Exhibit 99.4
EXECUTION COPY
iBASIS, INC.
AND
U.S. BANK NATIONAL ASSOCIATION,
AS
WARRANT AGENT
----------
2004 WARRANT AND REGISTRATION RIGHTS AGREEMENT
DATED AS OF JUNE 18, 2004
WARRANT AND REGISTRATION RIGHTS AGREEMENT
TABLE OF CONTENTS
Page
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Section 1. Appointment of Warrant Agent.....................................................................1
Section 2. Warrant Certificates; Warrant Shares.............................................................1
Section 3. Execution of Warrant Certificates and Warrant Share Certificates.................................2
Section 4. Registration and Countersignature................................................................2
Section 5. Transfer and Exchange of Warrants................................................................2
Section 6. Registration of Transfers and Exchanges..........................................................3
6.1. Transfer and Exchange of Physical Warrants...............................................3
6.2. Restrictions on Transfer of Physical Warrants for a Beneficial Interest in a
Global Warrant... .......................................................................4
6.3. Transfer and Exchange of Global Warrants.................................................4
6.4. Transfer of a Beneficial Interest in a Global Warrant for a Physical Warrant.............4
6.5. Restrictions on Transfer and Exchange of Global Warrants.................................5
6.6. Authentication of Definitive Warrants in Absence of Depository...........................5
6.7. Legends..................................................................................6
6.8. Cancellation and/or Adjustment of a Global Warrant.......................................6
Section 7. Issuance of Warrants; Terms of Warrants: Exercise of Warrants....................................7
7.1. Method of Exercise; Payment, Issuance of New Warrant; Transfer and
Exchange................... .............................................................7
7.2. Warrantholder Representations............................................................9
7.3. Stock Fully Paid; Reservation of Shares.................................................10
7.4. Adjustment of Exercise Price and Number of Shares.......................................10
7.5. Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc..............16
7.6. Notice of Adjustments...................................................................16
7.7. No Rights or Liabilities as Stockholder.................................................17
Section 8. Registration Rights.............................................................................17
8.1. Demand Registration Rights..............................................................17
8.2. Piggyback Registration Rights...........................................................19
8.3. Certain Other Provisions................................................................20
8.4. Indemnification and Contribution........................................................23
8.5. Reports Under Exchange Act..............................................................25
Section 9. Definitions.....................................................................................26
Section 10. Payment of Taxes................................................................................31
Section 11. Mutilated or Missing Warrant Certificates and Warrant Share Certificates........................31
Section 12. Fractional Interests............................................................................31
Section 13. Merger, Consolidation or Change of Name of Warrant Agent........................................32
Section 14. Warrant Agent...................................................................................32
Section 15. Change of Warrant Agent.........................................................................35
Section 16. Notices to Company and Warrant Agent............................................................36
Section 17. Supplements and Amendments......................................................................37
Section 18. Successors......................................................................................37
Section 19. Survival of Registration Rights Provisions, Warrant Agent Provisions............................38
Section 20. Governing Law; Submission to Jurisdiction: Waiver of Jury Trial.................................38
Section 21. Exercise of Rights and Remedies.................................................................38
Section 22. Benefits of This Agreement......................................................................38
Section 23. Counterparts....................................................................................39
2004
WARRANT AND REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as
of June 18, 2004, between iBasis, Inc., a Delaware (the "COMPANY"), and U.S.
Bank National Association, as Warrant Agent (the "WARRANT AGENT").
WHEREAS, the Company proposes to issue Warrants, as hereinafter described
(the "WARRANTS"), which in the aggregate initially entitle the holders of the
Warrants to purchase, at an Initial Exercise Price of $1.85 per share, 5,176,065
shares of Common Stock, par value $0.001 per share, of the Company (the Common
Stock issuable on exercise of any Warrant being referred to herein as the
"WARRANT SHARES"), in connection with the execution of that certain Note
Repurchase, Exchange and Amendment Agreement (as amended, supplemented and
otherwise modified from time to time, the "EXCHANGE AGREEMENT"), dated as of
April 27, 2004, by and among the Company and the Required Holders named therein.
WHEREAS, upon exercise of any Warrants, the Warrantholder shall own Warrant
Shares, which shall continue to be subject to the terms of this Agreement.
WHEREAS, the Warrant Shares shall have certain registration rights as
provided herein.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and exercise of Warrants, and the issue, transfer
and exchange of the Warrant Shares, and other matters as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 2. WARRANT CERTIFICATES; WARRANT SHARES. The certificates
evidencing the Warrants (the "WARRANT CERTIFICATES") to be delivered pursuant to
this Agreement shall be in fully registered form only and shall initially be
represented by one or more global warrants (each, a "GLOBAL WARRANT"),
substantially in the form of EXHIBIT A attached hereto, registered in the name
of The Depository Trust Company (the "DEPOSITORY") or its nominee and delivered
to the Warrant Agent, as custodian for the Depository and recorded in the
book-entry system maintained by the Depository. Upon written request, a
beneficial owner of an interest in a Global Warrant will be entitled to receive
a physical certificate representing such interest (a "PHYSICAL WARRANT"), as
provided in Section 6 hereof. Each Global Warrant shall represent such of the
outstanding Warrants as shall be specified therein and each shall provide that
it shall represent the aggregate amount of outstanding Warrants from time to
time endorsed thereon and that the aggregate amount of outstanding Warrants
represented thereby may from time to time be reduced or increased, as
appropriate. Any endorsement of a Global Warrant to reflect the amount of any
increase or decrease in the amount of Warrant Shares represented thereby shall
be made by the Warrant Agent and the Depository in accordance with instructions
given by the holder thereof. The certificates evidencing the Warrant Shares to
be delivered upon exercise of a
Warrant (the "WARRANT SHARE CERTIFICATES") shall be substantially in the form of
the specimen certificate attached hereto as EXHIBIT B.
Section 3. EXECUTION OF WARRANT CERTIFICATES AND WARRANT SHARE
CERTIFICATES. Warrant Certificates shall be signed on behalf of the Company by
its President or a Vice President and by its Secretary or an Assistant
Secretary. Each such signature upon the Warrant Certificates may be in the form
of a facsimile signature of the present or any future President, Vice President,
Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on
the Warrant Certificates and for that purpose the Company may adopt and use the
facsimile signature of any person who shall have been President, Vice President,
Secretary or Assistant Secretary, notwithstanding the fact that at the time the
Warrant Certificates shall be countersigned and delivered or disposed of he or
she shall have ceased to hold such office.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned by the Warrant Agent, or disposed of by the
Company, such Warrant Certificates nevertheless may be countersigned and
delivered or disposed of as though such person had not ceased to be such officer
of the Company; and any Warrant Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of the Company to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement any
such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by the
Warrant Agent.
The Warrant Share Certificates shall be executed in accordance with the
by-laws of the Company.
Section 4. REGISTRATION AND COUNTERSIGNATURE. The Warrants shall be
numbered and shall be registered on the books of the Company maintained at the
principal office of the Warrant Agent in Boston,
Massachusetts (the "WARRANT
REGISTER") as they are issued.
Warrant Certificates shall be manually countersigned by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. The Warrant
Agent shall, upon written instructions of the President, a Vice President, the
Treasurer or the Chief Financial Officer of the Company, initially countersign,
issue and deliver such number of Warrants as are set forth in such written
instructions, and the Warrant Agent shall be fully protected in conclusively
relying on such written instructions. Such written instructions shall not
instruct the Warrant Agent to countersign Warrants entitling the holders thereof
to purchase more than the number of Warrant Shares referred to above in the
first recital hereof. The Warrant Agent shall also countersign and deliver
Warrants as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates and the Warrant Shares as the absolute
owner(s) thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone), for all purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
Section 5. TRANSFER AND EXCHANGE OF WARRANTS. The Warrant Agent shall from
time to time, subject to the limitations set forth in Section 6 hereof, register
the transfer of any
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outstanding Warrants upon the records to be maintained by it for that purpose,
upon surrender thereof duly endorsed or accompanied (if so required by it) by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, duly executed by the registered Warrantholder or Warrantholders
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney. Subject to the terms of this Agreement, each Warrant
Certificate may be exchanged for another certificate or certificates entitling
the Warrantholder thereof to purchase a like aggregate number of Warrant Shares
as the certificate or certificates surrendered then entitle such Warrantholder
to purchase. Any Warrantholder desiring to exchange a Warrant Certificate or
Warrant Certificates shall make such request in writing delivered to the Warrant
Agent, and shall surrender, duly endorsed or accompanied (if so required by the
Warrant Agent) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, the Warrant Certificate or Warrant
Certificates to be so exchanged.
Upon registration of transfer, the Warrant Agent shall countersign and
deliver by certified mail a new Warrant Certificate or Warrant Certificates to
the Persons entitled thereto. The Warrant Certificates may be exchanged at the
option of the Warrantholder thereof, when surrendered at the office or agency of
the Company maintained for such purpose, which initially will be the corporate
trust office of the Warrant Agent in Boston,
Massachusetts for another Warrant
Certificate, or other Warrant Certificates of different denominations, of like
tenor and representing in the aggregate the right to purchase a like number of
Warrant Shares.
No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any stamp or other tax or other governmental charge that is
imposed in connection with any such exchange or registration of transfer.
Section 6. REGISTRATION OF TRANSFERS AND EXCHANGES.
6.1. TRANSFER AND EXCHANGE OF PHYSICAL WARRANTS. When Physical
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Physical Warrants; or
(ii) to exchange such Physical Warrants for an equal number of
Physical Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Agreement as set forth in this Section 6 for such
transactions are met; PROVIDED, HOWEVER, that the Physical Warrants presented or
surrendered for registration of transfer or exchange:
(1) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Warrant Agent, duly executed by
the Warrantholder thereof or his attorney duly authorized in writing;
and
(2) in the case of Physical Warrants the offer and sale of which have not
been registered under the Securities Act, such Physical Warrants shall
be accompanied,
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in the sole discretion of the Company, by the following additional
information and documents, as applicable:
(A) if such Physical Warrants are being delivered to the Warrant
Agent by a holder for registration in the name of such holder,
without transfer, a certification from such holder to that
effect (in substantially the form of EXHIBIT C attached
hereto); or
(B) if such Physical Warrants are being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under
the Securities Act (a "QUALIFIED INSTITUTIONAL BUYER")) in
accordance with Rule 144A under the Securities Act., a
certification to that effect (in substantially the form of
EXHIBIT C attached hereto).
6.2. RESTRICTIONS ON TRANSFER OF PHYSICAL WARRANTS FOR A BENEFICIAL
INTEREST IN A GLOBAL WARRANT. A Physical Warrant may not be exchanged for a
beneficial interest in a Global Warrant except upon satisfaction of the
requirements set forth below. Upon receipt by the Warrant Agent of a
Physical Warrant, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Warrant Agent, together with:
(A) a certification, in substantially the form of EXHIBIT C
attached hereto, that such Physical Warrant is being
transferred to a Qualified Institutional Buyer; and
(B) written instructions directing the Warrant Agent to make, or
to direct the Depository to make, an endorsement on the Global
Warrant to reflect an increase in the aggregate amount of the
Warrants represented by the Global Warrant,
then the Warrant Agent shall cancel such Physical Warrant and cause, or direct
the Depository to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall upon written instructions from the Company authenticate a new Global
Warrant in the appropriate amount.
6.3. TRANSFER AND EXCHANGE OF GLOBAL WARRANTS. The transfer and
exchange of Global Warrants or beneficial interests therein shall be
effected through the Depository, in accordance with this Agreement
(including the restrictions on transfer set forth herein) and the
procedures of the Depository therefore.
6.4. TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT FOR A
PHYSICAL WARRANT.
6.4.1. Any Person having a beneficial interest in a Global
Warrant may upon request exchange such beneficial interest for a
Physical Warrant. Upon receipt by the Warrant Agent of written
instructions or such other form of instructions as is customary for
the Depository from the Depository or its nominee
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on behalf of any person having a beneficial interest in a Global
Warrant and upon receipt by the Warrant Agent of a written order or
such other form of instructions as is customary for the Depository or
the person designated by the Depository as having such a beneficial
interest containing registration instructions and, in the case of any
such transfer or exchange of a beneficial interest in a Global Warrant
the offer and sale of which have not been registered under the
Securities Act, the following additional information and documents:
(A) if such beneficial interest is being transferred to the Person
designated by the Depository as being the beneficial owner, a
certification from such person to that effect (in
substantially the form of EXHIBIT C attached hereto); or
(B) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A
under the Securities Act, a certification to that effect (in
substantially the form of EXHIBIT C attached hereto),
then the Warrant Agent will cause, in accordance with the standing
instructions and procedures existing between the Depository and the
Warrant Agent, the aggregate amount of the Global Warrant to be
reduced and, following such reduction, the Company will execute and,
upon receipt of an authentication order in the form of an officers'
certificate, the Warrant Agent will authenticate and deliver to the
transferee a Physical Warrant.
6.4.2. Physical Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 6.4 shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Warrant Agent in
writing. The Warrant Agent shall deliver such Physical Warrants to the
Persons in whose names such Physical Warrants are so registered.
6.5. RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Agreement, a Global Warrant
may not be transferred as a whole except by the Depository to a nominee of
the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee
to a successor Depository or a nominee of such successor Depository.
6.6. AUTHENTICATION OF DEFINITIVE WARRANTS IN ABSENCE OF DEPOSITORY.
If at any time the Depository for the Warrants notifies the Company that
the Depository is unwilling or unable to continue as Depository for the
Global Warrants and a successor Depository for the Global Warrants cannot
be appointed by the Company within 90 days after delivery of such notice,
then the Company will execute, and the Warrant Agent, upon written
instructions from the Company requesting the authentication and delivery of
Physical Warrants as a result of the inability to retain a successor
Depository, will
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authenticate and deliver Physical Warrants, in an aggregate number equal to
the aggregate number of Warrants represented by the Global Warrants, in
exchange for such holder's beneficial interest in Global Warrants.
6.7. LEGENDS. For so long as transfer of a Warrant is not permitted
without registration under the Securities Act, each Warrant Certificate
evidencing such Warrant (and all Warrants issued in exchange therefor or
substitution thereof) shall bear a legend substantially to the following
effect:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B)
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, OR (C) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER) AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND."
6.8. CANCELLATION AND/OR ADJUSTMENT OF A GLOBAL WARRANT. At such time
as all beneficial interests in a Global Warrant have either been exchanged
for Physical Warrants, redeemed, repurchased or cancelled, such Global
Warrant shall be returned to or retained and cancelled by the Warrant
Agent. At any time prior to such cancellation, if any beneficial interest
in a Global Warrant is exchanged for Physical Warrants, redeemed,
repurchased or cancelled, the number of Warrants represented by such Global
Warrant shall be reduced and an endorsement shall be made on such Global
Warrant, by the Warrant Agent to reflect such reduction.
6.8.1. OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
PHYSICAL WARRANTS.
(i) To permit registrations of transfers and exchanges, the
Company shall execute, at the Warrant Agent's request, and the
Warrant Agent shall authenticate, Physical Warrants and Global
Warrants.
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(ii) All Physical Warrants and Global Warrants issued upon any
registration, transfer or exchange of Physical Warrants or
Global Warrants shall be the valid obligations of the Company,
entitled to the same benefits under this Agreement as the
Physical Warrants or Global Warrants surrendered upon the
registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat
the person in whose name any Warrant is registered as the
absolute owner of such Warrant, and neither the Warrant Agent
nor the Company shall be affected by notice to the contrary.
Section 7. ISSUANCE OF WARRANTS; TERMS OF WARRANTS: EXERCISE OF WARRANTS.
7.1. METHOD OF EXERCISE; PAYMENT, ISSUANCE OF NEW WARRANT; TRANSFER
AND EXCHANGE.
7.1.1. METHOD OF EXERCISE.
7.1.1.1. CASH EXERCISE. Subject to the terms of this
Agreement, each Warrantholder shall have the right to exercise
the Warrants evidenced by the Warrant Certificates it holds,
in whole or in part, during normal business hours on any
Business Day on or prior to the Expiration Date, by surrender
of the Warrant Certificates held by it to the Company at its
principal office, accompanied by a subscription substantially
in the form attached to the Warrant Certificates duly executed
by such holder and accompanied by (a) wire transfer of
immediately available funds or (b) certified or official bank
check payable to the order of the Company, in each case in the
amount obtained by multiplying (i) the number of shares of
Common Stock (without giving effect to any adjustment thereof
pursuant to the provisions of hereof) for which the Warrant is
then being exercised, as designated in such subscription, by
(ii) the Initial Exercise Price. Thereupon, such holder shall
be entitled to receive the number of duly authorized, validly
issued, fully paid and nonassessable Warrant Shares (or Other
Securities) determined as provided in Sections 7.4 and 7.5
hereof.
7.1.1.2. CONVERSION. Subject to the terms of this
Agreement, each Warrantholder shall have the right to convert
the Warrants evidenced by the Warrant Certificates it holds,
in whole or in part, into Warrant Shares (or Other
Securities), during normal business hours on any Business Day
on or prior to the Expiration Date, by surrender of the
Warrant Certificates held by it to the Company at its
principal office, accompanied by a conversion notice
substantially in the form attached to the Warrant Certificates
duly executed by such holder. Thereupon, such holder shall be
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entitled to receive a number of duly authorized, validly
issued, fully paid and nonassessable Warrant Shares (or Other
Securities) equal to:
(a) the excess of
(i) (x) the number of Warrant Shares (or Other
Securities) determined as provided in Sections 7.4 and
7.5 hereof which such holder would be entitled to
receive upon exercise of such Warrant for the number of
Warrant Shares designated in such conversion notice
(without giving effect to any adjustment thereof
pursuant to the provisions hereof) for which the
Warrant is then being exercised, as designated in such
conversion notice, MULTIPLIED BY (y) the Current Market
Price of each such Warrant Share (or such Other
Securities) so receivable upon such exercise
OVER
(ii) (x) the number of Warrant Shares (without
giving effect to any adjustment thereof pursuant to the
provisions hereof) which such holder would be entitled
to receive upon exercise of such Warrant for the number
of Warrant Shares designated in such conversion notice
(without giving effect to any adjustment thereof
pursuant to the provisions hereof), MULTIPLIED BY (y)
the Initial Exercise Price
DIVIDED BY
(b) such Current Market Price of each such Warrant
Share (or Other Securities).
7.1.2. WHEN EXERCISE EFFECTIVE. Each exercise of a Warrant
shall be deemed to have been effected immediately prior to the close
of business on the Business Day on which such Warrant shall have been
surrendered to the Company at its principal office and payment made as
provided in Section 7.1.1 hereof, and at such time the Person or
Persons in whose name or names any certificate or certificates for
Warrant Shares (or Other Securities) shall be issuable upon such
exercise as provided in Section 7.1.3 hereof shall be deemed to have
become the holder or holders of record thereof.
7.1.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as
practicable, but no later than five Business Days after each exercise
of a Warrant, in whole or in part, except as otherwise provided in
Section 7.1.4 hereof, the Company at its expense (including the
payment by it of any applicable issue taxes), through its transfer
agent, EquiServe Trust Company, N.A., will cause to be issued in the
name of and delivered to the holder thereof or, subject to the
provisions of the Exchange Agreement, as such holder (upon payment by
such holder of any applicable transfer taxes and subject to Section 6
above) may direct:
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(a) a certificate or certificates for the number of
duly authorized, validly issued, fully paid and nonassessable
Warrant Shares (or Other Securities) to which such holder
shall be entitled upon such exercise plus, in lieu of any
fractional share to which such holder would otherwise be
entitled, cash in an amount equal to the same fraction of the
Current Market Price per share on the Business Day immediately
preceding the date of such exercise; and
(b) in case such exercise is in part only, a new
Warrant or Warrants of like tenor, dated the date hereof and
calling in the aggregate on the face or faces thereof for the
number of Warrant Shares equal (without giving effect to any
adjustment thereof pursuant to the terms hereof) to the number
of such shares called for on the face of such Warrant minus
the number of such shares designated by the holder upon such
exercise as provided in Section 7.1.1 hereof.
The Company shall advise the Warrant Agent of any such
exercise and shall deliver to the Warrant Agent for cancellation any
exercised Warrant Certificate, or in the case of any exercise of a
Global Warrant, shall instruct the Warrant Agent in writing as to the
adjustment of the outstanding balance of such Global Warrant.
7.1.4. COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at
the time of or at any time after each exercise of a Warrant, upon the
request of the holder hereof, acknowledge in writing its continuing
obligation to afford to such holder all rights to which such holder
shall continue to be entitled after such exercise in accordance with
the terms of this Warrant Agreement and the Warrants; provided that if
any such holder shall fail to make any such request, the failure shall
not affect the continuing obligation of the Company to afford such
rights to such holder.
7.2. WARRANTHOLDER REPRESENTATIONS. Prior to the exercise of any
Warrant, the Warrantholder must represent and warrant to the Company, in
writing, as follows:
(i) it is acquiring the Warrant Shares for its own account for
investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention
of distributing or selling the same; and the Warrantholder has
no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing
for the disposition thereof;
(ii) the Warrantholder is an "accredited investor" as defined in
Rule 501(a) under the Securities Act; and
(iii) the Warrantholder has made such inquiry concerning the Company
and its business and personnel as it has deemed appropriate;
and the Warrantholder has sufficient knowledge and experience
in finance and
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business that is capable of evaluating the risks and merits of
investment in the Company.
7.3. STOCK FULLY PAID; RESERVATION OF SHARES. The Company represents,
warrants, covenants and agrees that all Warrant Shares which may be issued
upon the exercise of the rights represented by the Warrants will, upon
issuance and payment therefor in accordance with the terms of the Warrant,
be duly authorized, validly issued, fully paid and non-assessable. The
Company further covenants and agrees that during the period within which
the rights represented by the Warrants may be exercised, the Company will
at all times have authorized and reserved solely for the purpose of the
issuance upon exercise of the Warrants a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by the
Warrants.
The Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of any Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
non-assessable Warrant Shares upon the exercise of each Warrant, and (c)
use its reasonable efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Agreement and each Warrant. Without limiting the generality of the
foregoing, the Company will from time to time take all such action as may
be required to assure that the par value per share, if any, of the Common
Stock is at all times equal to or less than the lowest quotient obtained by
dividing the then current exercise price of each Warrant by the number of
Warrant Shares into which such Warrant can from time to time be exercised.
7.4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES.
7.4.1. GENERAL; NUMBER OF SHARES; EXERCISE PRICE. The number
of Warrant Shares which the holder of a Warrant shall be entitled to
receive upon each exercise thereof shall be determined by multiplying
the number of shares of Common Stock which would otherwise (but for
the provisions of this Section 7.4) be issuable upon such exercise, as
designated by the holder hereof pursuant to Section 7.1.1 hereof, by a
fraction of which (a) the numerator is the Initial Exercise Price of
such Warrant and (b) the denominator is the Exercise Price of such
Warrant in effect on the date of such exercise. The "EXERCISE PRICE"
shall initially be the Initial Exercise Price, and shall be adjusted
and readjusted from time to time as provided in this Section 7.4 and,
as so adjusted or readjusted, shall remain in effect until a further
adjustment or readjustment thereof is required by this Section 7.4.
7.4.2. ISSUANCE OF ADDITIONAL WARRANTS DUE TO ISSUANCE OF
ADDITIONAL COMMON SHARES. In case the Company at any time or from time
to time after the date of the final closing of the New Exchange (as
defined in the Exchange Agreement) shall issue or sell Additional
Common Shares (including Additional Common Shares deemed to be issued
pursuant to Section 7.4.4 or 7.4.5 hereof),
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other than an Excluded Issuance, without consideration or for a
consideration per share less than the lower of the Initial Exercise
Price or the then Fair Market Value, then in each such case such
Exercise Price shall be reduced (but not increased), concurrently with
such issue or sale, to a price (calculated to the nearest 0.000001 of
a cent) determined by multiplying the Exercise Price in effect
immediately prior to such issue or sale (the "ANTIDILUTION PRICE") by
a fraction:
(a) the numerator of which shall be the sum of (i)
the number of shares of Common Stock outstanding immediately
prior to such issue or sale MULTIPLIED BY the Antidilution
Price PLUS (ii) the consideration, if any, deemed received by
the Company upon such issue or sale; and
(b) the denominator of which shall be the product
of (i) the total number of shares of Common Stock deemed to be
outstanding immediately after such issue or sale MULTIPLIED BY
(ii) the Antidilution Price.
In each case, the number of shares of Common Stock shall be calculated
in accordance with Section 7.4.8 hereof.
7.4.3. DIVIDENDS AND DISTRIBUTIONS. In case the Company at any
time or from time to time after the date hereof shall declare, order,
pay or make a dividend or other distribution (including without
limitation any distribution of additional stock or other securities or
property or Options, by way of dividend or spin-off, distribution,
reclassification, recapitalization or similar corporate rearrangement
or otherwise) on the shares of Common Stock, other than a dividend
payable in (or otherwise deemed to be an issuance of) Additional
Common Shares or periodic cash dividends declared and paid in the
ordinary course of business, then, and in each such case, the holder
of a Warrant shall receive, upon the exercise of such Warrant at any
time on or after such record date, the number of Warrant Shares to be
received upon exercise of such Warrant determined as provided herein
and, in addition and without further payment, and without any
additional action required on the part of such holder, such dividend
or other distribution to which such holder would have been entitled by
way of such dividend or other distribution and subsequent dividends
and other distributions through the date of exercise as if such holder
(x) had exercised such Warrant immediately prior to such record date
and (y) had retained such dividend or other distribution in respect of
the shares of Common Stock and all subsequent dividends and other
distributions of any nature whatsoever in respect of any stock or
securities paid as dividends and other distributions and originating
directly or indirectly from such shares of Common Stock.
7.4.4. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In
case the Company at any time or from time to time after the date
hereof shall issue, sell, grant or assume, or shall fix a record date
for the determination of holders of any class of securities entitled
to receive, any Options or Convertible Securities, then, and in each
such case, the maximum number of Additional Common Shares (as
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set forth in the instrument relating thereto, without regard to any
provisions contained therein for a subsequent adjustment of such
number the purpose of which is to protect against dilution) at any
time issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be
Additional Common Shares issued as of the time of such issue, sale,
grant or assumption or, in case such a record date shall have been
fixed, as of the close of business on such record date.
Notwithstanding the foregoing, this Section 7.4.4 shall not apply to
(I.E., there shall not be a deemed issuance of Additional Common
Shares with respect to) the issuance, sale, grant or assumption of, or
fixing of a record date for determination of entitlement to receive,
an Excluded Issuance. In addition:
(a) no further adjustment of the Exercise Price
shall be made upon the exercise of any Options or the
conversion or exchange of Convertible Securities and the
consequent issue or sale of Convertible Securities or shares
of Common Stock;
(b) if Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any
increase in the consideration payable to the Company, or
decrease in the number of Common Shares issuable, upon the
exercise, conversion or exchange thereof (by change of rate or
otherwise), the Exercise Prices computed upon the original
issue, sale, grant or assumption thereof (or upon the
occurrence of the record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such
Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(c) if the consideration provided for in any Option
or the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Security shall be
reduced, or the ratio at which any Option is exercisable or
any Convertible Security is convertible into or exchangeable
for shares of Common Stock shall be increased, at any time
under or by reason of provisions with respect thereto designed
to protect against dilution, then, effective concurrently with
each such change, the Exercise Price then in effect shall
first be adjusted to eliminate the previous effects (if any)
of the issuance (or deemed issuance) of such Option or
Convertible Security on the Exercise Price and then readjusted
as if such Option or Convertible Security had been issued on
the date of such change with the terms in effect after such
change; and
(d) upon the expiration (or purchase by the Company
and cancellation or retirement) of any Options which shall not
have been exercised, or the expiration of any rights of
conversion or exchange under any Convertible Securities which
(or purchase by the Company and
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cancellation or retirement of any Convertible Securities the
rights of conversion or exchange under which) shall not have
been exercised, the Exercise Price computed upon the original
issue, sale, grant or assumption thereof (or upon the
occurrence of the record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon (and
effective as of) such expiration (or such cancellation or
retirement, as the case may be), be recomputed as if:
(i) in the case of Options or Convertible
Securities, the only Additional Common Shares issued or
sold were the Additional Common Shares, if any,
actually issued or sold upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities and the consideration received
therefor was the consideration actually received by the
Company for the issue, sale, grant or assumption of all
such Options, whether or not exercised, plus the
additional consideration actually received by the
Company upon any exercise thereof, or the consideration
actually received by the Company for the issue or sale
of all such Convertible Securities, whether or not
actually converted or exchanged, plus the additional
consideration actually received by the Company upon any
conversion or exchange thereof, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any,
actually issued or sold upon the exercise of such
Options were issued at the time of the issue, sale,
grant or assumption of such Options, and the
consideration received by the Company for the
Additional Common Shares deemed to have then been
issued was the consideration actually received by the
Company for the issue, sale, grant or assumption of all
such Options, whether or not exercised, plus the
consideration deemed to have been received by the
Company (pursuant to Section 7.4.6 hereof) upon the
issue or sale of such Convertible Securities with
respect to which such Options were actually exercised.
7.4.5. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In
case the Company at any time or from time to time after the date
hereof shall declare or pay any dividend on the shares of Common Stock
payable in shares of Common Stock or other securities, or shall effect
a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock), then, and in
each such case, Additional Common Shares shall be deemed to have been
issued (a) in the case of any such dividend, immediately after the
close of business on the record date for the determination of holders
of any class of securities entitled to receive such dividend, or (b)
in the case of any such subdivision, at the close of business on the
day immediately prior to the day upon which such corporate action
becomes effective.
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7.4.6. COMPUTATION OF CONSIDERATION. For the purposes of this
Section 7.4:
(a) the consideration for the issue or sale of any
Additional Common Shares shall, irrespective of the accounting
treatment of such consideration, be computed at the fair value
thereof at the time of such issue or sale, as determined in
good faith by the Board, without deduction for any expenses
paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in
connection with such issue or sale. In the event Additional
Common Shares are issued or sold together with other stock or
securities or other assets of the Company for a consideration
which covers both, the consideration for the issue or sale of
Additional Common Shares shall be the portion of such
consideration so received, computed as provided in this
Section 7.4.6, allocable to such Additional Common Shares, all
as determined in good faith by the Board. Notwithstanding the
foregoing, if Additional Common Shares are issued (i) to an
Affiliate of the Company or (ii) in connection with any
acquisition by the Company of stock or assets of a third party
or parties, the fair value of such Additional Common Shares at
the time of such issue or sale shall be the value as
determined in good faith by the Board, except that in the case
of issuances to Affiliates of the Company, or in connection
with acquisitions by the Company of stock or assets of a third
party, such fair value shall be the value set forth in an
opinion of independent accountants or investment bankers
selected by the Company, if such engagement is reasonably
requested by the Majority Warrantholders;
(b) Additional Common Shares deemed to have been
issued pursuant to Section 7.4.4 hereof shall be deemed to
have been issued for a consideration per share determined by
dividing:
(i) the total amount of consideration, if
any, received and/or receivable by the Company as
direct consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of
additional consideration (as set forth in the
instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment
of such consideration the purpose of which is to
protect against dilution) payable to the Company upon
the exercise in full of such Options or the conversion
or exchange of such Convertible Securities or, in the
case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and
the conversion or exchange of such Convertible
Securities, in each case computing such consideration
as provided in the foregoing clause (a), by
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(ii) the maximum number of shares of Common
Stock (as set forth in the instruments relating
thereto, without regard to any provision contained
therein for a subsequent adjustment of such number the
purpose of which is to protect against dilution)
issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities;
and
(c) Additional Common Shares deemed to have been
issued pursuant to Section 7.4.5 hereof shall be deemed to
have been issued for no consideration, unless the Company
actually receives consideration for any such issuance.
7.4.7. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the
outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of
Common Stock, the Exercise Price in effect immediately prior to such
combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased.
7.4.8. SHARES DEEMED OUTSTANDING. Unless otherwise
specifically provided herein, for all purposes of the computations to
be made pursuant to this Section 7.4, there shall be deemed to be
outstanding all shares of Common Stock issuable pursuant to the
exercise of Options and conversion of Convertible Securities
outstanding at the time as of which such computation is made. No
adjustment shall be made in the Exercise Price upon the issuance of
shares of Common Stock pursuant to Options and Convertible Securities
so deemed to be outstanding, but this Section 7.4.8 shall not prevent
other adjustments in the Exercise Price arising by virtue of such
outstanding Options or Convertible Securities pursuant to the
provisions of Sections 7.4.2, 7.4.4 and 7.4.5 hereof.
7.4.9. WARRANT AGENT'S DISCLAIMER. The Warrant Agent shall
have no duties or responsibilities under this Section 7.4, including,
but not limited to, determining when an adjustment under this Section
7.4 should be made, how such adjustment should be made or what the
adjustment should be. The Warrant Agent makes no representation as to
the validity or value of any securities or assets issued upon exercise
of Warrants. The Warrant Agent shall not be responsible for the
Company's failure to comply with this Section 7.4.
7.4.10. FILING OF REGISTRATION STATEMENT. In the event that
the first registration statement required to be filed by the Company
pursuant to Section 8.1.1 hereof has not been filed with the
Commission on or prior to the date (the "FILING DATE") that is thirty
(30) days from the date on which the Company receives the notice
described in Section 8.1.1 hereof, on the Filing Date the Exercise
Price shall be reduced to a price equal to the Exercise Price then in
effect MINUS $.25. If such registration statement has not been filed
with the Commission on or prior to any subsequent thirty (30) day
period following the Filing Date, on each such date the Exercise Price
shall be further reduced to a price equal to the
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Exercise Price then in effect MINUS $0.10, PROVIDED, HOWEVER, that the
Exercise Price shall not be reduced pursuant to this Section 7.4.10 to
an amount less than $0.10.
7.4.11. DECLARATION OF EFFECTIVENESS OF REGISTRATION
STATEMENT. In the event that the first registration statement filed by
the Company pursuant to Section 8.1.1 hereof has not been declared
effective by the Commission on or prior to the date (the "120 DAY
DEADLINE") that is one hundred twenty (120) days from the date on
which the Company receives the notice described in Section 8.1.1
hereof, on the 120 Day Deadline the Exercise Price shall be reduced to
a price equal to the Exercise Price then in effect MINUS $0.25. If
such registration statement has not been declared effective by the
Commission on or prior to any subsequent thirty (30) day period
following such 120 Day Deadline, on each such date the Exercise Price
shall be further reduced to a price equal to the Exercise Price then
in effect MINUS $0.10, PROVIDED, HOWEVER, that the Exercise Price
shall not be reduced pursuant to this Section 7.4.11 to an amount less
than $0.10.
7.5. ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or (b)
shall permit any other Person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving Person and the holders
of a majority of the Company's capital stock before such consolidation or
merger shall cease to hold a majority of the Company's capital stock after
such consolidation or merger, or (c) shall effect a capital reorganization
or reclassification of the Common Stock or Other Securities, then in the
case of each such transaction proper provision shall be made so that, upon
the basis and the terms and in the manner provided in this Agreement, the
holders of the Warrants, upon the exercise thereof at any time after the
consummation of such transaction, shall be entitled to receive (at the
aggregate Exercise Price in effect at the time of such consummation for all
Common Stock or Other Securities issuable upon such exercise immediately
prior to such consummation), in lieu of the Common Stock or Other
Securities issuable upon such exercise prior to such consummation, the
greatest amount of securities, cash or other property to which such holder
would actually have been entitled as a shareholder upon such consummation
if such holder had exercised the rights represented by the Warrant
Certificate held by it immediately prior thereto.
7.6. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price is adjusted,
the Company will promptly deliver to the Warrant Agent and to each
registered Warrantholder at the address provided to the Warrant Agent a
certificate setting forth, in reasonable detail, the event that triggered
the adjustment or issuance, the amount of the adjustment or issuance, the
method by which such adjustment or issuance was calculated (including a
description of the basis on which the Board made any determination
hereunder), and the Exercise Price after giving effect to such adjustment.
Unless and until the Warrant Agent receives such a certificate, it may
assume without inquiry that the Exercise Price of any outstanding Warrants
has not been adjusted.
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7.7. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in
this Agreement or in any Warrant shall be construed as conferring upon any
Warrantholder who has not exercised a Warrant any rights as a stockholder
of the Company prior to exercise of any Warrant or as imposing any
obligation on such Warrantholder to purchase any Securities or as imposing
any liabilities on such holder as a stockholder of the Company, whether
such obligation or liabilities are asserted by the Company or by creditors
of the Company.
Section 8. REGISTRATION RIGHTS. The Company will perform and comply, and
cause each of its Subsidiaries to perform and comply, with each of the following
provisions as are applicable to it. Each holder of Warrant Shares will perform
and comply with each of the following provisions as are applicable to such
holder.
8.1. DEMAND REGISTRATION RIGHTS.
8.1.1. GENERAL. One or more holders of Warrants or Warrant
Shares who at such time hold greater than 20% of the Warrant Shares
that have been or may be issued upon exercise, conversion or exchange
of the Warrants ("INITIATING HOLDERS") may request, by written notice
to the Company, that the Company effect the registration under the
Securities Act for a Public Offering of all or a specified part of the
Registrable Securities held by such Initiating Holders, without
exercising, converting or exchanging the Warrants held by such
Initiating Holders prior to making such request. Such notice shall
specify the intended method or methods of distribution. Promptly after
receipt of such notice from the Initiating Holders, the Company shall
give notice of such requested registration to all other holders of
Registrable Securities and Warrantholders in accordance with Section
8.2 hereof. The Company will then use its reasonable best efforts to
effect the registration under the Securities Act of the Registrable
Securities which the Company has been requested to register by such
Initiating Holders, together with all other Registrable Securities
which the Company has been requested to register pursuant to Section
8.2 hereof or otherwise by notice delivered to the Company within 20
days after the Company has given the required notice of such requested
registration (which request shall specify the intended method of
disposition of such Registrable Securities), all to the extent
requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities which the
Company has been so requested to register; PROVIDED, HOWEVER, that the
Company shall not be obligated to take any action to effect any such
registration pursuant to this Section 8.1.1 within 180 days
immediately following the effective date of any registration statement
pertaining to an underwritten public offering of securities of the
Company for its own account (other than a Rule 145 Transaction, or a
registration relating solely to employee benefit plans).
8.1.2. FORM; LIMITATIONS. Except as otherwise provided above,
each registration requested pursuant to Section 8.1.1 hereof shall be
effected by the filing of a registration statement on Form S-1 (or any
other form which includes substantially the same information as would
be required to be included in a
- 17 -
registration statement on such form as currently constituted), unless
the use of a different form has been agreed to in writing by holders
of at least a majority of the Registrable Securities to be included in
the proposed registration statement in question (the "MAJORITY
PARTICIPATING HOLDERS") or the Company is then eligible to use Form
S-3 for a Public Offering by the Majority Participating Holders of
their Warrant Shares; PROVIDED, HOWEVER, that the Company shall not be
required to effect any registration requested pursuant to Section
8.1.1 hereof on any form other than Form S-3 (or any successor form)
if the Company has previously effected three or more registrations of
Registrable Securities under Section 8.1.1 hereof on any form other
than Form S-3 (or any successor form). No registration of Registrable
Securities which shall not have become and remained effective in
accordance with this Section 8.1 shall be included in the calculation
of the number of registrations contemplated by this Section 8.1.2
(unless the Initiating Holders withdraw their request for such
registration, other than (i) if such withdrawal is a result of
information concerning the business or financial condition of the
Company which is made known after the date on which such registration
was requested or (ii) if the Initiating Holders pay all the expenses
of such registration otherwise payable by the Company pursuant to
Section 8.1.3 hereof). If at the time of any request to register
Registrable Securities pursuant to this Section 8.1, the Company is
engaged or has plans to engage in a registered public offering or is
engaged in any other activity which, in the good faith determination
of the Board, would be adversely affected by the requested
registration, then the Company may at its option direct that such
request be delayed for a period not in excess of 30 days from the date
of such request, such right to delay a request to be exercised by the
Company not more than once in any 12-month period. In the event that,
in the judgment of the Company, it is advisable to suspend use of a
prospectus included in a registration statement due to pending
material developments or other events that have not yet been publicly
disclosed and as to which the Company believes public disclosure would
be detrimental to the Company, the Company shall notify all selling
stockholders to such effect, and, upon receipt of such notice, each
such selling stockholder shall immediately discontinue any sales of
Registrable Securities pursuant to such registration statement until
such selling stockholder has received copies of a supplemented or
amended prospectus or until such selling stockholder is advised in
writing by the Company that the then current prospectus may be used
and has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such
prospectus. Notwithstanding anything to the contrary herein, the
Company shall not exercise its rights under the foregoing sentence to
suspend sales of Registrable Securities for a period in excess of 30
days consecutively or 60 days in any 365-day period.
8.1.3. PAYMENT OF EXPENSES. The Company shall pay all
reasonable expenses of holders of Warrant Shares incurred in
connection with the first three registrations of Registrable
Securities requested pursuant to this Section 8.1 (including the
reasonable fees and expenses of a single legal counsel representing
all selling stockholders), other than underwriting discounts and
commissions, if any, and applicable transfer taxes, if any.
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8.1.4. ADDITIONAL PROCEDURES. In the case of a registration
pursuant to this Section 8.1, whenever the Initiating Holders shall
request that such registration shall be effected pursuant to an
underwritten offering, the Company shall include such information in
the written notices to holders of Registrable Securities referred to
in Section 8.1.2 hereof. In such event, the right of any holder of
Registrable Securities to have securities owned by such holder
included in such registration pursuant to this Section 8.1 shall be
conditioned upon such holder's participation in such underwriting and
the inclusion of such holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed upon by the Majority
Participating Holders and such holder). If requested by the
underwriters of such registration, the Company, together with the
holders of Registrable Securities proposing to distribute their
securities through such underwriting, will enter into an underwriting
agreement with such underwriters for such offering containing such
representations and warranties by the Company and such holders and
such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions,
including, without limitation, customary indemnity and contribution
provisions (subject, in each case, to the limitations on such
liabilities set forth in this Agreement).
8.2. PIGGYBACK REGISTRATION RIGHTS.
8.2.1. GENERAL. Each time the Company proposes to register any
shares of Common Stock under the Securities Act on a form which would
permit registration of Registrable Securities for sale to the public,
for its own account and/or for the account of any holders of
Registrable Securities or Affiliate of a holder of Registrable
Securities (pursuant to Section 8.1 hereof or otherwise), for sale in
a Public Offering, the Company will give notice to all holders of
Registrable Securities of its intention to do so. Any such holder may,
by written response delivered to the Company within 20 days after the
effectiveness of such notice, request that all or a specified part of
the Registrable Securities held by such holder be included in such
registration. The Company thereupon will use its reasonable efforts to
cause to be included in such registration under the Securities Act all
shares of Common Stock which the Company has been so requested to
register by such holders, to the extent required to permit the
disposition (in accordance with the methods to be used by the Company
or other holders of shares of Common Stock in such Public Offering) of
the Registrable Securities to be so registered. No registration of
Registrable Securities effected under this Section 8.2 shall relieve
the Company of any of its obligations to effect registrations of
Registrable Securities pursuant to Section 8.1 hereof. The Company may
withdraw or suspend any registration covered by this Section 8.2 at
any time (subject, in the case of any registration also covered by
Section 8.1 hereof, to any limitations set forth therein).
8.2.2. EXCLUDED TRANSACTIONS. The Company shall not be
obligated to effect any registration of Registrable Securities under
this Section 8.2 incidental to the registration of any of its
securities in connection with:
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(a) Any Public Offering relating to employee
benefit plans or dividend reinvestment plans; or
(b) Any Public Offering relating to the
acquisition or merger after the date hereof by the Company or
any of its Subsidiaries of or with any other businesses.
8.2.3. PAYMENT OF EXPENSES. The Company shall pay all
reasonable fees and expenses of a single legal counsel representing
any and all holders of Registrable Securities incurred in connection
with the first three registrations of Registrable Securities requested
pursuant to this Section 8.2.
8.2.4. ADDITIONAL PROCEDURES. Holders of Warrant Shares
participating in any Public Offering pursuant to this Section 8.2
shall take all such actions and execute all such documents and
instruments that are reasonably requested by the Company to effect the
sale of their Warrant Shares in such Public Offering, including,
without limitation, being parties to the underwriting agreement
entered into by the Company and any other selling stockholders in
connection therewith and being liable in respect of the
representations and warranties by, and the other agreements (including
without limitation customary selling stockholder representations,
warranties, indemnifications and "lock-up" agreements) for the benefit
of the underwriters; PROVIDED, HOWEVER, that (a) with respect to
individual representations, warranties, indemnities and agreements of
selling holders of Warrant Shares in such Public Offering, the
aggregate amount of such liability shall not exceed such holder's net
proceeds from such offering and (b) to the extent selling holders of
Warrant Shares give further representations, warranties and
indemnities, then with respect to all other representations,
warranties and indemnities of sellers of shares in such Public
Offering, the aggregate amount of such liability shall not exceed the
lesser of (i) such holder's pro rata portion of any such liability, in
accordance with such holder's portion of the total number of Warrant
Shares included in the offering or (ii) such holder's net proceeds
from such offering.
8.3. CERTAIN OTHER PROVISIONS.
8.3.1. UNDERWRITER'S CUTBACK. In connection with any
registration of Warrant Shares, the underwriter may determine that
marketing factors (including, without limitation, an adverse effect on
the per share offering price) require a limitation of the number of
Warrant Shares to be underwritten. Notwithstanding any contrary
provision of Section 8.1 or Section 8.2 hereof, and subject to the
terms of this Section 8.3.1, the underwriter may limit the number of
shares which would otherwise be included in such registration by
excluding any or all Registrable Securities from such registration (it
being understood that the number of shares which the Company seeks to
have registered in such registration shall not be subject to
exclusion, in whole or in part, under this Section 8.3.1). Upon
receipt of notice from the underwriter of the need to reduce the
number of shares to be included in the registration, the Company shall
advise all holders of the
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Company's securities that would otherwise be registered and
underwritten pursuant hereto, and the number of shares of such
securities, including Registrable Securities, that may be included in
the registration shall be allocated in the following manner, unless
the underwriter shall determine that marketing factors require a
different allocation: (i) shares, other than Registrable Securities,
requested to be included in such registration by stockholders shall be
excluded unless (x) the Company has, prior to the date hereof, or
after the date hereof with the consent of the Majority Holders,
granted registration rights which are to be treated on an equal basis
with Registrable Securities for the purpose of the exercise of the
underwriter cutback (with it being specifically agreed and
acknowledged that the registration rights granted to (1) Silicon
Valley Bank pursuant to the Registration Rights Agreement, dated on or
around December 30, 2002, between the Company and Silicon Valley Bank,
(2) certain holders pursuant to the Amended and Restated
Warrant and
Registration Rights Agreement, dated February 21, 2003, by and among
the Company and the Warrant Agent as warrant agent, and (3) certain
holders pursuant to the Registration Rights Agreement, dated even date
herewith, by and among the Company and the holders party thereto are
to be treated on an equal basis with Registrable Securities for the
purposes of this underwriting cutback), with it being specifically
acknowledged that the registration rights granted to the holders of
any such shares of Common Stock are to be treated on an equal basis
with Registrable Securities for purposes of this underwriting cutback;
and (ii) if further limitation on the number of shares to be included
in the offering is required, the number of Registrable Securities and
other shares of Common Stock that may be included in such registration
shall be allocated among holders thereof in proportion, as nearly as
practicable, to the respective amounts of Common Stock which each
stockholder requested be registered in such registration. No
securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such
registration. Upon delivery of a written request that Registrable
Securities be included in an underwritten offering pursuant to Section
8.1.1 or Section 8.2.1 hereof, the holder thereof may not thereafter
elect to withdraw therefrom without the written consent the Company
and the Majority Participating Holders.
8.3.2. REGISTRATION PROCEDURES. If and in each case when the
Company is required to use its reasonable best efforts to effect a
registration of any Registrable Securities as provided in Section 8.1
or Section 8.2 hereof, the Company shall take appropriate and
customary actions in furtherance thereof, including, without
limitation:
(a) promptly filing with the Commission a
registration statement and using best efforts to cause such
registration statement to become effective;
(b) preparing and filing with the Commission such
amendments and supplements to such registration statements as
may be required to comply with the Securities Act and to keep
such registration
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statement effective for a period not to exceed 270 days from
the date of effectiveness or such earlier time as the
Registrable Securities covered by such registration statement
shall have been disposed of in accordance with the intended
method of distribution therefor or the expiration of the time
when a prospectus relating to such registration is required to
be delivered under the Securities Act; PROVIDED, HOWEVER, that
if the registration is effected by the filing of a
registration statement on Form S-3, then the Company shall
keep such registration statement effective for a period not to
exceed 3 years from the date of effectiveness or such earlier
time as the Registrable Securities covered by such
registration statement have been disposed of in accordance
with the intended method of distribution therefore, the
expiration of the time when a prospectus relating to such
registration is required to be delivered under the Securities
Act, or such registration statement no longer covers
Registrable Securities;
(c) using its best efforts to register or qualify
such Registrable Securities under the state securities or
"blue sky" laws of such jurisdictions as the sellers shall
reasonably request; PROVIDED, HOWEVER, that the Company shall
not be obligated to file any general consent to service of
process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any
jurisdiction in which it would not otherwise be so subject;
and
(d) otherwise cooperating reasonably with, and
taking such customary actions as may reasonably be requested
by the holders of Registrable Securities in connection with,
such registration.
8.3.3. SELECTION OF UNDERWRITERS AND COUNSEL. The underwriters
and legal counsel to be retained in connection with any Public
Offering shall be selected by the Board or, in the case of an offering
following a request therefor under Section 8.1.1 hereof, the
Initiating Holders with the consent of the Company (which consent
shall not be unreasonably withheld).
8.3.4. LOCK-UP. Without the prior written consent of the
underwriters managing any Public Offering, for a period beginning
seven days immediately preceding and ending on the 90th day following
the effective date of the registration statement used in connection
with such offering, no holder of Warrant Shares (whether or not a
selling stockholder pursuant to such registration statement)
representing at least 1% of the outstanding Common Stock shall (a)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer, directly or
indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for such Common Stock or (b) enter
into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of Common
Stock, whether any such transaction described in clause
- 22 -
(a) or (b) above is to be settled by delivery of such Common Stock or
such other securities, in cash or otherwise; PROVIDED, HOWEVER, that
the foregoing restrictions shall not apply to (i) the sale of Common
Stock pursuant to any such registration statement filed in accordance
with Section 8.1 or Section 8.2 hereof; (ii) transactions relating to
shares of Common Stock or other securities acquired in open market
transactions; or (iii) the exercise, conversion or exchange of
Warrants or conversions of shares of Common Stock into other classes
of Common Stock without change of holder.
8.3.5. FUTURE REGISTRATION RIGHTS. If, after the date hereof,
the Company enters into an agreement or other commitment with any
other Person that has the effect of establishing registration rights
with respect to the Company's capital stock the terms of which are
more favorable, taken as a whole, to such Person than the registration
rights established in favor of the holders of Registrable Securities
and Warrantholders pursuant to Section 8.1 or Section 8.2 hereof, then
the Company will promptly so notify the such holders in writing, and
the Company shall, without the necessity of any action on the part of
such holders, extend the benefits of such more favorable terms to such
holders as if such terms were contained in this Agreement, or permit
such holders to enter into such other agreement establishing such
rights in lieu of this agreement.
8.4. INDEMNIFICATION AND CONTRIBUTION.
8.4.1. INDEMNITIES OF THE COMPANY. In the event of any
registration of any Registrable Securities or other debt or equity
securities of the Company or any of its Subsidiaries under the
Securities Act pursuant to Section 8.1, Section 8.2 hereof or
otherwise, and in connection with any registration statement or any
other disclosure document produced by or on behalf of the Company or
any of its Subsidiaries including, without limitation, reports
required and other documents filed under the Exchange Act, and other
documents pursuant to which any debt or equity securities of the
Company or any of its Subsidiaries are sold (whether or not for the
account of the Company or its Subsidiaries), the Company will, and
hereby does, and will cause each of its Subsidiaries, jointly and
severally, to indemnify and hold harmless each seller of Registrable
Securities, any Person who is or might be deemed to be a controlling
Person of the Company or any of its Subsidiaries within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
their respective direct and indirect partners, advisory board members,
directors, officers, trustees, members and stockholders, and each
other Person, if any, who controls any such seller or any such
controlling Person within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (each such person being referred
to herein as a "COVERED PERSON"), against any losses, claims, damages
or liabilities (or actions or proceedings in respect thereof), joint
or several, to which such Covered Person may be or become subject
under the Securities Act, the Exchange Act, any other securities or
other law of any jurisdiction, the common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue
- 23 -
statement of any material fact contained or incorporated by reference
in any registration statement under the Securities Act, any
preliminary prospectus or final prospectus included therein, or any
related summary prospectus, or any amendment or supplement thereto, or
any document incorporated by reference therein, or any other such
disclosure document (including without limitation reports and other
documents filed under the Exchange Act and any document incorporated
by reference therein) or other document or report, (ii) any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading or (iii) any violation or alleged violation by the Company
or any of its subsidiaries of any federal, state, foreign or common
law rule or regulation applicable to the Company or any of its
Subsidiaries and relating to action or inaction in connection with any
such registration, disclosure document or other document or report,
and will reimburse such Covered Person for any legal or any other
reasonable expenses incurred by it in connection with investigating or
defending any such loss, claim, damage, liability, action or
proceeding; PROVIDED, HOWEVER, that neither the Company nor any of its
Subsidiaries shall be liable to any Covered Person in any such case to
the extent that any such loss, claim, damage, liability, action or
proceeding arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement, incorporated document or
other such disclosure document or other document or report, in
reliance upon and in conformity with written information furnished to
the Company or to any of its Subsidiaries through an instrument duly
executed by such Covered Person specifically stating that it is for
use in the preparation thereof. The indemnities of the Company and of
its subsidiaries contained in this Section 8.4.1 shall remain in full
force and effect regardless of any investigation made by or on behalf
of such Covered Person and shall survive any transfer of securities.
8.4.2. INDEMNITIES TO THE COMPANY. The Company and any of its
Subsidiaries may require, as a condition to including any securities
in any registration statement filed pursuant to this Agreement, that
the Company and any of its Subsidiaries shall have received an
undertaking satisfactory to it from the prospective seller of such
securities, to indemnify and hold harmless the Company and any of its
Subsidiaries, each director of the Company or any of its Subsidiaries,
each officer of the Company or any of its Subsidiaries who shall sign
such registration statement and each other Person (other than such
seller), if any, who controls the Company and any of its Subsidiaries
within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act and each other prospective seller of such
securities with respect to any statement in or omission from such
registration statement, any preliminary prospectus, final prospectus
or summary prospectus included therein, or any amendment or supplement
thereto, or any other disclosure document (including, without
limitation, reports and other documents filed under the Exchange Act
or any document incorporated therein) or other document or report, if
such statement or omission was made in reliance upon and in conformity
with written information furnished to the
- 24 -
Company or any of its Subsidiaries through an instrument executed by
such seller specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company,
any of its Subsidiaries or any such director, officer or controlling
Person and shall survive any transfer of securities.
8.4.3. CONTRIBUTION. If the indemnification provided for in
Section 8.4.1 or Section 8.4.2 hereof is unavailable to a party that
would have been entitled to indemnification pursuant to the foregoing
provisions of this Section 8.4 (an "INDEMNITEE") in respect of any
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to therein, then each party that would have
been an indemnifying party thereunder shall, in lieu of indemnifying
such Indemnitee, contribute to the amount paid or payable by such
Indemnitee as a result of such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative fault of such indemnifying
party on the one hand and such Indemnitee on the other in connection
with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof). The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such indemnifying
party or such Indemnitee and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The parties agree that it would not be just or
equitable if contribution pursuant to this Section 8.4.3 were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the preceding sentence. The amount paid or payable by a
contributing party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
above in this Section 8.4.3 shall include any legal or other expenses
reasonably incurred by such Indemnitee in connection with
investigating or defending any such action or claim. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
8.4.4. LIMITATION ON LIABILITY OF HOLDERS OF REGISTRABLE
SECURITIES. The liability of each holder of Registrable Securities in
respect of any indemnification or contribution obligation of such
holder arising under this Section 8.4 shall not in any event exceed an
amount equal to the net proceeds to such holder (after deduction of
all underwriters' discounts and commissions) from the disposition of
the Registrable Securities disposed of by such holder pursuant to such
registration.
8.5. REPORTS UNDER EXCHANGE ACT. In order to provide to the holders of
Warrant Shares the benefits of Rule 144 and any other rule or regulation of
the Commission that may at any time permit any such holder to sell
securities of the Company to the public without registration, and in order
to make it possible for the holders of Warrant Shares to
- 25 -
register the sale of the Registrable Securities pursuant to a registration
on Form S-3 if the Company is then otherwise eligible to use such Form, the
Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144;
(b) take such action, including the registration of
its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the holders of Warrant Shares to utilize
Form S-3 for the resale of their Registrable Securities
(ignoring, for this purpose, the provisions of Items I.A.5 and
I.B.3 of the General Instructions thereto);
(c) file with the Commission in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(d) furnish to any holder of Warrant Shares, so
long as the holder owns any Registrable Securities, forthwith
upon request (i) a written statement by the Company that it
has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, or that it qualifies as a
registrant whose securities may be resold in a secondary
offering pursuant to Form S-3; (ii) a copy of the most recent
annual or quarterly report of the Company filed with the
Commission and such other reports and documents so filed by
the Company; and (iii) such other information as may be
reasonably requested in availing any holder of Shares any rule
or regulation of the Commission which permits the selling of
any such securities without registration or pursuant to such
form.
Section 9. DEFINITIONS. For the purposes of this Agreement, the following
terms have the meanings below:
"ADDITIONAL COMMON SHARES" shall mean, subject to Section 7.4.8
hereof, all shares of Common Stock (including treasury shares) issued or
sold (or, pursuant to Section 7.4.4 or 7.4.5 hereof, deemed to be issued)
by the Company after the date hereof, whether or not subsequently
reacquired or retired by the Company, other than (i) shares of Common Stock
issued or issuable upon conversion, exercise or exchange of the Warrants;
and (ii) Excluded Issuances.
"AFFILIATE" shall mean, with respect to the Company or any of its
Subsidiaries (or any other specified Person), any other Person which,
directly or indirectly controls or is controlled by or is under direct or
indirect common control with the Company or such Subsidiary (or such
specified Person), and, without limiting the generality of the foregoing,
shall include (a) any other Person which beneficially owns or holds 10% of
more of any class of voting securities of such Person or 10% or more of the
equity interest in such Person, (b) any other Person of which such Person
beneficially owns or holds 10% or more of any class of voting securities or
in which such Person beneficially owns or holds 10% or more of the equity
interest in such Person and (c) any director or
- 26 -
executive officer of such Person. For the purposes of this definition, the
term "control" (including, with correlative meanings, the terms "controlled
by" and "under common control with"), as used with respect 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 or by contract or otherwise.
"AGREEMENT" shall have the meaning set forth in the first paragraph of
this Agreement.
"ANTIDILUTION PRICE" shall have the meaning set forth in Section 7.4.2
hereof.
"BOARD" shall mean the Board of Directors of the Company.
"BUSINESS DAY" shall mean any day, excluding Saturday, Sunday and any
day which shall be in New York, New York or Boston,
Massachusetts a legal
holiday or a day on which banking institutions are authorized by law or
other governmental actions to close.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMMON STOCK" shall mean the Company's common stock, par value $0.001
per share.
"COMPANY" shall have the meaning set forth in the first paragraph of
this Agreement.
"COVERED PERSON" shall have the meaning set forth in Section 8.4.1
hereof.
"CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness,
shares of stock (other than shares of Common Stock) or other securities,
including warrants, directly or indirectly convertible into or exchangeable
for shares of Common Stock.
"CURRENT MARKET PRICE" shall mean on any date specified herein, the
average daily Market Price during the period of the most recent 10 days,
ending two trading days immediately preceding such date, on which the
national securities exchanges were open for trading, except that if no
Common Stock is then listed or admitted to trading on any national
securities exchange or quoted in the over-the-counter market, the Current
Market Price shall be the Market Price on such date.
"DEPOSITORY" shall have the meaning set forth in Section 2 hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as in
effect from time to time.
"EXCHANGE AGREEMENT" shall have the meaning set forth in the second
paragraph hereof.
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"EXCLUDED ISSUANCE" shall mean the issuance of shares of Common Stock
(or options exercisable therefor) to officers, directors, and employees of
the Company, which shares are either (a) currently subject to the Company's
stock option plan or (b) any shares issuable upon the exercise of stock
options granted pursuant to any other option plan approved by the Company's
board of directors.
"EXERCISE PRICE" shall have the meaning set forth in Section 7.4.1
hereof.
"EXPIRATION DATE" shall mean 5:00 P.M. Boston time on June 18, 2007.
"FAIR MARKET VALUE" shall mean, as of any date, as to any share of
Common Stock, the Board's good faith determination of the fair value of
such shares as of the applicable reference date.
"FILING DATE" shall have the meaning set forth in Section 7.4.10
hereof.
"GLOBAL WARRANT" Shall have the meaning set froth in Section 2 hereof.
"INDEMNITEE" shall have the meaning set forth in Section 8.4.3 hereof.
"INITIAL EXERCISE PRICE" shall have the meaning set forth in the
second paragraph of this Agreement.
"INITIATING HOLDERS" shall have the meaning set forth in Section 8.1.1
hereof.
"MAJORITY HOLDERS" shall mean, as of any date, the holders of a
majority of the Warrant Shares outstanding on such date.
"MAJORITY PARTICIPATING HOLDERS" shall have the same meaning set forth
in Section 8.1.2 hereof.
"MAJORITY WARRANTHOLDERS" shall mean at any time holders of more than
50% of the Warrants or, if the Warrants have been exercised, the Warrant
Shares.
"MARKET PRICE" shall mean on any date specified herein, the amount per
share of Common Stock equal to (a) the last sale price of Common Stock,
regular way, on such date or, if no such sale takes place on such date, the
average of the closing bid and asked prices thereof on such date, in each
case as officially reported on the principal national securities exchange
on which Common Stock is then listed or admitted to trading, or (b) if
Common Stock is not then listed or admitted to trading on any national
securities exchange but is designated as a national market system security
by the NASD, the last trading price of Common Stock on such date, or (c) if
there shall have been no trading on such date or if Common Stock is not so
designated, the average of the closing bid and asked prices of Common Stock
on such date as shown by the NASD automated quotation system, or if
applicable, the OTCBB, or (d) if the Common Stock is not then listed or
admitted to trading on any national exchange or quoted in the
over-the-counter market, the Market Price thereof determined by good faith
mutual agreement of the Company and the Majority Warrantholders. If, in the
case of subsection (d), the Company and the
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Majority Warrantholders are unable to agree on the value of such Common
Stock within 10 business days, the Market Price shall be determined in
accordance with the following appraisal process:
Within the following five business days, each of the Company and the
Majority Warrantholders shall select and retain a firm of recognized
expertise in the valuation of business to perform a valuation of the Market
Price. Such firms shall then value the shares of the Common Stock, on a
going concern basis, without regard to any minority, marketability or other
discount resulting from consideration of a minority interest, the Company's
status as a closely held corporation or the existence of any put or call
rights. The Company shall provide to both valuation firms any information
reasonably requested by either such firm in connection with its valuation.
Each such firm shall deliver its valuation report to the Company and the
holder within 20 days after receiving all requested information from the
Company. If the greater of the valuations of a share of the Common Stock is
no more than 110% of the lesser of such valuations, the Market Price shall
be deemed to be the average of the two valuations. If the greater of such
valuations exceeds 110% of the lesser of such valuations, the two valuation
firms shall select a third mutually acceptable valuation firm within five
business days of such determination. Such third valuation firm shall be
directed to provide, within 15 business days, its valuation report, and the
valuation determined by the first two valuation firms that is closest to
the valuation determined by the third valuation firm shall be the Market
Price as of the reference date. The Company shall bear all costs and
expenses of this appraisal process.
"120 DAY DEADLINE" shall have the meaning set forth in Section 7.4.11
hereof.
"OPTIONS" shall mean options, warrants or other rights to subscribe
for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
"OTHER SECURITIES" shall mean any stock (other than Common Stock) and
other securities of the Company or any other Person which the holders of
the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 6 hereof or otherwise.
"PERSON" shall mean an individual, a corporation, a partnership, a
limited liability company, a trust, an unincorporated organization or a
government organization or an agency or political subdivision thereof.
"PHYSICAL WARRANT" shall have the meaning set forth in Section 2
hereof.
"PUBLIC OFFERING" shall mean a public offering and sale of Common
Stock for cash pursuant to an effective registration statement under the
Securities Act.
"QUALIFIED INSTITUTIONAL BUYER" shall have the meaning set forth in
Section 6.1 hereof.
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"REGISTRABLE SECURITIES" shall mean the Warrant Shares and all shares
of Common Stock directly or indirectly issued or issuable with respect to
the Warrant Shares by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or
other reorganization; PROVIDED, HOWEVER, that shares of Common Stock which
are Registrable Shares shall cease to be Registrable Shares (i) upon any
sale pursuant to a registration statement or Rule 144 under the Securities
Act or (ii) at such time as they become eligible for sale pursuant to Rule
144(k) under the Securities Act.
"RULE 144" shall mean Rule 144 under the Securities Act (or any
successor Rule).
"RULE 145 TRANSACTION" shall mean a registration on Form S-4 pursuant
to Rule 145 of the Securities Act (or any successor Form or provision, as
applicable).
"SECURITIES" shall mean any debt or equity securities of the Company,
whether now or hereafter authorized, and any instrument convertible into or
exchangeable for Securities or a Security. "SECURITY" shall mean one of the
Securities.
"SECURITIES ACT" shall mean the Securities Act of 1933, as in effect
from time to time.
"STOCK" shall include any and all shares, interests or other
equivalents (however designated) of, or participants in, the capital stock
of a corporation of any class.
"SUBSIDIARY" shall mean, for any Person, (i) a corporation a majority
of whose voting stock is at the time, directly or indirectly, owned by such
Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person, (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if such Person or
its Subsidiary is entitled to receive more than 50% of the assets of such
partnership upon its dissolution, (iii) a limited liability company, a
majority of whose membership interests is, at the time, directly or
indirectly owned by such Person or with respect to which such Person has a
right, under any scenario, to receive 50% or more of the distributions of
the assets of such limited liability company upon its dissolution, or (iv)
any other Person (other than a corporation or partnership) in which such
Person, a Subsidiary of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (a) at least a majority ownership interest or
(b) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"WARRANT AGENT" shall have the meaning set forth in the first
paragraph of this Agreement.
"WARRANT CERTIFICATES" shall have the meaning set forth in Section 2
hereof.
"WARRANT REGISTER" shall have the meaning set forth in Section 4
hereof.
"WARRANT SHARE CERTIFICATES" shall have the meaning set forth in
Section 2 hereof.
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"WARRANT SHARES" shall mean the shares received or to be received upon
exercise, conversion or exchange of the Warrants.
"WARRANTS" shall mean any warrants to purchase shares of Common Stock
issued hereunder or pursuant to the Exchange Agreement.
"WARRANTHOLDERS" shall mean the holders of the Warrants from time to
time, together with any permitted transferees of such holders who
subsequently acquire Warrants.
Section 10. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; PROVIDED, HOWEVER, that the Company shall not be required to pay
any tax or governmental charge which may be payable in respect of any transfer
involved in the issue of any Warrant Certificates or any Warrant Share
Certificates in a name other than that of the registered holder of a Warrant
Share Certificate or a Warrant Certificate surrendered upon the exercise of a
Warrant, and the Company shall not be required to issue or deliver such Warrant
Certificates or Warrant Share Certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or charge or shall have established to the satisfaction of the Company
that such tax or charge has been paid. The Warrant Agent shall have no duty or
obligation to take any action under any Section of this Agreement which requires
the payment by a Warrantholder of applicable taxes and governmental charges
unless and until the Warrant Agent is satisfied that all such taxes and/or
charges have been paid.
Section 11. MUTILATED OR MISSING WARRANT CERTIFICATES AND WARRANT SHARE
CERTIFICATES. In case any of the Warrant Certificates shall be mutilated, lost,
stolen or destroyed, the Company, at its expense, shall issue and the Warrant
Agent shall countersign, in exchange and substitution for and upon cancellation
of the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon receipt
of evidence reasonably satisfactory to the Company and the Warrant Agent of such
loss, theft or destruction of such Warrant Certificate and indemnity, if
requested, satisfactory to the Company and the Warrant Agent.
Section 12. FRACTIONAL INTERESTS.
(a) The Company shall not be required to issue fractional Warrant Shares
on the exercise of Warrants or otherwise. If more than one Warrant shall be
presented for exercise in full at the same time by the same holder, the number
of full Warrant Shares which shall be issuable upon the exercise thereof shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
on exercise of the Warrants so presented. If any fraction of a Warrant Share
would, except for the provisions of this Section 12, be issuable on the exercise
of any Warrants (or specified portion thereof), the Company shall pay an amount
in cash equal to the Current Market Price of such fractional Warrant Share as of
the day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction.
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(b) Warrants may be issued in fractional interests. Holders of fractional
interests in Warrants will be entitled to purchase a number of Warrant Shares
equal to the product obtained by multiplying the number of Warrant Shares
issuable with respect to a full Warrant multiplied by the fractional interest
owned by such holder in the Warrant.
(c) Whenever a payment for fractional Warrant Shares is to be made by the
Warrant Agent, the Company shall (i) promptly prepare and deliver to the Warrant
Agent a certificate setting forth in reasonable detail the facts related to such
payment and the prices and/or formulas utilized in calculating such payments,
and (ii) provide sufficient monies to the Warrant Agent in the form of fully
collected funds to make such payments. The Warrant Agent shall be fully
protected in relying upon such a certificate and shall have no duty with respect
to, and shall not be deemed to have knowledge of any payment for fractional
Warrant Shares under any Section of this Agreement relating to the payment of
fractional Warrant Shares unless and until the Warrant Agent shall have received
such a certificate and sufficient monies.
Section 13. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT. Any
person into which the Warrant Agent may be merged or with which it may be
consolidated, or any person resulting from any merger or consolidation to which
the Warrant Agent shall be a party, or any person succeeding to substantially
all of the business of the Warrant Agent (including the administration of this
Agreement), shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such person would be eligible for appointment as a
successor warrant agent under the provisions of Section 15 hereof. In case at
the time such successor to the Warrant Agent shall succeed to the agency created
by this Agreement, and in case at that time any of the Warrant Certificates
shall have been countersigned but not delivered, any such successor to the
Warrant Agent may adopt the countersignature of the original Warrant Agent; and
in case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor to the Warrant Agent; and in all such cases such Warrant
Certificates shall have the full force and effect provided in the Warrant
Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
Section 14. WARRANT AGENT. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement (and no implied duties or obligations
shall be read into this Agreement against the Warrant Agent) upon the following
terms and conditions, by all of which the Company and the Warrantholders, by
their acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates shall
be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness
- 32 -
of any of the same except such as describe the Warrant Agent or action taken or
to be taken by it. The Warrant Agent assumes no responsibility with respect to
the distribution of the Warrant Certificates and the Warrant Share Certificates
except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel of its own
selection (who may be counsel for the Company) and the Warrant Agent shall incur
no liability or responsibility to the Company or to any Warrantholder in respect
of any action taken, suffered or omitted to be taken by it hereunder in
accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any Warrantholder for any action taken in reliance on any Warrant
Certificate, certificate of shares, notice, resolution, waiver, consent, order,
certificate, or other paper, document or instrument (whether in its original or
facsimile form) believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(e) The Company agrees (i) to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent (including fees and
expenses of its counsel) and to reimburse the Warrant Agent for all expenses,
taxes and governmental charges and other charges and disbursements of any kind
and nature incurred by the Warrant Agent in the preparation, delivery,
execution, administration and amendment of this Agreement and the exercise and
performance of its duties hereunder and (ii) to indemnify the Warrant Agent (and
any predecessor Warrant Agent) and save it harmless against any and all claims
(whether asserted by the Company, a holder or any other person), damages,
losses, fines, penalties, settlements, expenses (including taxes other than
taxes based on the income of the Warrant Agent), liabilities, including
judgments, costs and counsel fees and expenses, for any action taken, suffered
or omitted to be taken by the Warrant Agent in connection with the execution of
this Agreement and the acceptance and administration of this Agreement, except
as a result of its gross negligence or willful misconduct (each as finally
determined by a court of competent jurisdiction). The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company. The provisions of this Section 14 shall survive the expiration of the
Warrants, the termination of this Agreement and the resignation or removal of
the Warrant Agent.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered Warrantholders shall
furnish the Warrant Agent with reasonable security and indemnity satisfactory to
it for any costs and expenses which may be incurred, but this provision shall
not limit the power of the Warrant Agent to take such action as it may consider
proper, whether with or without any such security or indemnity. All rights of
action under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrant Certificates or
Warrant Share Certificates or the production thereof at any trial or other
proceeding relative thereto, and any such action, suit or proceeding instituted
by the Warrant Agent shall be brought in its name as Warrant Agent and any
recovery
- 33 -
of judgment shall be for the ratable benefit of the registered holders of the
Warrants, as their respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, affiliate, director, officer
or employee of it, may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not 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.
(h) The Warrant Agent shall act hereunder solely as agent for the Company,
and its duties shall be determined solely by the provisions hereof. The Warrant
Agent shall not be liable for any action taken, suffered or omitted to be taken
by it in connection with this Agreement except for its own gross negligence or
willful misconduct, each as finally determined by a court of competent
jurisdiction. Anything to the contrary notwithstanding, in no event shall the
Warrant Agent be liable for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Warrant Agent has been advised of the likelihood of
such loss or damage.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any Warrantholder to make or cause to be made any adjustment
of the Exercise Price or number of the Warrant Shares or other securities or
property deliverable as provided in this Agreement, or to determine whether any
facts exist which may require any of such adjustments, or with respect to the
nature or extent of any such adjustments, when made, or with respect to the
method employed in making the same. The Warrant Agent shall not be accountable
with respect to the validity or value or the kind or amount of any Warrant
Shares or of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant or with respect to whether any such
Warrant Shares or other securities will when issued be validly issued and fully
paid and nonassessable, and makes no representation with respect thereto.
(j) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Warrant Agent shall have any liability to any Warrantholder
or other person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining performance of such
obligation; provided that the Company must use its reasonable best efforts to
have any such order, decree or ruling lifted or otherwise overturned as soon as
possible.
(k) With respect to the exercise by a Warrantholder of any Warrants in
accordance with the terms of this Agreement and with respect to any other
actions or omissions that may arise as a result of or under this Agreement, to
the extent the Warrant Agent has any questions or uncertainties as to what
actions it should take with respect thereto, the Warrant Agent may seek written
direction from the Company as to what course of action the Warrant Agent should
take and the Warrant Agent shall be fully protected and incur no liability in
refraining from taking any action thereunder unless and until the Warrant Agent
has received such written direction
- 34 -
from the Company. Any application by the Warrant Agent for such written
instructions from the Company may, at the option of the Warrant Agent, set forth
in writing any action proposed to be taken or omitted by the Warrant Agent under
this Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective. The Warrant Agent shall not be liable for any
action taken by, or omission of, the Warrant Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Warrant Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(l) No provision of this Agreement shall require the Warrant Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(m) Whenever in the performance of its duties under this Agreement the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting to
take any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the President, a
Vice President, the Treasurer or the Secretary of the Company and delivered to
the Warrant Agent; and such certificate shall be full authorization and
protection to the Warrant Agent for any action taken or suffered by it under the
provisions of this Agreement in reliance upon such certificate.
(n) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the President, a Vice President, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and such instructions shall be full authorization and
protection to the Warrant Agent, and the Warrant Agent shall not be liable for
any action taken, suffered or omitted to be taken by it in accordance with
instructions of any such officer.
(o) The Warrant Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Warrant Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence or willful misconduct (each as
finally determined by a court of competent jurisdiction) in the selection and
continued employment thereof.
Section 15. CHANGE OF WARRANT AGENT. The Warrant Agent or any successor
Warrant Agent may resign and be discharged from its duties under this Agreement
upon 60 days' notice in writing mailed to the Company. Upon such resignation or
if the Warrant Agent shall become incapable of acting as Warrant Agent, the
Company shall appoint a successor to such Warrant Agent. If the Company shall
fail to make such appointment within a period of 60 days after it has
- 35 -
been notified in writing of such resignation or incapacity by the Warrant Agent
or by the registered holder of a Warrant Certificate or a Warrant Share
Certificate, then the registered holder of any Warrant Certificate or Warrant
Share Certificate may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to such Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. The Majority
Warrantholders shall be entitled at any time to remove the Warrant Agent and
appoint a successor to such Warrant Agent. Such successor to the Warrant Agent
must be approved by the Company, which shall not unreasonably withhold such
approval. After appointment the successor to the Warrant Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent upon payment of all fees and expenses due it and its agents and
counsel shall deliver and transfer to the successor to the Warrant Agent any
property at the time held by it hereunder and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Failure to give
any notice provided for in this Section 15, however, or any defect therein,
shall not affect the legality or validity of the appointment of a successor to
the Warrant Agent.
Section 16. NOTICES TO COMPANY AND WARRANT AGENT. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if delivered by facsimile transmission
(provided confirmation of receipt is received immediately thereafter) or when
received, if deposited in the mail, first class or registered, postage prepaid,
addressed (until another address is filed in writing by the Company with the
Warrant Agent), as follows:
iBasis, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
In case the Company shall fail to maintain such office or agency or shall
fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
office of the Warrant Agent designated for such purpose.
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if delivered by facsimile transmission (provided
confirmation of receipt is received immediately
- 36 -
thereafter) or deposited in the mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) to the Warrant Agent as follows:
U.S. Bank National Association
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and
Ropes & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Section 17. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement or the Warrant
Certificates without the approval of any Warrantholders in order to cure any
ambiguity or to correct or supplement any provision contained herein or therein
which may be defective or inconsistent with any other provision herein, or to
make any other revisions in regard to matters or questions arising hereunder
which the Company and the Warrant Agent may deem necessary or desirable and
which shall not in any way adversely affect the interests of the Warrantholders.
Any supplement or amendment not covered by the preceding sentence shall require
the consent of the Majority Warrantholders, the Company and the Warrant Agent.
Prior to executing any supplement or amendment, the Warrant Agent shall be
entitled to rely on an officer's certificate of the Company to the effect that
such amendment or supplement complies with the terms of this Section 17.
Notwithstanding anything in this Agreement to the contrary, the prior written
consent of the Warrant Agent must be obtained in connection with any supplement
or amendment that alters the rights or duties of the Warrant Agent.
Section 18. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
- 37 -
Section 19. SURVIVAL OF REGISTRATION RIGHTS PROVISIONS, WARRANT AGENT
PROVISIONS. The provisions of Sections 8 and 14 hereof shall survive the
exercise or expiration of the Warrants.
Section 20. GOVERNING LAW; SUBMISSION TO JURISDICTION: WAIVER OF JURY
TRIAL. This Agreement and each Warrant Certificates issued hereunder shall be
deemed to be a contract made under the laws of The Commonwealth of
Massachusetts
and for all purposes shall be governed by and construed in accordance with the
internal laws of said State, without regard to principles of conflicts of laws.
Each party hereto hereby submits to the nonexclusive jurisdiction of the United
States District Court for the District of
Massachusetts and of any
Massachusetts
state court sitting in Boston for purposes of all legal proceedings arising out
of or relating to this agreement or the transactions contemplated hereby. Each
party hereto irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH
PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT,
TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED
UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT
IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 20
CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN
ENTERING INTO THIS AGREEMENT. Any party hereto may file an original counterpart
or a copy of this Section 20 with any court as written evidence of the consent
of each party hereto to the waiver of its right to trial by jury.
Section 21. EXERCISE OF RIGHTS AND REMEDIES. No delay of or omission in the
exercise of any right, power or remedy accruing to any party as a result of any
breach or default by any other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed as a waiver of or acquiescence
in any such breach or default, or of any similar breach or default occurring
later; nor shall any such delay, omission or waiver of any single breach or
default be deemed a waiver of any other breach or default occurring before or
after that waiver.
Section 22. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person or corporation other than the Company, the
Warrant Agent and the Warrantholders (including any holder of a beneficial
interest in any Warrant) any legal or equitable right, remedy or claim under
this Agreement, and this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrant Agent and the Warrantholders (including any holder
of a beneficial interest in any Warrant).
- 38 -
Section 23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[SIGNATURE PAGE FOLLOWS]
- 39 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
iBASIS, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Warrant Agent
By:/s/ ▇▇▇▇. ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trust Officer
Exhibit A
FORM OF WARRANT CERTIFICATE
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE 2004
WARRANT
AND REGISTRATION RIGHTS AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE 2004
WARRANT AND REGISTRATION RIGHTS AGREEMENT,
AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE 2004
WARRANT AND
REGISTRATION RIGHTS AGREEMENT. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(C) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE SHARES OF STOCK PURCHASABLE UPON EXERCISE OF THE WARRANTS REPRESENTED
BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE 2004
WARRANT AND REGISTRATION RIGHTS
AGREEMENT AND THE SECURITIES
EXCHANGE AGREEMENT TO WHICH THE ISSUER AND THE WARRANT AGENT ARE PARTY, A COPY
OF WHICH MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE ISSUER OR OBTAINED FROM
THE ISSUER WITHOUT CHARGE.
- 2 -
iBASIS, INC.
No. W-4 5,176,065 Warrants
CUSIP NO: 450732 12 8
WARRANT CERTIFICATE
This Warrant Certificate certifies that CEDE & Co., or its registered
assigns, is the registered holder of warrants expiring June 18, 2007 (the
"Warrants") to purchase shares of Common Stock, par value $0.001 per share (the
"Common Stock"), of iBasis, Inc., a Delaware Corporation (the "Company"). Each
Warrant entitles the holder upon exercise to receive from the Company on or
after the date of issuance of such Warrant and on or before 5:00 P.M. Boston
Time on June 18, 2007 (the "Expiration Date"), one fully paid and nonassessable
share of Common Stock (a "Warrant Share") at the initial exercise price (the
"Exercise Price") of $1.85 payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office or agency of the Warrant Agent, but only subject to the
conditions set forth herein and in the 2004
Warrant and Registration Rights
Agreement referred to on the reverse hereof. The Exercise Price and number of
Warrant Shares issuable upon exercise of the Warrants are subject to adjustment
upon the occurrence of certain events set forth in the 2004
Warrant and
Registration Rights Agreement.
No Warrant may be exercised after the Expiration Date, and to the extent
not exercised by such time such warrants shall become void.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the 2004 Warrant and Registration Rights
Agreement.
This Warrant Certificate, and all actions, claims and conduct relating
thereto, shall be governed by and construed in accordance with the laws of The
Commonwealth of
Massachusetts, without regard to the principles of conflicts of
laws.
- 3 -
IN WITNESS WHEREOF, iBasis, Inc. has caused this Warrant Certificate to be
duly executed.
Dated: June 18, 2004
iBASIS, INC.
By:
-------------------------
Name:
Title:
WARRANT AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Warrants described in the within-named 2004 Warrant and
Registration Rights Agreement.
U.S. BANK NATIONAL ASSOCIATION, as Warrant Agent
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
As Authenticating Agent
(if different from Warrant Agent)
- 4 -
iBASIS, INC.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring June 18, 2007, entitling the holder on
exercise to receive shares of Common Stock and are issued or to be issued
pursuant to a 2004 Warrant and Registration Rights Agreement dated as of June
18, 2007 (the "2004 Warrant and Registration Rights Agreement"), duly executed
and delivered by the Company to U.S. Bank National Association, as warrant agent
(the "Warrant Agent"), which 2004 Warrant and Registration Rights Agreement is
hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the holders (the words "holders" or "holder" meaning the registered holders
or registered holder) of the Warrants. A copy of the 2004 Warrant and
Registration Rights Agreement may be obtained by the holder hereof upon written
request to the Company. Capitalized terms used herein without being otherwise
defined shall have the meaning ascribed to them in the 2004 Warrant and
Registration Rights Agreement.
Each Warrant may be exercised at any time on or after the date of issuance
of such Warrant and on or before the Expiration Date. The holder of Warrants
evidenced by this Warrant Certificate may exercise them as follows:
(I) The Warrants evidenced by this Warrant Certificate may be
exercised by the holder hereof, in whole or in part, during normal business
hours on any Business Day on or prior to the Expiration Date, by surrender
of this Warrant Certificate to the Company at its principal office,
accompanied by a subscription substantially in the form attached to this
Warrant Certificate duly executed by such holder and accompanied by (a)
wire transfer of immediately available funds or (b) certified or official
bank check payable to the order of the Company, in each case in the amount
obtained by multiplying (i) the number of shares of Common Stock (without
giving effect to any adjustment thereof pursuant to the provisions of the
2004 Warrant and Registration Rights Agreement) for which the Warrant
evidenced by this Warrant Certificate is then being exercised, as
designated in such subscription, by (ii) the Initial Exercise Price.
Thereupon, such holder shall be entitled to receive the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock (or Other Securities) determined as provided in Sections 6 and 7 of
the 2004 Warrant and Registration Rights Agreement.
(II) The Warrants evidenced by this Warrant Certificate may be
converted by the holder hereof, in whole or in part, into shares of Common
Stock (or Other Securities), during normal business hours on any Business
Day on or prior to the Expiration Date, by surrender of this Warrant
Certificate to the Company at its principal office, accompanied by a
conversion notice substantially in the form attached to this Warrant
Certificate duly executed by such holder. Thereupon, such holder shall be
entitled to receive a number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock (or Other Securities) equal to:
(a) the excess of
- 5 -
(i) (x) the number of shares of Common Stock (or Other Securities)
determined as provided in Sections 6 and 7 of the 2004 Warrant and
Registration Rights Agreement which such holder would be entitled to
receive upon exercise of the Warrants represented by this Warrant
Certificate for the number of shares of Common Stock designated in such
conversion notice (without giving effect to any adjustment thereof pursuant
to Sections 6 or 7 of the 2004 Warrant and Registration Rights Agreement)
MULTIPLIED BY (y) the Current Market Price of each such share of Common
Stock (or such Other Securities) so receivable upon such exercise
OVER
(ii) (x) the number of shares of Common Stock (without giving effect
to any adjustment thereof pursuant to Sections 6 or 7 of the 2004 Warrant
and Registration Rights Agreement or other provisions thereof) which such
holder would be entitled to receive upon exercise of the Warrants
represented by this Warrant Certificate for the number of shares of Common
Stock designated in such conversion notice (without giving effect to any
adjustment thereof pursuant to Sections 6 or 7 of the 2004 Warrant and
Registration Rights Agreement) MULTIPLIED BY (y) the Initial Exercise Price
DIVIDED BY
(b) such Current Market Price of each such share of Common Stock (or Other
Securities).
In the event that upon any exercise of Warrants evidenced hereby the number
of Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or its assignee a new Warrant
Certificate of like tenor, dated the date hereof and calling in the aggregate on
the face or faces thereof for the number of Warrants (without giving effect to
any adjustment thereof pursuant to the terms of the 2004 Warrant and
Registration Rights Agreement) to the number of Warrants called for on the face
of this Warrant Certificate minus the number of Warrants designated by the
holder upon such exercise.
Upon the exercise of the Warrants evidenced by this Warrant Certificate as
provided above, the Company may elect either (i) to comply with the requirements
of Section 7.1.3 of the 2004 Warrant and Registration Rights Agreement with
respect to the issuance of shares of Common Stock in connection with such
exercise or (ii) upon written notice to the holder not more than two Business
Days following the date of exercise, to pay to the holder an amount equal to the
Market Price for each share of Common Stock issuable upon such exercise (the
"Cash Close Out") in lieu of issuing such Common Stock. Any Cash Close Out made
in accordance with this paragraph shall be paid within two Business Days of the
exercise of the Warrants evidenced by this Warrant Certificate by (a) wire
transfer of immediately available funds or (b) certified or official bank check
payable to the order of the holder hereof.
The Company will not be required to issue fractional shares of Common Stock
upon exercise of the Warrants or distribute share certificates that evidence
fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
there may be paid to the registered Holder of this Warrant Certificate at the
time such Warrant Certificate is exercised an amount in cash equal to the same
fraction of the Current Market Value per share of Common
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Stock on the Business Day immediately proceeding the date this Warrant
Certificate is surrendered for exercise.
The holders of the Warrants are entitled to certain registration rights
with respect to the Common Stock purchasable upon exercise thereof. Such
registration rights are set forth in Section 8 of the 2004 Warrant and
Registration Rights Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent
by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the 2004 Warrant and Registration Rights
Agreement, but without payment of any service charge, for another Warrant
Certificate or Warrant Certificates of like tenor evidencing in the aggregate a
like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the 2004 Warrant and
Registration Rights Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitled any holder hereof to any rights
of a stockholder of the Company.
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FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To iBasis, Inc.:
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________(1) shares of the
Common Stock and herewith makes payment of $_____ in accordance with the terms
hereof, and requests that the certificates for such shares be issued in the name
of, and delivered to _______________, whose address is as follows:
Dated:
---------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
---------------------------------------------
(Street Address)
---------------------------------------------
(City) (State) (Zip Code)
----------
(1) Insert here the number of shares called for on the face of this Warrant
Certificate (or, in the case of a partial exercise, the portion thereof as to
which the Warrant evidenced by this Warrant Certificate is being exercised), in
either case without making any adjustment for any stock or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant
evidenced by this Warrant Certificate, may be delivered upon exercise. In the
case of a partial exercise, a new Warrant Certificate will be issued and
delivered, representing the unexercised portion of the Warrant evidenced by this
Warrant Certificate, to the holder surrendering the Warrant Certificate.
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FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the Warrants
evidenced by this Warrant Certificate hereby sells, assigns and transfers unto
__________________the right represented by such Warrant Certificate to purchase
_______(2) shares of Common Stock of iBasis, Inc. to which such Warrant
Certificate relates, and appoints _______________Attorney to make such transfer
on the books of iBasis, Inc. maintained for such purpose, with full power of
substitution in the premises.
Dated:
---------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
---------------------------------------------
(Street Address)
---------------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
--------------------------
Name:
----------
(2) Insert here the number of shares called for on the face of this Warrant
Certificate (or, in the case of a partial transfer, the portion thereof as to
which the Warrant evidenced by this Warrant Certificate is being transferred),
in either case without making any adjustment for any stock or other securities
or property or cash which, pursuant to the adjustment provisions of the Warrant
evidenced by this Warrant Certificate, may be delivered upon exercise. In the
case of a partial transfer, a new Warrant Certificate will be issued and
delivered, representing the non-transferred portion of the Warrants evidenced by
this Warrant Certificate, to the holder transferring the Warrants.
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FORM OF CONVERSION NOTICE
To iBasis, Inc.:
The undersigned registered holder of the Warrants evidenced by this Warrant
Certificate hereby irrevocably converts such Warrants with respect to
________(3) shares of the Common Stock which such holder would be entitled to
receive upon the exercise hereof, and requests that the certificates for such
shares be issued in the name of, and delivered to _________________, whose
address is as follows:
Dated:
---------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
---------------------------------------------
(Street Address)
---------------------------------------------
(City) (State) (Zip Code)
----------
(3) Insert here the number of shares called for on the face of this Warrant
Certificate (or, in the case of a partial conversion, the portion thereof as to
which the Warrants evidenced by this Warrant Certificate are being converted),
in either case without making any adjustment for additional shares of Common
Stock or any other stock or other securities or property or cash which, pursuant
to the adjustment provisions of the Warrant evidenced by this Warrant
Certificate, may be delivered upon exercise. In the case of a partial
conversion, a new Warrant Certificate will be issued and delivered, representing
the unconverted portion of the Warrants, to the holder surrendering this Warrant
Certificate.
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SCHEDULE OF EXCHANGES
The following exchanges of a part of this Global Warrant for Physical Warrants
(or of Physical Warrants for an interest in the Global Warrant) have been made:
Number of
Amount of Amount of Warrants of this
decrease in increase in Global Warrant Signature of
Number of Number of following such authorized
Date of Warrants this Warrants of this decrease (or officer of
Exchange Global Warrant Global Warrant increase) Warrant Agent
------------------ -------------------- --------------------- ------------------ ------------------
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Exhibit B
FORM OF COMMON STOCK CERTIFICATE
[Attached]
Exhibit C
FORM OF QIB CERTIFICATION
[Attached]