DATA TRANSMISSION NETWORK CORPORATION
COMMON STOCK PURCHASE WARRANT
Expiring December 11, 2005
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TABLE OF CONTENTS
Page
1. Exercise of Warrant ....................................... 1
1.1. Manner of Exercise ............................... 1
1.2. When Exercise Deemed Effected .................... 2
1.3. Delivery of Stock Certificates, Etc. ............. 2
1.4. Company to Reaffirm Obligations .................. 3
2. Adjustments ............................................... 3
2.1. Number of Shares; Warrant Price ................... 3
2.2. Adjustment of Warrant Price ....................... 3
2.2.1. Issuance of Additional Shares of Common Stock.. 3
2.2.2. Extraordinary Dividends and Distributions .... 4
2.3. Treatment of Options and Convertible Securities ....... 4
2.4. Treatment of Stock Dividends, Stock Splits, Etc. ....... 7
2.5. Computation of Consideration .......................... 7
2.6. Adjustments for Combinations. Etc. .................... 8
2.7. Dilution in Case of Other Securities .................. 8
2.8. Minimum Adjustment of Warrant Price ................... 9
3. Consolidation, Merger, Sale of Assets, Reorganization, Etc. .... 9
3.1. General Provisions..................................... 9
3.2. Assumption of Obligations ............................. 11
4. Other Dilutive Events .................................... 11
5. No Dilution or Impairment ................................. 11
6. Accountants' Report as to Adjustments..................... 12
7. Notices of Corporate Action .............................. 12
8. Restrictions on Transfer .................................. 13
8.1. Restrictive Legends............................... 13
8.2. Notice of Proposed Transfer; Opinions of Counsel .. 13
8.3. Termination of Restrictions........................ 14
8.4 Holder's Representations and Warranties............ 14
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9. Registration Under Securities Act, Etc. .................... 15
9.1. Incidental Registration ............................ 15
9.2. Registration Procedures ........................... 17
9.3. Underwritten Offerings ............................ 21
9.3.1. Incidental Underwritten Offerings ........ 21
9.3.2. Holdback Agreements ....................... 21
9.4. Preparation; Reasonable Investigation ............. 22
9.5. Rights of Requesting Holders ........................ 22
9.6. Indemnification .................................... 22
9.7. Adjustments Affecting Registrable Securities ........ 25
9.8. Other Registration of Common Stock .................. 25
9.9. Nominees for Beneficial Owners ...................... 25
9.10. Rule 144 and Rule 144A .............................. 26
10. Availability of Information .................................. 26
11. Reservation of Stock. Etc. ................................... 26
12. Listing on Securities Exchange ............................... 26
13. Ownership, Transfer and Substitution of Warrants ............. 26
13.1. Ownership of Warrants ............................... 26
13.2. Transfer and Exchange of Warrants ................... 27
13.3. Replacement of Warrants ............................. 27
14. Definitions .................................................. 27
15. Remedies ..................................................... 32
16. No Rights or Liabilities as Stockholder ...................... 32
17. Notices ..................................................... 33
18. Expiration; Notice ........................................... 33
19. Miscellaneous ............................................... 33
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THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED
EXCEPT IN COMPLIANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT AND SUCH SHARES ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFERABILITY SET FORTH IN THIS WARRANT.
Common Stock Purchase Warrant
Expiring December 11, 2005
Omaha, Nebraska
December 11, 1998
DATA TRANSMISSION NETWORK CORPORATION, a Delaware corporation (the
"Company"), for value received, hereby certifies that ABRY Broadcast Partners
II, L.P., a Delaware limited partnership, or registered assigns, is entitled to
purchase from the Company 14,824 duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, par value $.001 per share, of the Company
(the "Common Stock") at the purchase price per share of $34.00, at any time or
from time to time prior to 3 P.M., New York City time, on December 11, 2005, all
subject to the terms, conditions and adjustments set forth below in this
Warrant.
This Warrant is one of the Common Stock Purchase Warrants issued in
connection with the Company's acquisition of all of the issued and outstanding
capital stock of Weather Services Corporation, a Massachusetts corporation
("WSC"), pursuant to the Agreement and Plan of Merger (the "Merger Agreement"),
dated as of November 12, 1998 between the Company, Merger Sub, WSC, and ABRY.
Certain capitalized terms used in this Warrant are defined in Section 14. If a
capitalized term used in this Warrant is not defined in Section 14, or elsewhere
in this Warrant, such term shall have the meaning given such term in the Merger
Agreement.
1. Exercise of Warrant.
1.1. Manner of Exercise.
(a) This Warrant may be exercised by the holder hereof, in whole or
in part, during normal business hours on any Business Day prior to the
expiration of this Warrant by surrender of this Warrant, with the form of
subscription at the end hereof (or a reasonable facsimile thereof) duly
executed by such holder, to the Company at its principal office (or, if
such exercise shall be in connection with an underwritten Public Offering
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of shares of Common Stock (or Other Securities) subject to this Warrant,
at the location at which the Company shall have agreed to deliver the
shares of Common Stock (or Other Securities) subject to such offering),
accompanied by payment, in cash or by certified or official bank check
payable to the order of the Company, in the amount obtained by multiplying
(a) the number of shares of Common Stock (without giving effect to any
adjustment therein) designated in such form of subscription by (b) the
Warrant Price, and such holder shall thereupon 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 2 through 4.
(b) Holder may elect in writing delivered to the Company as provided
above to receive, without payment of additional consideration, shares of
Common Stock equal to the value of this Warrant or any portion hereof by
the surrender of this Warrant or such portion to the Company at its
principal office. Thereupon, the Company shall issue to such holder such
number of fully paid and nonassessable shares of Common Stock as is
computed using the following formula:
X = Y (A-B)
A
where X = the number of shares to be issued to such holder pursuant to
this subsection 1.1(b).
Y = the number of shares covered by this Warrant in respect of
which the net issue election is made pursuant to this subsection
1.1(b).
A = the Market Price of one share of Common Stock as at the time
the net issue election is made pursuant to this subsection
1.1(b).
B = the Warrant Price in effect under this Warrant at the time the
net issue election is made pursuant to this subsection 1.1(b).
1.2. When Exercise Deemed Effected. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in Section 1.1, and at such time the person or persons in whose name or
names any certificate or certificates for shares of Common Stock (or Other
Securities) shall be issuable upon such exercise as provided in Section 1.3
shall be deemed to have become the holder or holders of record thereof.
1.3. Delivery of Stock Certificates, Etc. As soon as practicable after the
exercise of this Warrant, in whole or in part, and in any event within ten (10)
Business Days thereafter (unless such exercise shall be in connection with an
underwritten Public Offering of shares of Common Stock (or Other Securities)
subject to this Warrant, in which event concurrently with such exercise), the
Company at its expense (including the payment by it of any taxes (other than
transfer taxes) applicable to the Company) will cause to be issued in the name
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of and delivered to the holder hereof or, subject to Section 8, as such holder
(upon payment by such holder of any applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (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
Market Price per share of such Common Stock (or Other Securities) on the
Business Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant of like
tenor, calling in the aggregate on the face thereof for the number of
shares of Common Stock equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of this
Warrant minus the number of such shares designated by the holder upon such
exercise as provided in Section 1.1.
1.4. Company to Reaffirm Obligations. The Company will, at the time of or
at any time after each exercise of this Warrant, upon the request of the holder
hereof or of any shares of Common Stock (or Other Securities) issued upon such
exercise, acknowledge in writing its continuing obligation to afford to such
holder all rights (including, without limitation, any right of registration of
any shares of Common Stock (or Other Securities) issuable upon exercise of this
Warrant pursuant to Section 9) to which such holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
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.
2. Adjustments.
2.1. Number of Shares; Warrant Price. The number of shares of Common Stock
which the holder of this Warrant shall be entitled to receive upon each exercise
hereof shall be determined by multiplying the number of shares of Common Stock
which would otherwise (but for the provisions of this Section 2) be issuable
upon such exercise, as designated by the holder hereof pursuant to Section 1.1,
by a fraction of which (a) the numerator is $34.00 and (ii) the denominator is
the Warrant Price in effect on the date of such exercise. The "Warrant Price"
shall initially be $34.00 per share, and shall be adjusted and readjusted from
time to time as provided in this Section 2 and, as so adjusted or readjusted,
shall remain in effect until a further adjustment or readjustment thereof is
required by this Section 2.
2.2. Adjustment of Warrant Price.
2.2.1. Issuance of Additional Shares of Common Stock. In case the Company,
at any time or from time to time after December 11, 1998 (the "Initial Date"),
shall issue or sell Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 2.3 or 2.4)
without consideration or for a consideration per share less than the Base Price
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in effect, in each case, on the date of and immediately prior to such issue or
sale, then, and in each such case, subject to Section 2.8, such Warrant Price
shall be reduced, concurrently with such issue or sale, to a price (calculated
to the nearest .001 of a cent) determined by multiplying such Warrant Price by a
fraction,
(a) the numerator of which shall be (i) the number of shares of
Common Stock outstanding immediately prior to such issue or sale plus (ii)
the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such Additional Shares of
Common Stock so issued or sold would purchase at the Base Price, and
(b) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale,
provided that, for the purposes of this Section 2.2.1 (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
Section 2.3 or 2.4, such Additional Shares shall be deemed to be outstanding,
and (y) treasury shares shall not be deemed to be outstanding.
2.2.2. Extraordinary Dividends and Distributions. In case the Company at
any time or from time to time after the Initial Date shall declare, order, pay
or make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or property or
Options by way of dividend or spin-off, reclassification, recapitalization or
similar corporate rearrangement) on any Common Stock, other than (a) a dividend
payable in Additional Shares of Common Stock or in Options for Common Stock or
(b) a dividend payable in cash and declared out of the earned surplus of the
Company, then, and in each such case, subject to Section 2.8, the Warrant Price
in effect immediately prior to the close of business on the record date fixed
for the determination of holders of any class of securities entitled to receive
such dividend or distribution shall be reduced, effective as of the close of
business on such record date, to a price (calculated to the nearest .001 of a
cent) determined by multiplying such Warrant Price by a fraction,
(x) the numerator of which shall be the Current Market Price in
effect on such record date or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading, less the value of such dividend or distribution (as determined in
good faith by the Board of Directors of the Company) applicable to one
share of Common Stock, and
(y) the denominator of which shall be such Current Market Price.
2.3. Treatment of Options and Convertible Securities. In case the Company
at any time or from time to time after the Initial Date 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 Shares of Common
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Stock (as set forth in the instrument relating thereto, without regard to any
provisions contained therein for a subsequent adjustment of such number)
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 issued for purposes of Section 2.2 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 (or, if
the Common Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), provided that such Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section 2.5) of such shares would be less than
the Base Price in effect, in each case, on the date of and immediately prior to
such issue, sale, grant or assumption or immediately prior to the close of
business on such record date (or, if the Common Stock trades on an ex-dividend
basis, on the date prior to the commencement of ex-dividend trading), as the
case may be, and provided, further, that in any such case in which Additional
Shares of Common Stock are deemed to be issued,
(a) no further adjustment of the Warrant Price shall be made upon
the subsequent issue or sale of Additional Shares of Common Stock or
Convertible Securities upon the exercise of such Options or the conversion
or exchange of such Convertible Securities;
(b) if such 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
Additional Shares of Common Stock issuable, upon the exercise, conversion
or exchange thereof (by change of rate or otherwise), the Warrant Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement
of ex-dividend trading, as the case may be, 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) upon the expiration of any such Options or of the rights of
conversion or exchange under any such Convertible Securities which shall
not have been exercised (or upon purchase by the Company and cancellation
or retirement of any such Options which shall not have been exercised or
of any such Convertible Securities the rights of conversion or exchange
under which shall not have been exercised), the Warrant Price computed
upon the original issue, sale, grant or assumption thereof (or upon the
occurrence of the record date, or date prior to the commencement of
ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
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(x) in the case of options for Common Stock or of Convertible
Securities, the only Additional Shares of Common Stock issued or
sold were the Additional Shares of Common Stock, 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 (i) an amount equal to (A) the consideration
actually received by the Company for the issue, sale, grant or
assumption of all such options, whether or not exercised, plus (B)
the consideration actually received by the Company upon such
exercise, minus (C) the consideration paid by the Company for any
purchase of such Options which were not exercised, or (ii) an amount
equal to (A) the consideration actually received by the Company for
the issue, sale, grant or assumption of all such Convertible
Securities which were actually converted or exchanged, plus (B) the
additional consideration, if any, actually received by the Company
upon such conversion or exchange, minus (C) the consideration paid
by the Company for any purchase of such Convertible Securities the
rights of conversion or exchange under which were not exercised, and
(y) 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 Shares of Common Stock deemed to
have then been issued was an amount equal to (i) the consideration
actually received by the Company for the issue, sale, grant or
assumption of all such options, whether or not exercised, plus (ii)
the consideration deemed to have been received by the Company
(pursuant to Section 2.4) upon the issue or sale of the Convertible
Securities with respect to which such options were actually
exercised, minus (iii) the consideration paid by the Company for any
purchase of such Options which were not exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above shall
have the effect of increasing the Warrant Price by an amount in excess of
the amount of the adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Options or Convertible
Securities; and
(e) in the case of any such Options which expire by their terms not
more than 30 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment
shall be made in the manner provided in subdivision (c) above.
In case at any time after the Initial Date the Company shall be
required to increase the number of Additional Shares of Common Stock subject to
any Option or into which any Convertible Securities (other than the Warrants)
are convertible or exchangeable pursuant to the operation of anti-dilution
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provisions applicable thereto, such Additional Shares of Common Stock shall be
deemed to be issued for purposes of Section 2.2 as of the time of such increase.
2.4. Treatment of Stock Dividends, Stock Splits, Etc. In case the Company
at any time or from time to time after the Initial Date shall declare or pay any
dividend or other distribution on any class of stock of the Company payable in
Common Stock, 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 Common Stock), then, and in each such
case, Additional Shares of Common Stock 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.
2.5. Computation of Consideration. For the purposes of this Section 2:
(a) The consideration for the issue or sale of any Additional Shares
of Common Stock or for the issue, sale, grant or assumption of any Options
or Convertible Securities, irrespective of the accounting treatment of
such consideration, shall
(x) insofar as it consists of cash, be computed at the amount of
cash received by the Company, without deducting any expenses paid or
incurred by the Company or any commissions or compensation paid or
concessions or discounts allowed to underwriters, dealers or others
performing similar services and any accrued interest or dividends in
connection with such issue or sale,
(y) insofar as it consists of consideration (including
securities) other than cash, be computed at the fair value thereof
at the time of such issue or sale, as determined in good faith by
the Board of Directors of the Company, without deducting any
expenses paid or incurred by the Company for any commissions or
compensation paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services and any
accrued interest or dividends in connection with such issue or sale,
and
(z) in case Additional Shares of Common Stock are issued or sold
or Convertible Securities are issued, sold, granted or assumed
together with other stock or securities or other assets of the
Company for a consideration which covers both, be the proportion of
such consideration so received, computed as provided in subdivisions
(x) and (y) above, allocable to such Additional Shares of Common
Stock or Convertible Securities, as the case may be, all as
determined in good faith by the Board of Directors of the Company.
(b) All options issued, sold, granted or assumed together with other
stock or securities or other assets of the Company for a consideration
which covers both, all Additional Shares of Common Stock, Options or
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Convertible Securities issued in payment of any dividend or other
distribution on any class of stock of the Company and all Additional
Shares of Common Stock issued to 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 Common
Stock) shall be deemed to have been issued without consideration.
(c) Additional Shares of Common Stock deemed to have been issued for
consideration pursuant to Section 2.3, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration per
share determined by dividing
(x) the total amount, if any, received and receivable by the
Company as 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)
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 subdivision (a), by
(y) 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)
issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(d) Additional Shares of Common Stock issued or deemed to have been
issued pursuant to the operation of anti-dilution provisions applicable to
Convertible Securities (other than the Warrants), Options or other
securities of the Company (either as a result of the adjustments provided
for by the Warrants or otherwise) shall be deemed to have been issued
without consideration.
2.6. 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 Warrant Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.7. Dilution in Case of Other Securities. In case any Other Securities
shall be issued or sold or shall become subject to issue or sale upon the
conversion or exchange of any Common Stock (or Other Securities) of the Company
(or any issuer of Other Securities or any other Person referred to in Section 3)
or to subscription, purchase or other acquisition pursuant to any options issued
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or granted by the Company (or any such other issuer or Person) for a
consideration such as to dilute, on a basis consistent with the standards
established in the other provisions of this Section 2, the purchase rights
granted by this Warrant, then, and in each such case, the computations,
adjustments and readjustments provided for in this Section 2 with respect to the
Warrant Price shall be made as nearly as possible in the manner so provided and
applied to determine the amount of Other Securities from time to time receivable
upon the exercise of this Warrant, so as to protect the holder of this Warrant
against the effect of such dilution.
2.8. Minimum Adjustment of Warrant Price. If the amount of any adjustment
of the Warrant Price required pursuant to this Section 2 would be less than
one-tenth of one percent of the Warrant Price in effect at the time such
adjustment is otherwise so required to be made, such amount shall be carried
forward and adjustment with respect thereto made at the time of and together
with any subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least one-tenth of one
percent of such Warrant Price; provided that, upon the exercise of this Warrant,
all adjustments carried forward and not theretofore made up to and including the
date of such exercise shall be made to the nearest one one-hundredth of a cent.
3. Consolidation, Merger, Sale of Assets, Reorganization. Etc.
3.1. General Provisions. In case the Company, after the Initial Date, (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 but, in connection with
such consolidation or merger, Common Stock or Other Securities shall be changed
into or exchanged for cash, stock or other securities of any other Person or any
other property, or (c) shall transfer all or substantially all of its properties
and assets to any other Person, or (d) shall effect a capital reorganization or
reclassification of Common Stock or Other Securities (other than a capital
reorganization or reclassification resulting in the issue of additional Shares
of Common Stock for which adjustment in the Warrant Price is provided in Section
2.2.1 or 2.2.2), then, and in the case of each such transaction, the Company
shall give written notice thereof to the holder of this Warrant not less than 30
days prior to the consummation thereof and proper provision shall be made so
that, upon the basis and the terms and in the manner provided in this Section 3,
the holder of this Warrant, upon the exercise hereof at any time after the
consummation of such transaction, shall be entitled to receive, at the aggregate
Warrant 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, either of the following, as such
holder shall elect by written notice to the Company on or before the date
immediately preceding the date of the consummation of such transaction (and, in
the absence of such notice, the provisions of subdivision (y) below shall be
deemed to have been elected by such holder):
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(x) the highest amount of cash, securities or other property to
which such holder would actually have been entitled as a shareholder
upon such consummation if such holder had exercised this Warrant
immediately prior thereto, subject to adjustments (subsequent to
such consummation) as nearly equivalent as possible to the
adjustments provided for in Section 2 and this Section 3, provided
that if a purchase, tender or exchange offer shall have been made to
and accepted by the holders of Common Stock under circumstances in
which, upon completion of such purchase, tender or exchange offer,
the maker thereof, together with members of any group (within the
meaning of Section 13(d)(3) of the Exchange Act) of which such maker
is a part, and together with any affiliate or associate of such
maker (within the meaning of Rule 12b-2 under the Exchange Act) and
any members of any such group of which any such affiliate or
associate is a part, own beneficially (within the meaning of Rule
13d-3 under the Exchange Act) more than 50% of the outstanding
shares of Common Stock, and if the holder of this Warrant so
designates in such notice given to the Company, the holder of this
Warrant shall be entitled to receive the highest amount of cash,
securities or other property to which such holder would actually
have been entitled as a shareholder if the holder of this Warrant
had exercised this Warrant prior to the expiration of such purchase,
tender or exchange offer, accepted such offer and all of the Common
Stock held by such holder had been purchased pursuant to such
purchase, tender or exchange offer, subject to adjustments (from and
after the consummation of such purchase, tender or exchange offer)
as nearly equivalent as possible to the adjustments provided for in
Section 2 and this Section 3; or
(y) the number of shares of Voting Common Stock (or equivalent
equity interests) of the Acquiring Person or, if the Acquiring
Person fails to meet, but its Parent meets, the requirements set
forth in the proviso below, of its Parent, subject to adjustments
(subsequent to such corporate action) as nearly equivalent as
possible to the adjustments provided for in Section 2 and this
Section 3, determined by dividing (i) the product obtained by
multiplying (A) the number of shares of Common Stock (or Other
Securities) to which the holder of this Warrant would have been
entitled had such holder exercised this Warrant immediately prior to
the consummation of such transaction, times (B) the greater of the
Acquisition Price and the Warrant Price in effect on the date
immediately preceding the date of such consummation, by (ii) the
Current Market Price per share of the Voting Common Stock (or
equivalent equity interests) of the Acquiring Person or its Parent,
as the case may be, on the date immediately preceding the date of
such consummation;
provided that the Company shall not effect any of the transactions described in
subdivisions (a) through (d) above unless, immediately after the date of the
consummation of such transaction, the Acquiring Person or its Parent is required
to file, by virtue of having an outstanding class of Voting Common Stock (or
equivalent equity interests), reports with the Commission pursuant to Section 13
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or Section 15(d) of the Exchange Act, and such Voting Common Stock (or
equivalent equity interest) is listed or admitted to trading on a national
securities exchange or is quoted in the NASD automated quotation system. In the
event that the Acquiring Person fulfills the requirements contained in the
immediately preceding proviso, then, if the holder of this Warrant shall elect
(or shall be deemed to elect) to receive Voting Common Stock (or equivalent
equity interests) pursuant to subdivision (y) above, such holder shall be
entitled to receive, upon the basis stated in such subdivision (y), only the
Voting Common Stock (or equivalent equity interests) of the Acquiring Person.
3.2. Assumption of Obligations. Notwithstanding anything contained in this
Warrant or the Merger Agreement to the contrary, the Company will not effect any
of the transactions described in subdivisions (a) through (d) of Section 3.1
unless, prior to the consummation thereof, each Person (other than the Company)
which may be required to deliver any cash, stock or other securities or other
property upon the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the holder of
this Warrant, (a) the obligations of the Company under this Warrant (and if the
Company shall survive the consummation of such transaction, such assumption
shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Warrant) and (b) the obligation to deliver
to such holder such cash, stock or other securities or other property as, in
accordance with the foregoing provisions of this Section 3, such holder may be
entitled to receive, and such Person shall have similarly delivered to such
holder an opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such holder, stating that this Warrant shall thereafter continue
in full force and effect and the terms hereof (including, without limitation,
all of the provisions of Section 2 and this Section 3) shall be applicable to
the cash, stock or other securities or other property which such Person may be
required to deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.
4. Other Dilutive Events. In case any event shall occur as to which the
provisions of Section 2 or Section 3 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase
rights represented by this Warrant in accordance with the essential intent
and principles of such sections, then, in each such case, the Company
shall appoint a firm of independent public accountants of recognized
national standing (which may be the regular auditors of the Company),
which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in
Sections 2 and 3, necessary to preserve, without dilution, the purchase
rights represented by this Warrant. Upon receipt of such opinion the
Company will promptly mail a copy thereof to the holder of this Warrant
and shall make the adjustments described therein.
5. No Dilution or Impairment. The Company will not, by amendment of its
certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in
order to protect the rights of the holder of this Warrant against dilution
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or other impairment. Without limiting the generality of the foregoing, the
Company (a) will not permit the par value of any shares of stock
receivable upon the exercise of this Warrant to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock upon the exercise of
all outstanding warrants issued by the Company (including this Warrant)
from time to time, and (c) will not take any action which results in any
adjustment of the Warrant Price if the total number of shares of Common
Stock (or Other Securities) issuable after the action upon the exercise of
all outstanding warrants issued by the Company (including this Warrant)
would exceed the total number of shares of Common Stock (or other
Securities) then authorized by the Company's certificate of incorporation
and available for the purpose of issue upon such exercise.
6. Accountants' Report as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable
upon the exercise of this Warrant, the Company at its expense will
promptly compute such adjustment or readjustment in accordance with the
terms of this Warrant, and will prepare a certificate of the chief
financial officer of the Company setting forth such adjustment or
readjustment and showing in reasonable detail the method of calculation
thereof and the facts upon which such adjustment or readjustment is based,
including without limitation a statement of (a) the consideration received
or to be received by the Company for any Additional Shares of Common Stock
issued or sold or deemed to have been issued, (b) the number of shares of
Common Stock outstanding or deemed to be outstanding, and (c) the Warrant
Price in effect immediately prior to such issue or sale and as adjusted
and readjusted (if required by Section 2) on account thereof. The Company
will forthwith mail a copy of each such certificate to each holder of a
Warrant and will, upon the written request at any time of the holder of
this Warrant, furnish to such holder a like certificate setting forth the
Warrant Price at the time in effect and showing in reasonable detail how
it was calculated. In addition, with respect to any fiscal year of the
Company during which any such adjustment or readjustment shall have been
made, the Company will cause the independent public accountants reporting
upon the Company's financial statements for such fiscal year to verify,
concurrently with their annual audit of the Company's financial
statements, the computations made by the Company during such fiscal year
and to prepare and to deliver to the holder of this Warrant a report
setting forth substantially the information described above in this
Section 6 with respect to all such adjustments and readjustments. The
Company will also keep copies of all such certificates and reports at its
principal office and will cause the same to be available for inspection at
such office during normal business hours by the holder of this Warrant or
any prospective purchaser of this Warrant designated by the holder
thereof.
7. Notices of Corporate Action. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right
to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
or
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(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer of all or substantially all the assets of the Company to any
other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to the holder of this Warrant a notice specifying (x) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (y) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall be
mailed at least 20 days prior to the date therein specified, in the case of any
date referred to in the foregoing subdivision (x), and at least 30 days prior to
the date therein specified, in the case of the date referred to in the foregoing
subdivision (y).
8. Restrictions on Transfer.
8.1. Restrictive Legends. Except as otherwise permitted by this Section 8,
each certificate for Common Stock (or Other Securities) issued upon the exercise
of this Warrant and each certificate issued upon the direct or indirect Transfer
of any such Common Stock (or Other Securities) shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 and may not be transferred except in compliance
with such Act and applicable state securities laws. Such shares are also
subject to certain restrictions on transferability imposed by a Common
Stock Purchase Warrant expiring December 11, 2005, a copy of which is on
file at the offices of the Company."
8.2. Notice of Proposed Transfer; Opinions of Counsel. Prior to any
Transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act (other than a Transfer
pursuant to Rule 144 or any comparable rule under such Act), the holder thereof
will give written notice to the Company of such holder's intention to effect
such Transfer and to comply in all other respects with this Section 8.2. Each
such notice (a) shall describe the manner and circumstances of the proposed
Transfer in sufficient detail to enable counsel to render the opinions referred
to below, and (b) shall designate counsel for the holder giving such notice (who
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may be internal counsel for such holder). The holder giving such notice will
submit a copy thereof to the counsel designated in such notice and the Company
will promptly submit a copy thereof to its counsel. The following provisions
shall then apply:
(x) If in the opinion of such counsel for the holder the
proposed Transfer may be effected without registration (a copy of
which opinion shall be delivered to the Company), and if such
opinion is reasonably satisfactory to the Company, such holder shall
thereupon be entitled to Transfer such Restricted Securities in
accordance with the terms of the notice delivered by such holder to
the Company. Each Warrant or certificate, if any, issued upon or in
connection with such Transfer shall bear the appropriate restrictive
legend set forth in Section 8.1 unless, in the opinion of such
counsel and the Company's counsel, such legend is no longer required
to insure compliance with the Securities Act.
(y) If the opinion of such counsel for the holder is not to the
effect that the proposed Transfer may legally be effected without
registration of such Restricted Securities under the Securities Act,
such holder shall not be entitled to Transfer such Restricted
Securities (other than in a Transfer pursuant to Rule 144 or any
comparable rule under the Securities Act) until the conditions
specified in subdivision (x) above shall be satisfied or until
registration of such Restricted Securities under the Securities Act
has become effective.
Notwithstanding the foregoing provisions of this Section 8.2, the holder of any
Restricted Securities shall be permitted to Transfer any such Restricted
Securities pursuant to Rule 144A under the Securities Act, provided that each
transferee agrees in writing to be bound by all the restrictions on transfer of
such Restricted Securities contained in this Section 8.2.
8.3. Termination of Restrictions. The restrictions imposed by this Section
8 upon the transferability of Restricted Securities shall cease and terminate as
to any particular Restricted Securities (a) when such securities shall have been
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering such Restricted Securities, (a) when,
in the opinions of both counsel for the holder thereof and counsel for the
Company, such restrictions are no longer required in order to insure compliance
with the Securities Act, or (c) when such securities may be immediately sold by
the holder as determined under Rule 144 under the Securities Act. Whenever such
restrictions shall terminate as to any Restricted Securities, as soon as
practicable thereafter and in any event within ten Business Days, the holder
thereof shall be entitled to receive from the Company, without expense (other
than transfer taxes, if any), new securities of like tenor not bearing the
applicable legend set forth in Section 8.1 hereof.
8.4. Holder's Representations and Warranties. Holder hereby represents and
warrants to the Company as follows:
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(a) Holder is acquiring this Warrant and any shares of Common Stock
acquired upon exercise of this Warrant for its own account, for investment
and not with a view to any "distribution" within the meaning of the
Securities Act.
(b) Holder is knowledgeable and experienced in making venture
capital investments, is able to bear the economic risk of loss of its
investment in the Company, has been granted the opportunity to make an
investigation of the affairs of the Company and has used such opportunity
either directly or through its authorized representative.
(c) Holder understands that because the shares of Common Stock
issuable under this Warrant have not been registered under the Securities
Act, it cannot dispose of any or all of such shares of Common Stock unless
such shares are subsequently registered under the Securities Act or
exemptions from registration are available. Holder acknowledges and
understands that, except as provided in this Warrant, it has no
registration rights. By reason of these restrictions, Holder understands
that it may be required to hold such shares of Common Stock for an
indefinite period of time.
(d) ▇▇▇▇▇▇ is an "accredited investor" as such term is defined in
Regulation D promulgated under the Securities Act.
9. Registration under Securities Act, Etc.
9.1. Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at any
time on or prior to December 11, 2005 proposes to register any of its
securities under the Securities Act (other than by a registration on Form
S-4 or S-8 or any successor or similar forms), whether or not for sale for
its own account, in a manner which would permit registration of
Registrable Securities for sale to the public under the Securities Act, it
will each such time give prompt written notice to all holders of
Registrable Securities of its intention to do so and of such holders'
rights under this Section 9.1. Upon the written request of any such holder
made within 20 days after receipt of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by such
holder and the intended method of disposition thereof), the Company will
use its best efforts to effect the registration under the Securities Act
of all Registrable Securities which the Company has been so requested to
register by the holders thereof, to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid)
of the Registrable Securities so to be registered, by inclusion of such
Registrable Securities in the registration statement which covers the
securities which the Company proposes to register, provided that (x) the
Company shall not be required to effect the registration pursuant to this
Section 9.1 of any Warrants (but shall be required to effect the
registration of Registrable Securities described in clauses (b) and (c) of
the definition of Registrable Securities) and (y) if, at any time after
giving written notice of its intention to register any securities and
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prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the
Company may, at its election, give written notice of such determination to
each holder of Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration
(but not from its obligation to pay the Registration Expenses in
connection therewith), and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to
this Section 9.1.
(b) Priority in Incidental Registrations. If a registration pursuant
to this Section 9.1 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, that the
dollar amount or number of shares of Registrable Securities and other
shares of Common Stock or Other Securities to be included in the offering
exceeds the maximum dollar amount or number that can be sold in such
offering without adversely affecting the proposed offering price, the
timing, the distribution method or the probability of success of such
offering (the "Maximum Number of Shares"), then the Company shall include
in such registration:
(x) if the registration is a primary offering for the Company,
(i) first, the shares of Common Stock or Other Securities that the
Company proposes to sell for its own account which can be sold
without exceeding the Maximum Number of Shares; (ii) second, to the
extent the Maximum Number of Shares has not been reached under the
foregoing clause (i), the shares of Common Stock or Other Securities
requested to be included in such registration by the holders thereof
with registration rights granted prior to the date hereof which can
be sold without exceeding the Maximum Number of Shares (allocated
pro rata among such other security holders, as nearly as
practicable, on the basis of the number of shares of Common Stock or
Other Securities requested to be included in such offering by such
other security holders); and (iii) third, to the extent the Maximum
Number of Shares has not been reached under the foregoing clauses
(i) and (ii), the Registrable Securities and shares of Common Stock
or Other Securities requested to be included in such registration by
the holder of this Warrant and other security holders with
registration rights which can be sold without exceeding the Maximum
Number of Shares (allocated pro rata among such holder and other
security holders, as nearly as practicable, on the basis of the
number of shares of Registrable Securities and Common Stock or Other
Securities requested to be included in such offering by the holder
and such other security holders); and
(y) if the registration is for a secondary offering for any of
the Company's securityholders, (i) first, if the registration was
requested by other security holders with demand registration rights,
then the shares of Common Stock or Other Securities that such other
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security holders have requested to be included in such offering
which can be sold without exceeding the Maximum Number of Shares;
(ii) second, to the extent the Maximum Number of Shares has not been
reached under the foregoing clause (i), the shares of Common Stock
or Other Securities requested to be included in such registration by
other security holders with registration rights granted prior to the
date hereof which can be sold without exceeding the Maximum Number
of Shares (allocated pro rata among such other security holders, as
nearly as practicable, on the basis of the number of shares of
Common Stock or Other Securities requested to be included in such
offering by such other security holders); and (iii) third, to the
extent the Maximum Number of Shares has not been reached under the
foregoing clauses (i) and (ii), the Registrable Securities and
shares of Common Stock or Other Securities requested to be included
in such registration by the holder of this Warrant and other
security holders with registration rights which can be sold without
exceeding the Maximum Number of Shares (allocated pro rata among
such holder and other security holders, as nearly as practicable, on
the basis of the number of shares of Registrable Securities and
Common Stock or Other Securities requested to be included in such
offering by the holder and such other security holders).
9.2. Registration Procedures. If and whenever (x) the Company is required
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 9.1 or (y) there is a Requesting
Holder in connection with any other proposed registration by the Company under
the Securities Act, the Company will as expeditiously as possible:
(a) prepare and file with the Commission the requisite registration
statement (including such audited financial statements as may be required
by the Securities Act or the rules and regulations promulgated thereunder)
to effect such registration and use its best efforts to cause such
registration statement to become effective, provided that before filing
such registration statement or any amendments thereto, the Company will
furnish to the counsel selected by the holders of Registrable Securities
whose Registrable Securities are to be included in such registration
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel, and provided, further, that the
Company may discontinue any registration of its securities which are not
Registrable Securities at any time prior to the effective date of the
registration statement relating thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration statement and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered
by such registration statement until the earlier of such time as all of
such securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement and the expiration of 90 days after such
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registration statement becomes effective, except with respect to any such
registration statement filed pursuant to Rule 415 (or any successor Rule)
under the Securities Act, in which case such period shall be 2 years;
(c) furnish to each seller of Registrable Securities covered by such
registration statement and each Requesting Holder such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request;
(d) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as each
seller thereof and each Requesting Holder shall reasonably request, to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the securities owned
by such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
subdivision (d) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(e) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(f) furnish to each seller of Registrable Securities and each
Requesting ▇▇▇▇▇▇ a signed counterpart, addressed to such seller (and the
underwriters, if any), of
(x) an opinion of counsel for the Company, dated the effective
date of such registration statement (and, if such registration
includes an underwritten Public Offering, dated the date of any
closing under the underwriting agreement), reasonably satisfactory
in form and substance to such seller, and
(y) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten Public Offering, dated the date of any closing under
the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement (it being understood that
such letter, if the cost thereof does not constitute a "Registration
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Expense", is to be delivered only at the request of, and at the
expense of, any seller of Registrable Securities or Requesting
Holder),
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten Public Offerings of securities and, in the case of the
accountants' letter, such other financial matters, as such seller (or the
underwriters, if any) may reasonably request;
(g) immediately notify each seller of such Registrable Securities,
and (if requested by any such seller) confirm such advice in writing, (w)
when the prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to the registration statement
or any post-effective amendment, when the same has become effective, (x)
of any request by the Commission for amendments or supplements to the
registration statement or the prospectus or for additional information,
(y) of the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation of any
proceedings for that purpose, and (z) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(h) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the
earliest possible time;
(i) immediately notify each holder of Registrable Securities covered
by such registration statement and each Requesting Holder, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and at the request of any such holder promptly
prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances under which they were made;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first full calendar month after the effective
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date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act, and not
file any amendment or supplement to such registration statement or
prospectus to which any such seller or any Requesting Holder shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder, having been
furnished with a copy thereof at least five (5) business days prior to the
filing thereof;
(k) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement not later than the effective date of such registration
statement;
(1) cooperate with the sellers of such Registrable Securities to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which securities shall not
bear any restrictive legends and shall be in a form eligible for deposit
with The Depository Trust Company; and enable such Registrable Securities
to be in such denominations and registered in such names as such sellers
may request at least two business days prior to any sale of Registrable
Securities;
(m) use its best efforts (x) to cause all such Registrable
Securities covered by such registration statement to be listed on a
national securities exchange (if such Registrable Securities are not
already so listed) and on each additional national securities exchange on
which similar securities issued by the Company are then listed, if the
listing of such Registrable Securities is then permitted under the rules
of such exchange, or (y) to secure designation of all such Registrable
Securities covered by such registration statement as a NASDAQ "national
market system security" within the meaning of Rule llAa2-1 of the
Commission or, failing that, secure NASDAQ authorization for such
Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such
with respect to such Registrable Securities with the NASD;
(n) provide a CUSIP number for all Registrable Securities, not later
than the effective date of the applicable registration statement; and
(o) enter into such agreements and take such other actions as the
Requisite Holders shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
The Company may require each holder of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such holder and the distribution of such securities as the Company may from time
to time reasonably request in writing.
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9.3. Underwritten Offerings.
9.3.1. Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 9.1 and such securities are to be distributed by or
through one or more underwriters, the Company will, subject to the provisions of
Section 9.1(b), use its best efforts, if requested by any holder of Registrable
Securities, to arrange for such underwriters to include the Registrable
Securities to be offered and sold by such holder among the securities to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. No holder of Registrable
Securities shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder and such holder's intended method
of distribution and any other representation required by law.
9.3.2. Holdback Agreements.
(x) Each holder of Registrable Securities agrees, if so required
by the managing underwriter, not to effect any public sale or
distribution of securities of the Company of the same class as the
securities included in such Registration Statement, during the seven
days prior to the date on which any underwritten registration
pursuant to Section 9.1 has become effective and the 90 days
thereafter, except as part of such underwritten registration or to
the extent that such holder is prohibited by applicable law from
agreeing to withhold Registrable Securities from sale or is acting
in its capacity as a fiduciary or an investment adviser. Without
limiting the scope of the term "fiduciary," a holder shall be deemed
to be acting as a fiduciary or an investment adviser if its actions
or the Registrable Securities proposed to be sold are subject to
ERISA, the Investment Company Act of 1940 or the Investment Advisers
Act of 1940 or if such Registrable Securities are held in a separate
account under applicable insurance law or regulation.
(y) The Company agrees (i) not to effect any public sale or
distribution of its equity securities or securities convertible into
or exchangeable or exercisable for any of such securities during the
seven (7) days prior to the date on which any underwritten
registration pursuant to Section 9.1 has become effective and the 90
days thereafter, except as part of such underwritten registration
and except pursuant to registrations on Form S-4 or S-8 or any
successor or similar forms thereto, and (ii) to cause each holder of
its equity securities or of any securities convertible into or
exchangeable or exercisable for any of such securities, in each case
purchased from the Company at any time after the date of this
Agreement (other than in a Public Offering), to agree not to effect
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any such public sale or distribution of such securities, during such
period, except as part of such underwritten registration.
9.4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act,
the Company will give the holders of Registrable Securities registered under
such registration statement, their underwriters, if any, each Requesting Holder
and their respective counsel and accountants, the opportunity to participate in
the preparation of such registration statement, each prospectus included therein
or filed with the Commission, and each amendment thereof or supplement thereto,
and will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
9.5. Rights of Requesting Holders. The Company will not file any
registration statement under the Securities Act, whether or not pursuant to
registration rights granted to other holders of its securities and whether or
not for sale for its own account (other than by a registration on Form S-4, S-8
or any successor form thereto), unless it shall first have given to each Person
which holds any Registrable Securities issued by the Company at least 30 days'
prior written notice thereof. Any such holder who shall so request within 30
days after such notice (a "Requesting Holder") shall have the rights of a
Requesting Holder provided in Sections 9.2, 9.4 and 9.6. In addition, if any
registration statement refers to any Requesting Holder by name or otherwise as
the holder of any securities of the Company, then such holder shall have the
right to require (a) the insertion therein of language, in form and substance
reasonably satisfactory to such holder, to the effect that, if true, the holding
by such holder of such securities does not necessarily make such holder a
"controlling person" of the Company within the meaning of the Securities Act and
is not to be construed as a recommendation by such holder of the investment
quality of the Company's debt or equity securities covered thereby and that such
holding does not imply that such holder will assist in meeting any future
financial requirements of the Company, or (b) in the event that such reference
to such holder by name or otherwise is not required by the Securities Act or any
rules and regulations promulgated thereunder, the deletion of the reference to
such holder.
9.6. Indemnification.
(a) The Company will, and hereby does, indemnify, to the extent
permitted by applicable law, each holder of Registrable Securities and its
Affiliates and their respective officers and directors, if any, and each
Person, if any, who controls such holder within the meaning of Section 15
of the Securities Act, against all losses, claims, damages, liabilities
(or proceedings in respect thereof) and expenses (under the Securities Act
or common law or otherwise), joint or several, caused by any untrue
statement or alleged untrue statement of a material fact contained in any
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registration statement or prospectus (and as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) or
any preliminary prospectus or caused by 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, except insofar as
such losses, claims, damages, liabilities (or proceedings in respect
thereof) or expenses are caused by any untrue statement or alleged untrue
statement contained in or by any omission or alleged omission from
information furnished in writing to the Company by such holder expressly
for use therein. If the offering pursuant to any registration statement
provided for under this Warrant is made through underwriters, no action or
failure to act on the part of such underwriters (whether or not any such
underwriter is an Affiliate of any holder of Registrable Securities) shall
affect the obligations of the Company to indemnify any holder of
Registrable Securities or any other Person pursuant to the preceding
sentence. If the offering pursuant to any registration statement provided
for under this Agreement is made through underwriters, the Company agrees
to enter into an underwriting agreement in customary form with such
underwriters and the Company agrees to indemnify such underwriters, their
officers and directors, if any, and each Person, if any, who controls such
underwriters within the meaning of Section 15 of the Securities Act to the
same extent as hereinbefore provided with respect to the indemnification
of the holders of Registrable Securities; provided that the Company shall
not be required to indemnify any such underwriter, or any officer or
director of such underwriter or any Person who controls such underwriter
within the meaning of Section 15 of the Securities Act, to the extent that
the loss, claim, damage, liability (or proceedings in respect thereof) or
expense for which indemnification is claimed results from such
underwriter's failure to send or give a copy of the amended or
supplemented final prospectus to the Person asserting an untrue statement
or alleged untrue statement or omission or alleged omission at or prior to
the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such amended or
supplemented final prospectus prior to such written confirmation and the
underwriter was given notice of the availability of such amended or
supplemented final prospectus.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder will
indemnify, to the extent permitted by applicable law, the Company, its
officers and directors and each Person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages, liabilities (or proceedings in respect thereof)
and expenses resulting from any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or
prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement is contained
in or such omission is from information so furnished in writing by such
holder expressly for use therein, provided that such holder's obligations
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hereunder shall be limited to an amount equal to the proceeds to such
holder of the Registrable Securities sold pursuant to such registration
statement.
(c) Any Person entitled to indemnification under the provisions of
this Section 9.6 shall (x) give prompt notice to the indemnifying party of
any claim with respect to which it seeks indemnification (but the failure
of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 9.6, except to the extent that the
indemnifying party is actually prejudiced by such failure) and (y) unless
in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of
such claim, permit such indemnifying party to assume the defense of such
claim, with counsel reasonably satisfactory to the indemnified party; and
if such defense is so assumed, such indemnifying party shall not enter
into any settlement without the consent of the indemnified party if such
settlement attributes liability to the indemnified party and such
indemnifying party shall not be subject to any liability for any
settlement made without its consent (which shall not be unreasonably
withheld); and any underwriting agreement entered into with respect to any
registration statement provided for under this Agreement shall so provide.
In the event an indemnifying party shall not be entitled, or elects not,
to assume the defense of a claim, such indemnifying party shall not be
obligated to pay the fees and expenses of more than one counsel or firm of
counsel for all parties indemnified by such indemnifying party in respect
of such claim, unless in the reasonable judgment of any such indemnified
party a conflict of interest may exist between such indemnified party and
any other of such indemnified parties in respect to such claim. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of a participating holder of
Registrable Securities, its officers, directors or any Person, if any, who
controls such holder as aforesaid, and shall survive the transfer of such
securities by such holder.
(d) If the indemnification provided for in this Section 9.6 shall
for any reason be held by a court to be unavailable to an indemnified
party under Section 9.6(a) or (b) hereof in respect of any loss, claim,
damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 9.6(a) or (b), the indemnified
party and the indemnifying party under Section 9.6(a) or (b) shall
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating the same), (x) in such proportion as is appropriate to
reflect the relative fault of the Company and the prospective sellers of
Registrable Securities covered by the registration statement which
resulted in such loss, claim, damage or liability, or action or proceeding
in respect thereof, with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action or proceeding
in respect thereof, as well as any other relevant equitable considerations
or (y) if the allocation provided by clause (x) above is not permitted by
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applicable law, in such proportion as shall be appropriate to reflect the
relative benefits received by the Company and such prospective sellers
from the offering of the securities covered by such registration
statement, provided, that for purposes of clauses (x) or (y), the relative
benefits received by the prospective sellers shall be deemed not to exceed
the amount of proceeds received by such prospective sellers and no holder
of Registrable Securities shall be required to contribute any amount in
excess of the amount such holder could have been required to pay to an
indemnified party if the indemnity under subsection (a) of this Section
9.6 was available. 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. Such sellers' obligations to contribute as
provided in this Section 9.6(d) are several in proportion to the relative
value of their respective Registrable Securities covered by such
registration statement and not joint. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent,
which consent shall not be unreasonably withheld.
(e) Indemnification and contribution similar to that specified in
the preceding subdivisions of this Section 9.6 (with appropriate
modifications) shall be given by the Company and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation
of any governmental authority other than the Securities Act.
(f) An indemnifying party shall make payments of all amounts
required to be made pursuant to the foregoing provisions of this Section
9.6 to or for the account of the indemnified party from time to time
promptly upon receipt of bills or invoices relating thereto or when
otherwise due or payable.
9.7. Adjustments Affecting Registrable Securities. The Company will not
effect or permit to occur any combination or subdivision of shares which would
materially and adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in any registration of its
securities contemplated by this Section 9 or the marketability of such
Registrable Securities under any such registration.
9.8. Other Registration of Common Stock. If any shares of the Common Stock
required to be reserved for purposes of issuance upon exercise of this Warrant
in connection with their sale in a registration pursuant to Section 9.1 require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
such exercise, the Company will, at its expense and as expeditiously as
possible, use its best efforts to cause such shares to be duly registered or
approved, as the case may be.
9.9. Nominees for Beneficial Owners. For purposes of this Section 9, in
the event that any Registrable Securities are held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its election, be
treated as the holder of such Registrable Securities for purposes of any request
or other action by any holder or holders of Registrable Securities pursuant to
this Section 9 or any determination of any number or percentage of shares of
Registrable Securities held by any holder or holders of Registrable Securities
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contemplated by this Section 9. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
9.10. Rule 144 and Rule 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of Rule 144 and Rule 144A under the Securities Act, as such
rules may be amended from time to time, or any similar rules or regulations
hereafter adopted by the Commission, including, without limitation, filing on a
timely basis all reports required to be filed pursuant to the Exchange Act.
10. Availability of Information. The Company will cooperate with each holder
of any Restricted Securities in supplying such information as may be
necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to
the availability of an exemption from the Securities Act for the sale of
any Restricted Securities. The Company will furnish to the holder of this
Warrant, promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, and copies of all regular
and periodic reports and all registration statements and prospectuses
filed by the Company with any securities exchange or with the Commission.
11. Reservation of Stock, Etc. The Company will at all times reserve and keep
available, solely for issuance and delivery upon exercise of this Warrant,
the number of shares of Common Stock (or Other Securities) from time to
time issuable upon exercise of this Warrant at the time outstanding. All
shares of Common Stock (or Other Securities) shall be duly authorized and,
when issued upon such exercise, shall be validly issued and, in the case
of shares, fully paid and nonassessable, with no liability on the part of
the holders thereof.
12. Listing on Securities Exchange. The Company will (a) list on each national
securities exchange on which any Common Stock may at any time be listed,
subject to official notice of issuance upon exercise of this Warrant, and
will maintain such listing of, all shares of Common Stock from time to
time issuable upon exercise of this Warrant or (b) secure and maintain
designation of all shares of Common Stock from time to time issuable upon
exercise of this Warrant as a NASDAQ "national market system security"
within the meaning of Rule llAa2-1 of the Commission or, failing that,
secure NASDAQ authorization for such shares of Common Stock.
13. Ownership, Transfer and Substitution of Warrants.
13.1. Ownership of Warrants. The Company may treat the person in whose
name this Warrant is registered on the register kept at the principal office of
the Company as the owner and holder thereof for all purposes, notwithstanding
any notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes, notwithstanding
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any notice to the contrary. Subject to Section 8, a Warrant, if properly
assigned, may be exercised by a new holder without first having a new Warrant
issued.
13.2. Transfer and Exchange of Warrants. Upon the surrender of any
Warrant, properly endorsed, for registration of transfer or for exchange at the
principal office of the Company, the Company at its expense will (subject to
compliance with Section 8, if applicable) execute and deliver to or upon the
order of the holder thereof a new Warrant or Warrants of like tenor, in
denominations of at least 1,000 shares, in the name of such holder or as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock called for on the face or faces of the Warrant or
Warrants so surrendered.
13.3. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant
held by a Person other than the Purchaser or any institutional investor, upon
delivery of indemnity reasonably satisfactory to the Company in form and amount
or, in the case of any such mutilation, upon surrender of such Warrant for
cancellation at the principal office of the Company, the Company at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
14. Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
Acquiring Person: the continuing or surviving corporation or other entity
of a consolidation or merger with the Company (if other than the Company), the
transferee of substantially all of the properties and assets of the Company, the
corporation or other entity consolidating with or merging into the Company in a
consolidation or merger in connection with which the Common Stock is changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or, in the case of a capital reorganization or
reclassification, the Company.
Acquisition Price: as applied to the Common Stock, with respect to any
transaction to which Section 3 applies, (a) the price per share equal to the
greater of the following, determined in each case as of the date immediately
preceding the date of consummation of such transaction: (x) the Market Price of
the Common Stock and (y) the highest amount of cash plus the Fair Value of the
highest amount of securities or other property which the holder of this Warrant
would have been entitled as a shareholder to receive upon such consummation if
such holder had exercised this Warrant immediately prior thereto, or (b) if a
purchase, tender or an exchange offer is made by the Acquiring Person (or by any
of its affiliates) to the holders of the Common Stock and such offer is accepted
by the holders of more than 50% of the outstanding shares of Common Stock, the
greater of (i) the price determined in accordance with the foregoing subdivision
(a), and (ii) the price per share equal to the greater of the following,
determined in each case as of the date immediately preceding the acceptance of
such offer by the holders of more than 50% of the outstanding shares of Common
Stock: (A) the Market Price of the Common Stock and (B) the highest amount of
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cash plus the Fair Value of the highest amount of securities or other property
which the holder of this Warrant would be entitled as a shareholder to receive
pursuant to such offer if such holder had exercised this Warrant immediately
prior to the expiration of such offer and accepted the same.
Additional Shares of Common Stock: all shares (including treasury shares)
of Common Stock issued or sold (or, pursuant to Section 2.3 or 2.4, deemed to be
issued) by the Company after the Initial Date, whether or not subsequently
reacquired or retired by the Company, other than (a) shares of Common Stock
issued upon the exercise of any Warrants and (b) not more than 3,010,000 shares
of Common Stock issued upon the exercise of stock options granted to directors,
officers and other employees of the Company pursuant to the DTN Stock Option
Plan of 1989, as amended, and the DTN Non-Employee Director Option Plan, as
amended, and (c) 75,000 shares of Common Stock issuable upon the exercise of
existing warrants.
Base Price: on any date specified herein, the lesser of (a) the Current
Market Price or (b) the Warrant Price.
Business Day: any day other than a Saturday or a Sunday or a day on which
commercial banking institutions in the City of New York are authorized by law to
be closed, provided that, in determining the period within which certificates or
Warrants are to be issued and delivered pursuant to Section 1.3 at a time when
shares of Common Stock (or Other Securities) are listed or admitted to trading
on any national securities exchange or in the over-the-counter market and in
determining the Market Price of any securities listed or admitted to trading on
any national securities exchange or in the over-the-counter market, "Business
Day" shall mean any day when the principal exchange in which securities are then
listed or admitted to trading is open for trading or, if such securities are
traded in the over-the-counter market in the United States, such system is open
for trading, and provided, further, that any reference to "days" (unless
Business Days are specified) shall mean calendar days.
Commission: the Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act or the Exchange Act,
whichever is the relevant statute for the particular purpose.
Common Stock: the Company's common stock, par value $.001 per share, as
constituted on the date hereof, any stock into which such common stock shall
have been changed or any stock resulting from any reclassification of such
common stock, and all other stock of any class or classes (however designated)
of the Company the holders of which have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference.
Company: Data Transmission Network Corporation, a Delaware corporation.
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Convertible Securities: any evidences of indebtedness, shares of stock
(other than Common Stock) or other securities directly or indirectly convertible
into or exchangeable for Additional Shares of Common Stock.
Current Market Price: on any date specified herein, (a) with respect to
Common Stock or to Voting Common Stock (or equivalent equity interests) of an
Acquiring Person or its Parent, (x) the average daily Market Price during the
period of the most recent 20 consecutive Business Days ending on such date, or
(y) if shares of Common Stock or such Voting Common Stock (or equivalent equity
interests), as the case may be, are not then listed or admitted to trading on
any national securities exchange and if the closing bid and asked prices thereof
are not then quoted or published in the over-the-counter market, the Market
Price on such date; and (b) with respect to any other securities, the Market
Price on such date.
Exchange Act: the Securities Exchange Act of 1934, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time of determination.
Fair Value: with respect to any securities or other property, the fair
value thereof as of a date which is within 15 days of the date as of which the
determination is to be made (a) determined by an agreement between the Company
and the Requisite Holders or (b) if the Company and the Requisite Holders fail
to agree, determined jointly by an independent investment banking firm retained
by the Company and by an independent investment banking firm retained by the
Requisite Holders, either of which firms may be an independent investment
banking firm regularly retained by the Company or any such holder or (c) if the
Company or such holders shall fail so to retain an independent investment
banking firm within five Business Days of the retention of such firm by such
holders or the Company, as the case may be, determined solely by the firm so
retained or (d) if the firms so retained by the Company and by such holders
shall be unable to . reach a joint determination within 15 Business Days of the
retention of the last firm so retained, determined by another independent
investment banking firm which is not a regular investment banking firm of the
Company or any such holder chosen by the first two such firms. Each of the
Company and the holders of the Warrants shall be responsible for the fees and
expenses of the investment banking firm retained by them under the foregoing
clause (b) and shall share equally the fees and expenses of any investment
banking firm retained under the foregoing clause (d).
Initial Date: the meaning specified in Section 2.2.
Market Price: on any date specified herein, (a) with respect to Common
Stock or to Voting Common Stock (or equivalent equity interests) of an Acquiring
Person or its Parent, the amount per share equal to (x) the last sale price of
shares of such security, 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 the same are then listed or admitted to trading, or
(y) if no shares of such security are then listed or admitted to trading on any
national securities exchange but such security is designated as a national
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market system security by the NASD, the last trading price of such security on
such date, or if such security is not so designated, the average of the reported
closing bid and asked prices thereof on such date as shown by the NASDAQ system
or, if no shares thereof are then quoted in such system, as published by the
National Quotation Bureau, Incorporated or any successor organization, and in
either case as reported by any member firm of the New York Stock Exchange
selected by the Company, or (z) if no shares of such security are then listed or
admitted to trading on any national exchange or designated as a national market
system security and if no closing bid and asked prices thereof are then so
quoted or published in the over-the-counter market, the higher of (x) the book
value thereof as determined by agreement between the Company and the Requisite
Holders, or if the Company and the Requisite Holders fail to agree, by any firm
of independent public accountants of recognized standing selected by the Board
of Directors of the Company, as of the last day of any month ending within 60
days preceding the date as of which the determination is to be made and (y) the
fair value thereof determined in good faith by the Board of Directors of the
Company thereof as of a date which is within 15 days of the date as of which the
determination is to be made; and (b) with respect to any other securities, the
fair value thereof determined in good faith by the Board of Directors of the
Company as of a date which is within 15 days of the date as of which the
determination is to be made.
Maximum Number of Shares: the meaning specified in Section 9.1(b).
Merger Agreement: the meaning specified in the opening paragraphs of this
Warrant.
NASD: the National Association of Securities Dealers.
NASDAO: the Automated Quotation System of the NASD.
Options: rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
Other Securities: any stock (other than Common Stock) and other securities
of the Company or any other Person (corporate or otherwise) which the holder of
this Warrant at any time shall be entitled to receive, or shall have received,
upon the exercise of this Warrant, 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 3 or
otherwise.
Parent: as to any Acquiring Person, any corporation or other Person which
(a) controls the Acquiring Person directly or indirectly through one or more
intermediaries, (b) is required to include the Acquiring Person in its
consolidated financial statements under generally accepted accounting principles
and (c) is not itself included in the consolidated financial statements of any
other Person (other than its consolidated subsidiaries).
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Person: an individual, a partnership, limited liability company, an
association, a joint venture, a corporation, a business, a trust, an
unincorporated organization or a government or any department, agency or
subdivision thereof.
Public Offering: any offering of Common Stock to the public pursuant to an
effective registration statement under the Securities Act.
Registrable Securities: (a) this Warrant, (b) any shares of Common Stock
or Other Securities issued or issuable upon exercise of this Warrant and (c) any
securities issued or issuable with respect to any Common Stock or Other
Securities referred to in subdivision (b) by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (x) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (y) they shall have been sold as permitted under Rule 144 (or any
successor provision) under the Securities Act, or (z) they shall have ceased to
be outstanding.
Registration Expenses: all expenses incident to the Company's performance
of or compliance with Section 9, including, without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance (provided that "Registration Expenses" will
not include any "cold comfort" letter requested solely by the holders of
Registrable Securities in connection with any registration if the Company shall
not have elected or been required by the underwriters with respect to such
registration to cause such a letter to be delivered), the reasonable fees and
disbursements of a single counsel and single firm of accountants retained by the
holders of the Registrable Securities being registered, premiums and other costs
of policies of insurance against liabilities arising out of the public offering
of the Registrable Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but excluding
underwriting discounts and commissions and transfer taxes, if any, provided
that, in any case where Registration Expenses are not to be borne by the
Company, such expenses shall not include salaries of Company personnel or
general overhead expenses of the Company, auditing fees, premiums or other
expenses relating to liability insurance required by underwriters of the
Company, or other expenses for the preparation of financial statements or other
data normally prepared by the Company in the ordinary course of its business or
which the Company would have incurred in any event.
Requesting Holder: the meaning specified in Section 9.5.
Requisite Holders: the holders of more than 50% of the Registrable
Securities issued and outstanding at such time.
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Restricted Securities: (a) any Warrants bearing the applicable legend set
forth in Section 8.1, (b) any shares of Common Stock (or Other Securities) which
have been issued upon the exercise of Warrants and which are evidenced by a
certificate or certificates bearing the applicable legend set forth in such
Section 8.1, and (c) unless the context otherwise requires, any shares of Common
Stock (or Other Securities) which are at the time issuable upon the exercise of
Warrants and which, when so issued, will be evidenced by a certificate or
certificates bearing the applicable legend set forth in Section 8.1.
Securities Act: the Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time of determination.
Subsidiary: any corporation, association or other business entity a
majority (by number of votes) of the Voting Common Stock of which is at the time
owned by the Company or by one or more Subsidiaries or by the Company and one or
more Subsidiaries.
Transfer: unless the context otherwise requires, any sale, assignment,
pledge or other disposition of any security, or of any interest therein, which
could constitute a "sale" as that term is defined in Section 2(3) of the
Securities Act.
Voting Common Stock: with respect to any corporation, association or other
business entity, stock of any class or classes (or equivalent interest) , if the
holders of the stock of such class or classes (or equivalent interests) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or persons performing similar functions) of such
corporation, association or business entity, even if the right so to vote has
been suspended by the happening of such a contingency.
Warrant Price: the meaning specified in Section 2.1.
Warrants: the Common Stock Purchase Warrants issued by the Company under
the Merger Agreement.
15. Remedies. The Company stipulates that the remedies at law of the holder of
this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for
the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
16. No Rights or Liabilities as Stockholder. Nothing contained in this Warrant
shall be construed as conferring upon the holder hereof any voting or
other rights as a stockholder of the Company or as imposing any
liabilities on such holder to purchase any securities or as a stockholder
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of the Company, whether such liabilities are asserted by the Company or by
creditors or stockholders of the Company or otherwise.
17. Notices. All notices and other communications under this Warrant shall be
in writing and shall be mailed by registered or certified mail, return
receipt requested, addressed (a) if to the holder of this Warrant or any
holder of any Common Stock (or Other Securities), at the registered
address of such holder as set forth in the register kept at the principal
office of the Company, or (b) if to the Company, to the attention of its
Chief Financial Officer at its principal office, provided that the
exercise of any Warrant shall be effected in the manner provided in
Section 1.
18. Expiration; Notice. The Company will give the holder of this Warrant no
less than 45 days' nor more than 90 days' notice of the expiration of the
right to exercise this Warrant. The right to exercise this Warrant shall
expire at 3 P.M., New York City time, December 11, 2005. The registration
rights provided in Section 9 shall expire at 3 P.M., New York City time,
December 11, 2005 with respect to any shares of Common Stock issued
previously to such time upon the exercise hereof.
19. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. The agreements of the Company contained in this
Warrant other than those applicable solely to the Warrants and the holders
thereof shall inure to the benefit of and be enforceable by any holder or
holders at the time of any Common Stock (or Other Securities) issued upon
the exercise of Warrants, whether so expressed or not. This Warrant shall
be construed and enforced in accordance with and governed by the laws of
the State of New York. The section headings in this Warrant are for
purposes of convenience only and shall not constitute a part hereof.
DATA TRANSMISSION NETWORK CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Its: Vice President - Operations
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FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To: _______________________
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, ____________ shares of
Common Stock of Data Transmission Network Corporation, a Delaware corporation,
and herewith makes payment of $____________ therefor, and requests that the
certificates for such shares be issued in the name of
____________________________, and delivered to __________________, whose address
is ____________________________.
Dated: ___________________.
------------------------------------
(Signature must conform in all
respects to the name of holder as
specified on the face of this
Warrant)
[insert address]
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FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto ____________________________
the right represented by such Warrant to purchase shares of Common Stock of Data
Transmission Network Corporation, a Delaware corporation, to which such Warrant
relates, and appoints ______________________ Attorney to make such transfer on
the books of _________________ maintained for such purpose, with full power of
substitution in the premises.
Dated: _________________.
------------------------------------
(Signature must conform in all
respects to the name of holder as
specified on the face of this Warrant)
[insert address]
Signed in the presence of:
----------------------------
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