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EXHIBIT 10.2
WARRANT AGREEMENT
Dated as of July 30, 1998
between
TELEHUB COMMUNICATIONS CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
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WARRANT AGREEMENT dated as of July 30, 1998 (the "Agreement") between
TELEHUB COMMUNICATIONS CORPORATION, a Nevada corporation (the "Company"), and
STATE STREET BANK AND TRUST COMPANY, as warrant agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue 125,000 common stock purchase
warrants, as hereinafter described (the "Warrants"), to purchase up to an
aggregate of 2,082,732 shares of Common Stock (as defined below), subject to
adjustment, in connection with the offering of an aggregate principal amount at
maturity of $125,000,000 of the Company's 13 7/8% Senior Discount Notes due
2005 (the "Notes"). Each Warrant entitles the holder thereof to purchase
16.661856 shares of Common Stock. Each Warrant will also entitle the holder
thereof to purchase an additional 8.678048 shares of Common Stock, subject to
adjustment, if on or before July 31, 1999, the Company has not (a) consummated
an initial public offering of shares of Common Stock in which the Company has
received gross proceeds of at least $25 million (a "Qualified IPO"), (b)
repurchased all outstanding Notes, or (c) consummated a merger pursuant to
which the shares of Common Stock are converted into securities traded on NASDAQ
or a national securities exchange and have a market value of at least $100
million. The Notes and Warrants will be sold in units (the "units"), each unit
consisting of $1,000 principal amount at maturity of Notes and one Warrant.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, and for the purpose of defining the respective rights and
obligations of the Company, the Warrant Agent and the Holders (as defined
below), the parties hereto agree as follows:
Section 1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Affiliate" of any person means any person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person. For purposes of this definition, "control" when used with respect
to any person means the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Commission" means the Securities and Exchange Commission.
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"Common Stock" means the common stock, par value $0.001 per share, of the
Company, and any other capital stock of the Company into which such common
stock may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution for, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.
"Company" means TeleHub Communications Corporation, a Nevada corporation,
and its successors and assigns.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Event" means the earlier to occur of (i) 90 days after any
underwritten primary public offering of shares of Common Stock (other than
Disqualified Stock as defined in the Indenture) registered under the Securities
Act (other than a public offering registered on Form S-8 under the Securities
Act), (ii) a consolidation, merger or purchase of assets of the Company or any
of its subsidiaries that results in the Common Stock becoming subject to
registration under the Exchange Act or (iii) the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company.
"Exercise Price" means the purchase price per share of Common Stock to be
paid upon the exercise of each Warrant in accordance with the terms hereof,
which price shall initially be $.01 per share, subject to adjustment from time
to time pursuant to Section 13 hereof.
"Expiration Date" means July 31, 2005.
"Holder" means a person who owns Registrable Securities.
"Indenture" means the indenture, dated the date hereof, between the
Company and State Street Bank and Trust Company, as trustee.
"Initial Purchaser" means BancBoston Securities Inc.
"Issue Date" means the date of this Agreement.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
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"Principal Office of Warrant Agent" means the Warrant Agent's office
located at Boston, Massachusetts or such other office of the Warrant Agent as
the Warrant Agent shall designate from time to time in writing as its Principal
Office for the purposes of this Agreement.
"Registrable Securities" means any of (i) the Warrant Shares and (ii) any
other securities issued or issuable with respect to any Warrant Shares by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise,
unless, in each case, such Warrant Shares and securities, if any, have been
offered and sold to the Holder pursuant to an effective Registration Statement
under the Securities Act declared effective prior to the exercisability of the
Warrants or such Warrant Shares and securities, if any, may be sold to the
public pursuant to Rule 144 without any restriction on the amount of securities
which may be sold by such Holder or the satisfaction of any condition. As to
any particular Registrable Securities held by a Holder, such securities shall
cease to be Registrable Securities when (i) a Registration Statement with
respect to the exercise or offering of such securities by the Holder thereof
shall have been declared effective under the Securities Act and such securities
shall have been exercised and/or disposed of by such Holder pursuant to such
Registration Statement, (ii) such securities may at the time of determination
be sold to the public pursuant to Rule 144 without any restriction on the
amount of securities which may be sold by such Holder (or any similar provision
then in force, but not Rule 144A) promulgated under the Securities Act without
the lapse of any further time or the satisfaction of any condition, (iii) such
securities shall have been otherwise transferred by such Holder and new
certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company or its transfer agent and
subsequent disposition of such securities shall not require registration or
qualification under the Securities Act or any similar state law then in force
or (iv) such securities shall have ceased to be outstanding.
"Registration Rights Agreement" means the registration rights agreement,
dated as of the date hereof by and among the Company and the Initial Purchaser
relating to the Notes.
"Securities Act" means the Securities Act of 1933, as amended.
"Separation Date" means the earliest to occur of (i) October 30, 1998,
(ii) a Change in Control (as defined in the Indenture), (iii) the occurrence of
an Event of Default (as defined in the Indenture), (iv) the date on which a
registration statement with respect to the Notes or an Exchange Offer (as
defined in the Registration Rights Agreement) for the Notes is declared
effective, or (v) such earlier date as may be determined by BancBoston
Securities Inc.
"Trustee" means the trustee under the Indenture.
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"Warrant Agent" means State Street Bank and Trust Company or the successor
or successors of such Warrant Agent appointed in accordance with the terms
hereof.
"Warrant Registration Rights Agreement" means the registration rights
agreement, dated as of July 30, 1998, between the Company and the Initial
Purchaser relating to the Warrants and the Warrant Shares.
"Warrant Shares" means the shares of Common Stock issued or issuable upon
the exercise of the Warrants.
Section 2. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 3. Issuance of Warrants: Warrant Certificates. The Warrants will
be issued in the form of one or more global certificates (the "Global
Warrants"), substantially in the form of Exhibit A (including footnote 1
thereto). The Global Warrants shall be deposited on the Issue Date with, or on
behalf of, The Depositary Trust Company (the "Depositary") and registered in
the name of Cede & Co., as the Depositary's nominee. Each Global Warrant shall
represent such of the outstanding Warrants as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Warrants from time to time endorsed thereon and that the aggregate amount of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate. Upon request, a Holder may receive from the
Depositary and the Warrant Agent Warrants in definitive form (the "Definitive
Warrants"), substantially in the form of Exhibit A (not including footnote 1
thereto) as set forth in Section 7 below. Any certificates (the "Warrant
Certificates") evidencing the Global Warrants or the Definitive Warrants to be
delivered pursuant to this Agreement shall be substantially in the form set
forth in Exhibit A attached hereto.
Section 4. Execution of Warrant Certificates. Warrant Certificates shall
be signed on behalf of the Company by its Chairman of the Board, President,
Vice President or by its Secretary or an Assistant Secretary. Each such
signature upon the Warrant Certificates may be in the form of a facsimile
signature of the present or any future Chairman of the Board, President, Vice
President, Secretary or Assistant Secretary and may be imprinted or otherwise
reproduced on the Warrant Certificates and for that purpose the Company may
adopt and use the facsimile signature of any person who shall have been
Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of, such person shall have
ceased to hold such
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office. The seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature.
Section 5. Separation of Warrants. The Notes and Warrants shall not be
separately transferable prior to the Separation Date.
Section 6. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall number and register the Warrant Certificates in a
register as they are issued by the Company.
Warrant Certificates shall be manually countersigned by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. The Warrant
Agent shall, upon written instructions of the Chairman of the Board, the
President, a Vice President, the Treasurer or the Controller of the Company,
initially countersign, issue and deliver Warrants entitling the Holders thereof
to purchase not more than the number of Warrant Shares referred to above in the
first recital hereof and shall countersign and deliver Warrants as otherwise
provided in this Agreement.
The Company and the Warrant Agent may deem and treat the Holder(s) of the
Warrant Certificates as the absolute owner(s) thereof (notwithstanding any
notation of ownership or other writing thereon made by anyone), for all
purposes, and neither the Company nor the Warrant Agent shall be affected by
any notice to the contrary. Prior to a Separation Date, the registered holder
of the Unit shall be deemed the registered Holder of such Warrants for all
purposes hereunder.
Section 7. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Global Warrants. The transfer and exchange
of Global Warrants or beneficial interests therein shall be effected through
the Depositary, in accordance with this Warrant Agreement and the procedures of
the Depositary therefor.
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(b) Exchange of a Beneficial Interest in a Global Warrant for a
Definitive Warrant.
(i) Any person having a beneficial interest in a Global Warrant may upon
request exchange such beneficial interest for a Definitive Warrant. Upon
receipt by the Warrant Agent of written instructions or such other form of
instructions as is customary for the Depositary from the Depositary or its
nominee on behalf of any person having a beneficial interest in a Global
Warrant and, in the case of a Registrable Security, the following additional in
formation and documents (all of which may be submitted by facsimile), as
applicable:
(A) if such beneficial interest is being delivered to the person
designated by the Depositary as being the beneficial owner, a
certification from such beneficial owner to that effect (in substantially
the form of Exhibit B hereto);
(B) if such beneficial interest is being transferred (1) to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act or
(2) pursuant to an exemption from registration in accordance with Rule 144
under the Securities Act (and based on an opinion of counsel if the
Company or the Warrant Agent so requests) or (3) pursuant to an effective
registration statement under the Securities Act, a certification to that
effect (in substantially the form of Exhibit B hereto);
(C) if such beneficial interest is being transferred to any
institutional "accredited investor," within the meaning of Rule 501(a)(1),
(2), (3) and (7) under the Securities Act pursuant to a private placement
exemption from the registration requirements of the Securities Act (and
based on an opinion of counsel if the Company or the Warrant Agent so
requests), a certification to that effect (in substantially the form of
Exhibit B hereto) and a certification from the applicable transferee (in
substantially the form of Exhibit C hereto);
(D) if such beneficial interest is being transferred pursuant to an
exemption from registration in accordance with Rule 904 under the
Securities Act (and based on an opinion of counsel if the Company or the
Warrant Agent so requests), a certification to that effect (in
substantially the form of Exhibit B); or
(E) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the Securities Act
(and based on an opinion of counsel if the Company or the Warrant Agent so
requests), a certification to that effect (in substantially the form of
Exhibit B hereto);
then, in accordance with the standing instructions and procedures existing
between the Depositary and Warrant Agent, the Warrant Agent shall cause the
number of Warrants
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and Warrant Shares represented by the Global Warrant to be reduced by the
number of Warrants and Warrant Shares to be represented by the Definitive
Warrants to be issued in exchange for the interest in the Global Warrant
and, following such reduction, the Company shall execute and the Warrant Agent
shall countersign and deliver to the transferee, as the case may be, a
Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial interest
in a Global Warrant pursuant to this Section 7(b) shall be registered in such
names as the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Warrant Agent. The Warrant Agent
shall deliver such Definitive Warrants to the persons in whose names such
Warrants are so registered.
(c) Transfer and Exchange of Definitive Warrants. When Definitive
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations, the Warrant Agent shall
register the transfer or make the exchange as requested if the following
requirements are met:
(x) the Definitive Warrants presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Warrant
Agent, duly executed by the Holder thereof or by his attorney, duly
authorized in writing; and
(y) in the case of Registrable Securities, such request shall be
accompanied by the following additional information and documents (all of
which may be submitted by facsimile), as applicable:
(A) if such Registrable Security is being delivered to the Warrant
Agent by a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect (in
substantially the form of Exhibit B hereto);
(B) if such Registrable Security is being transferred (1) to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act or
(2) pursuant to an exemption from registration in accordance with Rule 144
under the Securities Act (and based on an opinion of counsel if the
Company or the Warrant Agent so requests) or (3) pursuant to an effective
registration statement under the Securities Act, a certification to that
effect (in substantially the form of Exhibit B hereto);
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(C) if such Registrable Security is being transferred to an
institutional "accredited investor," within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act pursuant to a private placement
exemption from the registration requirements of the Securities Act (and
based on an opinion of counsel if the Company or the Warrant Agent so
requests), a certification to that effect (in substantially the form of
Exhibit B hereto) and a certification from the applicable transferee (in
substantially the form of Exhibit C hereto);
(D) if such Registrable Security is being transferred pursuant to an
exemption from registration in accordance with Rule 904 under the
Securities Act (and based on an opinion of counsel if the Company or the
Warrant Agent so requests), a certification to that effect (in
substantially the form of Exhibit B hereto); or
(E) if such Registrable Security is being transferred in reliance on
another exemption from the registration requirements of the Securities Act
(and based on an opinion of counsel if the Company or the Warrant Agent so
requests), a certification to that effect (in substantially the form of
Exhibit B hereto).
(d) Restrictions on Exchange or Transfer of a Definitive Warrant for a
Beneficial Interest in a Global Warrant. A Definitive Warrant may not be
exchanged for a beneficial interest in a Global Warrant except upon
satisfaction of the requirements set forth below. Upon receipt by the Warrant
Agent of a Definitive Warrant, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Warrant Agent, together
with:
(i) if such Definitive Warrant is a Registrable Security,
certification from the Holder thereof (in substantially the form of Exhibit B
hereto) to the effect that such Definitive Warrant is being transferred by such
Holder either (A) to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under the Securities Act
(and based on an opinion of counsel if the Company or the Warrant Agent so
requests), (B) outside the United States, to a foreign person in a transaction
meeting the requirements of Rule 904 under the Securities Act (and based on an
opinion of counsel if the Company or the Warrant Agent so requests) or (C) to
an institutional "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act pursuant to a private placement
exemption from the registration requirements of the Securities Act who has
provided a certification to that effect (and based on an opinion of counsel if
the Company or the Warrant Agent so requests) who wishes to take delivery
thereof in the form of a beneficial interest in a Global Warrant; and
(ii) whether or not such Definitive Warrant is a Registrable Security,
written instructions directing the Warrant Agent to make, or to direct the
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Depositary to make, an endorsement on the Global Warrant to reflect an increase
in the number of Warrants and Warrant Shares represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or
direct the Depositary to cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Warrant Agent, the
number of Warrants and Warrant Shares represented by the Global Warrant to be
increased accordingly. If no Global Warrants are then outstanding, the Company
shall issue and the Warrant Agent shall countersign a new Global Warrant
representing the appropriate number of Warrants and Warrant Shares.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 7), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Countersigning of Definitive Warrants in Absence of Depositary. If at
any time:
(i) the Depositary for the Global Warrants notifies the Company that
the Depositary is unwilling or unable to continue as Depositary for the Global
Warrants and a successor Depositary for the Global Warrants is not appointed by
the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Warrant Agent in
writing that it elects to cause the issuance of Definitive Warrants under this
Warrant Agreement, then the Company shall execute, and the Warrant Agent, upon
receipt of written instructions signed by two officers of the Company, shall
countersign and deliver Definitive Warrants, in an aggregate number equal to
the number of Warrants represented by Global Warrants, in exchange for such
Global Warrants.
(g) Legends.
(i) Except for any Registrable Security sold or transferred (including
any Registrable Security represented by a Global Warrant) as discussed in
clause (ii) below, each Warrant Certificate evidencing the Global Warrants and
the Definitive Warrants (and all Warrants issued in exchange therefor or
substitution thereof) and each certificate representing the Warrant Shares
shall bear a legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION
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EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT
OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A , (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A PERSON THAT
IS NOT A U.S. PERSON (AS DEFINED IN RULE 902 UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR
TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE AND WARRANT AGENT A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE WARRANTS (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE WARRANT AGENT) OR (e) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (IN THE CASE OF (b), (c), (d) or (e), UPON
AN OPINION OF COUNSEL IF THE ISSUER OR WARRANT AGENT,
REGISTRAR OR TRANSFER AGENT FOR THE SECURITIES SO REQUESTS),
(2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
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OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Registrable Security (including
any Registrable Security represented by a Global Warrant) pursuant to an
effective registration statement under the Securities Act, pursuant to Rule 144
under the Securities Act or pursuant to an opinion of counsel reasonably
satisfactory to the Company and addressed to the Warrant Agent that no legend
is required:
(A) in the case of any Registrable Security that is a Definitive Warrant,
the Warrant Agent shall permit the Holder thereof to exchange such Registrable
Security for a Definitive Warrant that does not bear the legend set forth in
clause (i) above and rescind any restriction on the transfer of such
Registrable Security; and
(B) in the case of any Registrable Security represented by a Global
Warrant, such Registrable Security shall not be required to bear the legend set
forth in clause (i) above but shall continue to be subject to the provisions of
Section 7(c) hereof; provided, however, that with respect to any request for an
exchange of a Registrable Security that is represented by a Global Warrant for
a Definitive Warrant that does not bear the legend set forth in clause (i)
above, which request is made in reliance upon Rule 144 (and based upon an
opinion of counsel if the Company or the Warrant Agent so requests), the Holder
thereof shall certify in writing to the Warrant Agent that such request is
being made pursuant to Rule 144 (such certification to be substantially in
the form of Exhibit B hereto).
(h) Cancellation of Global Warrant. At such time as all beneficial
interests in Global Warrants have either been exchanged for Definitive
Warrants, redeemed, repurchased or cancelled, all Global Warrants shall be
returned to or retained and cancelled by the Warrant Agent.
(i) Obligations with respect to Transfers and Exchanges of Warrants.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of Section 6 and this Section 7, Definitive
Warrants and Global Warrants as required pursuant to the provisions of this
Section 7.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration of transfer or exchange of Definitive Warrants or Global Warrants
shall be the valid obligations of the Company, entitled to the same benefits
under this Warrant
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Agreement, as the Definitive Warrants or Global Warrants surrendered upon such
registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the person in
whose name any Warrant is registered as the absolute owner of such Warrant and
neither the Warrant Agent, nor the Company shall be affected by notice to the
contrary.
(iv) No service charge shall be made to a Holder for any registration,
transfer or exchange.
Section 8. Terms of Warrants: Exercise of Warrants. Subject to the terms
of this Agreement, each Warrant Holder shall have the right, which may be
exercised commencing at 9:00 a.m., New York City time, on the earliest to occur
of (i) the Separation Date, (ii) the Exercise Event, (iii) a registration
statement under the Securities Act relating to the Warrant Shares has been
filed with, and declared effective by, the Commission, and no stop order
suspending the effectiveness of such registration statement has been issued by
the Commission or (iv) the issuance of the Warrant Shares is permitted pursuant
to an exemption from the registration requirements of the Securities Act (the
first such date to occur, the "Exercise Date") and ending at 5:00 p.m., New
York City time, on the Expiration Date, to receive from the Company the number
of fully paid and nonassessable Warrant Shares which the Holder may at the time
be entitled to receive on exercise of such Warrants and payment of the Exercise
Price then in effect for such Warrant Shares. Subject to the provisions of the
following paragraph of this Section 8, each Warrant not exercised prior to 5:00
p.m., New York City time, on the Expiration Date shall become void and all
rights thereunder and all rights in respect thereof under this Agreement shall
cease as of such time. No adjustments as to dividends will be made upon
exercise of the Warrants except to the extent set forth in Section 13(d).
The Company shall give notice not less than 90, and not more than 120,
days prior to the Expiration Date to the Holders of all then outstanding
Warrants to the effect that the Warrants will terminate and become void as of
5:00 p.m., New York City time, on the Expiration Date. If the Company fails to
give such notice, the Warrants will not expire until 90 days after the date the
Company gives such notice, provided, however, in no event will Holders be
entitled to any damages or other remedy for the Company's failure to give such
notice other than any such extension.
A Warrant may be exercised upon surrender to the Company at the Principal
Office of the Warrant Agent of the certificate or certificates evidencing the
Warrant to be exercised with the form of election to purchase on the reverse
thereof properly completed and signed, which signature shall be guaranteed by a
bank or trust company having an office or correspondent in the United States or
a broker or dealer which is a member of a registered securities exchange or the
National Association of
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Securities Dealers, Inc., and upon payment to the Warrant Agent for the account
of the Company of the Exercise Price as adjusted as herein provided, for each
of the Warrant Shares in respect of which such Warrant is then exercised.
Payment of the aggregate Exercise Price shall be made in cash or by certified
or official bank check, payable to the order of the Company if a registration
statement relating to the issuance of Warrant Shares upon exercise of the
Warrant is then in effect. In the alternative, each Holder may exercise its
right to receive Warrant Shares (i) on a net basis, such that without the
exchange of any funds, the Holder receives that number of Warrant Shares
otherwise issuable upon exercise of its Warrants (and to which such exercise
relates) less that number of Warrant Shares having a fair market value equal to
the aggregate Exercise Price that would otherwise have been paid by the Holder
for the Warrant Shares being issued, (ii) by tendering Notes having an
accredited value, plus accrued but unpaid interest, if any, thereon, to the
date of exercise equal to the aggregate Exercise Price that would otherwise
have been paid by the Holder for the Warrant Shares being issued, or (iii) by a
combination of the procedures in clauses (i) and (ii). For purposes of the
foregoing sentence, "fair market value" of the Warrant Shares shall be as
determined by the Board of Directors of the Company in good faith. The Company
shall notify the Warrant Agent in writing of any such determination of fair
market value. The exercise of Warrants by Holders of beneficial interest in
Global Warrants shall be effected in accordance with this Agreement and the
procedures of the Depositary therefor.
Subject to the provisions of Section 9 hereof, upon surrender of Warrants
and payment of the Exercise Price as provided above, the Warrant Agent shall
thereupon promptly notify the Company, and the Company shall promptly transfer
to the Holder of such Warrant Certificate a certificate or certificates for the
appropriate number of Warrant Shares or other securities or property (including
any money) to which the Holder is entitled, registered or otherwise placed in,
or payable to the order of, such name or names as may be directed in writing by
the Holder, and shall deliver such certificate or certificates representing the
Warrant Shares and any other securities or property (including any money) to
the person or persons entitled to receive the same, together with an amount in
cash in lieu of any fraction of a share as provided in Section 15. Any such
certificate or certificates representing the Warrant Shares shall be deemed to
have been issued and any person so designated to be named therein shall be
deemed to have become a Holder of record of such Warrant Shares as of the date
of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable commencing on the Exercise Date, at the
election of the Holders thereof, either in full or from time to time in part
and, in the event that a certificate evidencing Warrants is exercised in
respect of fewer than all of the Warrant Shares issuable on such exercise at
any time prior to the date of expiration of the Warrants, a new certificate
evidencing the remaining Warrant or Warrants will be issued, and the Warrant
Agent is hereby irrevocably authorized to countersign and to deliver the
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required new Warrant Certificate or Certificates pursuant to the provisions of
this Section and of Section 4 hereof, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly
executed on behalf of the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall then
be disposed of by the Warrant Agent in a manner satisfactory to the Company.
The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all monies received by
the Warrant Agent for the purchase of the Warrant Shares through the exercise
of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder by or from the Company available for inspection by
the Holders, upon reasonable written notice, during normal business hours at
its Principal Office. The Company shall supply the Warrant Agent from time to
time with such numbers of copies of this Agreement as the Warrant Agent may
request.
Section 9. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants or to any separation of the Warrants from the Notes; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares in a name other than that
of the Holder of a Warrant Certificate surrendered upon the exercise of a
Warrant, and the Company shall not be required to issue or deliver such Warrant
Certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
Section 10. Mutilated or Missing Warrant Certificates. In case any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue and the Warrant Agent may countersign, in exchange
and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing
an equivalent number of Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, also
reasonably satisfactory to them. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company or the Warrant Agent may
prescribe.
Section 11. Reservation of Warrant Shares. The Company will at all times
reserve and keep available, free from any preemptive rights imposed by the
Company, out
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of the aggregate of its authorized but unissued Common Stock or its authorized
and issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be or may become
deliverable upon the exercise of all outstanding Warrants.
The transfer agent for the Common Stock (the "Transfer Agent") and every
subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep
a copy of this Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition
from time to time from such Transfer Agent the stock certificates required to
honor outstanding Warrants upon exercise thereof in accordance with the terms
of this Agreement. The Company will supply such Transfer Agent with duly
executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 15. The Company
will furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto, transmitted to each Holder of the Warrants
pursuant to Section 16 hereof. Prior to the initial public offering of the
Common Stock of the Company, the Company may act as Transfer Agent for the
Common Stock. The Warrant Agent hereby agrees that it will not issue any stock
certificates delivered hereunder other than upon the exercise of Warrants in
accordance with the terms of this Agreement and, promptly after the issuance of
any such stock certificates, to notify the Transfer Agent of such issuance.
Before taking any action which would cause an adjustment pursuant to
Section 13 hereof that would reduce the Exercise Price below the then par value
(if any) of the Warrant Shares, the Company will take any corporate action
which may, in the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants in accordance with the terms of this Agreement (including
the payment of the Exercise Price) will, upon issue, be duly and validly
issued, fully paid, nonassessable, and free of preemptive rights imposed by the
Company.
Section 12. Obtaining Stock Exchange Listings. The Company will from
time to time use its best efforts to take all action which may be necessary so
that the Warrant Shares, immediately upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchanges and markets
(including, without limitation, the
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Nasdaq National Market) within the United States of America, if any, on which
other shares of Common Stock are then listed. Upon the listing of such Warrant
Shares, the Company shall notify the Warrant Agent in writing. The Company will
obtain and keep all required permits and records in connection with such
listing.
Section 13. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The number and kind of shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to
time (as set forth in the notices required by Section 16 hereof) as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall hereafter
(a) pay a dividend or make a distribution on its Common Stock in shares of its
capital stock (whether shares of Common Stock or of capital stock of any other
class), (B) subdivide its outstanding shares of Common Stock, (C) combine its
outstanding shares of Common Stock into a smaller number of shares, or (D)
issue by reclassification of its shares of Common Stock any shares of capital
stock of the Company, the Exercise Price in effect and the number of Warrant
Shares issuable upon exercise of each Warrant immediately prior to such action
shall be adjusted so that the Holder of any Warrant thereafter exercised shall
be entitled to receive, for the same Exercise Price, the number of shares of
capital stock of the Company which such Holder would have owned immediately
following such action had such Warrant been exercised immediately prior
thereto. Any adjustment made pursuant to this paragraph shall become effective
immediately after the record date in the case of a dividend and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification. If, as a result of an adjustment made
pursuant to this paragraph, the Holder of any Warrant thereafter exercised
shall become entitled to receive shares of two or more classes of capital stock
of the Company, the Board of Directors of the Company (whose determination
shall be conclusive) shall determine the allocation of the adjusted Exercise
Price between or among shares of such classes of capital stock.
(b) Reclassification, Combinations, Mergers, etc. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
then outstanding shares of Common Stock or other capital stock issuable upon
exercise of the Warrants) or in case of any sale or conveyance to another
corporation of all or substantially all of the assets of the Company, then, as
a condition of such reclassification, change, consolidation, merger, sale or
conveyance, the Company or such a successor or purchasing corporation, as the
case may be, shall forthwith make lawful and adequate provision whereby the
Holder of each Warrant then outstanding shall have the
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right thereafter to receive on exercise of such Warrant the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a Holder
of the number of shares of Common Stock issuable upon exercise of such Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance and enter into a supplemental warrant agreement so providing.
Such provisions shall include provision for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 13. If the issuer of securities deliverable upon exercise of Warrants
under the supplemental warrant agreement is an affiliate of the formed,
surviving or transferee corporation, that issuer shall join in the supplemental
warrant agreement. The above provisions of this paragraph (b) shall similarly
apply to successive reclassifications and changes of shares of Common Stock and
to successive consolidations, mergers, sales or conveyances.
(c) Issuance of Options or Convertible Securities. The Company shall not
during the time any Warrant is exercisable hereunder issue, sell, distribute or
otherwise grant in any manner (including by assumption) to all holders of the
Common Stock any rights to subscribe for or to purchase, or any warrants or
options for the purchase of, Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (any such rights, warrants or
options being herein called "Options" and any such convertible or exchangeable
stock or securities being herein called "Convertible Securities") or any
Convertible Securities (other than upon exercise of any Option), whether or not
such Options or the rights to convert or exchange such Convertible Securities
are immediately exercisable, at a purchase price per share less than current
market price as determined under Section 13(e).
(d) Dividends and Distributions. (1) Until an initial public offering of
shares of Common Stock that is registered pursuant to the Securities Act and
pursuant to which the Company derives net proceeds of at least $50,000,000 (the
"IPO") the following provision with respect to the Warrants shall apply:
If, at any time or from time to time after the date of this Warrant
Agreement, the Company shall distribute to the holders of shares of Common
Stock (i) securities, (ii) property, other than cash, or (iii) cash, without
fair payment therefor, then, and in each such case, each Holder, upon the
exercise of any Warrant, shall be entitled to receive, without duplication for
any adjustment made elsewhere in this Section 13, such securities, property and
cash which the Holder would hold on the date of such exercise if, on the date
of this Warrant Agreement, the Holder had been the holder of record of the
shares of Common Stock subscribed for upon such exercise and, during the period
from the date of this Warrant Agreement to and including the date of such
exercise, had retained such shares of Common Stock and the securities, property
and cash receivable by the Holder during such period, subject, however, to the
Holder agreeing to any conditions to such distribution as were required of all
other Holders of shares of Common Stock in
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connection with such distribution. If the securities to be distributed by the
Company involve rights, warrants, options or any other form of convertible
securities and the right to exercise or convert such securities would expire in
accordance with its terms prior to the exercise of any Warrant, then the terms
of such securities shall provide that such exercise or convertibility right
shall remain in effect until thirty (30) days after the date the Holder
receives such securities pursuant to the exercise of such Holder's Warrant.
(2) From and after the IPO, the following provision with respect to the
Warrants shall apply:
In the event the Company shall, at any time or from time to time after the
date hereof, distribute to all the holders of Common Stock any dividend or
other distribution of cash, evidences of its indebtedness, other securities or
other properties or assets (in each case other than (i) dividends payable in
Common Stock, Options or Convertible Securities and (ii) any cash dividend
that, when added to all other cash dividends paid in the one year prior to the
declaration date of such dividend (excluding any such other dividend included
in a previous adjustment of the Exercise Price pursuant to this paragraph (d)
and excluding any cash dividends or other cash distributions from current or
retained earnings), does not exceed 5% of the current market price per share of
Common Stock on such declaration date), or any options, warrants or other
rights to subscribe for or purchase any of the foregoing, then (A) the Exercise
Price shall be decreased to a price determined by multiplying the Exercise
Price then in effect by a fraction, the numerator of which shall be the current
market price per share of Common Stock on the record date for such distribution
less the sum of (X) the cash portion, if any, of such distribution per share of
Common Stock outstanding (exclusive of any treasury shares) on the record date
for such distribution plus (Y) the then fair market value (as determined in
good faith by the Board of Directors of the Company) per share of Common Stock
outstanding (exclusive of any treasury shares) on the record date for such
distribution of that portion, if any, of such distribution consisting of
evidences of indebtedness, other securities, properties, assets, options,
warrants or subscription or purchase rights, and the denominator of which shall
be such current market price per share of Common Stock and (B) the number of
shares of Common Stock purchasable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number of shares of Common
Stock so purchasable immediately prior to the record date for such distribution
by a fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (A) of this sentence and
the denominator of which shall be the Exercise Price in effect immediately
after such adjustment. The adjustments required by this paragraph (d) shall be
made whenever any such distribution occurs retroactive to the record date for
the determination of stockholders entitled to receive such distribution.
(e) Current Market Price. For the purpose of any computation of current
market price under this Section 13 and Section 15, the current market price per
share of
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Common Stock at any date shall be (x) for purposes of Section 15, the closing
price on the business day immediately prior to the exercise of the applicable
Warrant pursuant to Section 8 and (y) in all other cases, the average of the
daily closing prices for the shorter of (i) the 20 consecutive trading days
ending on the last full trading day on the exchange or market specified in the
second succeeding sentence prior to the Time of Determination (as defined
below) and (ii) the period commencing on the date next succeeding the first
public announcement of the issuance, sale, distribution or granting in question
through such last full trading day prior to the Time of Determination. The term
"Time of Determination" as used herein shall be the time and date of the
earlier to occur of (A) the date as of which the current market price is to be
computed and (B) the last full trading day on such exchange or market before
the commencement of "ex-dividend" trading in the Common Stock relating to the
event giving rise to the adjustment required by paragraph (a), (b), (c) or (d).
The closing price for any day shall be the last reported sale price regular
way or, in case no such reported sale takes place on such day, the average of
the closing bid and asked prices regular way for such day, in each case (1) on
the principal national securities exchange on which the shares of Common Stock
are listed or to which such shares are admitted to trading or (2) if the Common
Stock is not listed or admitted to trading on a national securities exchange,
in the over-the-counter market as reported by Nasdaq National Market or any
comparable system or (3) if the Common Stock is not listed on Nasdaq National
Market or a comparable system, as furnished by two members of the NASD selected
from time to time in good faith by the Board of Directors of the Company for
that purpose. In the absence of all of the foregoing, or if for any other
reason the current market price per share cannot be determined pursuant to the
foregoing provisions of this paragraph (e), the current market price per share
shall be the fair market value thereof as determined in good faith by the Board
of Directors of the Company.
(f) Consideration Received. If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold or distributed for a consideration
other than cash, the amount of the consideration other than cash received by
the Company in respect thereof shall be deemed to be the then fair market value
of such consideration (as determined in good faith by the Board of Directors of
the Company). If any Options shall be issued in connection with the issuance
and sale of other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such Options by
the parties thereto, such Options shall be deemed to have been issued without
consideration; provided, however, that if such Options have an exercise price
equal to or greater than the current market price of the Common Stock on the
date of issuance of such Options, then such Options shall be deemed to have
been issued for consideration equal to such exercise price.
(g) Deferral of Certain Adjustments. No adjustment to the Exercise Price
(including the related adjustment to the number of shares of Common Stock
purchasable upon the exercise of each Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an
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increase or decrease of at least one percent of the Exercise Price; provided
that any adjustments which by reason of this paragraph (g) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. No adjustment need be made for a change in the par value of the
Common Stock. All calculations under this Section shall be made to the nearest
1/10,000 of one cent or to the nearest 1/1000 of a share, as the case may be.
(h) Changes in Options and Convertible Securities. If the exercise
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities referred to in paragraph (c) or (e) above, or the
rate at which any Convertible Securities referred to in paragraph (c) or (e)
above are convertible into or exchangeable for Common Stock shall change at any
time (other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Section 13), the Exercise Price then in effect and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall forthwith be
readjusted (effective only with respect to any exercise of any Warrant after
such readjustment) to the Exercise Price and number of shares of Common Stock
so purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.
(i) Expiration of Options and Convertible Securities. If, at any time
after any adjustment to the number of shares of Common Stock purchasable upon
the exercise of each Warrant shall have been made pursuant to paragraph (c) or
(h) above or this paragraph (i), any Options or Convertible Securities shall
have expired unexercised, the number of such shares so purchasable shall, upon
such expiration, be readjusted and shall thereafter be such as they would have
been had they been originally adjusted (or had the original adjustment not been
required, as the case may be) as if (i) the only shares of Common Stock deemed
to have been issued in connection with such Options or Convertible Securities
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Options or Convertible Securities and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale, distribution or
granting of all such Options or Convertible Securities, whether or not
exercised; provided that no such readjustment shall have the effect of
decreasing the number of such shares so purchasable by an amount (calculated by
adjusting such decrease to account for all other adjustments made pursuant to
this Section 13 following the date of the original adjustment referred to
above) in excess of the amount of the adjustment initially made in respect of
the issuance, sale, distribution or granting of such Options or Convertible
Securities.
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(j) Registration of Warrants. If on or before July 31, 1999 the Company
has not (a) consummated a Qualified IPO, (b) repurchased all outstanding Notes
or (c) consummated a merger pursuant to which the shares of Common Stock are
converted into securities traded on NASDAQ or a national securities exchange
and have a market value of at least $100 million, the Warrants will also
entitle each holder to purchase an additional 8.678048 shares of Common Stock,
aggregating to 1,084,756 additional shares of Common Stock which represent
approximately 4.0% of the Company's outstanding Common Stock on a fully diluted
basis (assuming exercise of outstanding options and warrants and conversion of
all outstanding Preferred Stock) as of the Issue Date.
(k) Other Adjustments. In the event that at any time, as a result of an
adjustment made pursuant to this Section 13, the Holders shall become entitled
to receive any securities of the Company other than shares of Common Stock,
thereafter the number of such other securities so receivable upon exercise of
the Warrants and the Exercise Price applicable to such exercise shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of
Common Stock contained in this Section 13.
Section 14. Statement on Warrants. Irrespective of any adjustment in the
number or kind of shares issuable upon the exercise of the Warrants or the
Exercise Price, Warrants theretofore or thereafter issued may continue to
express the same number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
Section 15. Fractional Interest. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by
the same Holder, the number of full shares of Common Stock which shall be
issuable upon such exercise shall be computed on the basis of the aggregate
number of shares of Common Stock acquirable on exercise of the Warrants so
presented. If any fraction of a share of Common Stock would, except for the
provisions of this Section, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall direct the Transfer Agent to pay
an amount in cash calculated by it equal to (i) the then current market price
per share multiplied by such fraction computed to the nearest whole cent, less
(ii) an amount equal to the Exercise Price multiplied by such fraction computed
to the nearest whole cent. The Holders, by their acceptance of the Warrant
Certificates, expressly waive any and all rights to receive any fraction of a
share of Common Stock or a stock certificate representing a fraction of a share
of Common Stock.
Section 16. Notices to Warrant Holders and the Warrant Agent. Upon any
adjustment of the Exercise Price pursuant to Section 13, the Company shall
promptly thereafter (i) cause to be filed with the Warrant Agent a certificate
executed by the independent accountants of the Company setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts
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upon which such calculations are based and setting forth the number of Warrant
Shares (or portion thereof) issuable after such adjustment in the Exercise
Price, upon exercise of a Warrant and payment of the adjusted Exercise Price,
which certificate shall be conclusive evidence of the correctness of the
matters set forth therein, and (ii) cause to be given to each of the registered
Holders of the Warrant Certificates at his address appearing on the Warrant
register written notice of such adjustments by first-class mail, postage
prepaid. The Warrant Agent shall be entitled to rely on the above-referenced
accountant's certificate and shall be under no duty or responsibility with
respect to any such certificate, except to exhibit the same from time to time
to any Holder desiring an inspection thereof during reasonable business hours.
The Warrant Agent shall not at any time be under any duty or responsibility to
any Holder to determine whether any facts exist that may require any adjustment
of the number of shares of Common Stock or other stock or property issuable on
exercise of the Warrants or the Exercise Price, or with respect to the nature
or extent of any such adjustment when made, or with respect to the method
employed in making such adjustment or the validity or value (or the kind or
amount) of any shares of Common Stock or other stock or property which may be
issuable on exercise of the Warrants. The Warrant Agent shall not be
responsible for any failure of the Company to make any cash payment or to
issue, transfer or deliver any shares of Common Stock or stock certificates or
other common stock or property upon the exercise of any Warrant.
In case:
(a) the Company shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase shares
of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of shares
of Common Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends payable in shares of Common Stock or distributions
referred to in Section 13 hereof); or
(c) of any consolidation or merger to which the Company is a party for
which approval of any shareholders of the Company is required and following
which the shareholders of the Company before such consolidation or merger no
longer hold at least 50% of the outstanding capital stock of the Company
following the merger or consolidation, or of the conveyance or transfer of all
or substantially all of the properties and assets of the Company, or of any
reclassification or change of Common Stock issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common Stock,
or other transaction that would result in a Change in Control; or
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(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
(e) the Company proposes to take any other action that would require an
adjustment of the Exercise Price or the number of Warrant Shares pursuant to
Section 13;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered Holders of the Warrant Certificates at
such Holder's address appearing on the Warrant register, at least 20 days (or
10 days in any case specified in clauses (a) or (b) above) prior to the
applicable record date hereinafter specified, or promptly in the case of events
for which there is no record date, by first class mail, postage prepaid, a
written notice stating (i) the date as of which the holders of record of shares
of Common Stock to be entitled to receive any such rights, options, warrants or
distribution are to be determined, or (ii) the initial expiration date set
forth in any tender offer or exchange offer for shares of Common Stock, or
(iii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up or Change of Control is expected to
become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up or Change of Control. The failure to give the notice
required by this Section 16 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or Change of
Control or the vote upon any action. Nothing contained in this Agreement or in
any of the Warrant Certificates shall be construed as conferring upon the
Holders thereof the right to vote or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company.
Section 17. Merger, Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 19. Any such successor Warrant Agent shall
promptly cause notice of its succession as Warrant Agent to be mailed (by first
class mail, postage prepaid) to each Holder at such Holder's last address as
shown on the register maintained by the Warrant Agent pursuant to this
Agreement. In case at the time such successor to the Warrant Agent shall
succeed to the agency created by this Agreement, and in case at that time any
of the Warrant Certificates shall have been countersigned but not delivered,
any such successor to the Warrant Agent may adopt the
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25
countersignature of the original Warrant Agent; and in case at that time any of
the Warrant Certificates shall not have been countersigned, any successor to
the Warrant Agent may countersign such Warrant Certificates either in the name
of the predecessor Warrant Agent or in the name of the successor to the Warrant
Agent; and in all such cases such Warrant Certificates shall have the full
force and effect provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its
changed name, and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement.
Section 18. Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the Holders of Warrants, by their acceptance
thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates shall
be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any Holder of any Warrant
Certificate in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any Holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
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26
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature reasonably
incurred by the Warrant Agent in the execution of this Agreement and to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, reasonable costs and counsel fees, for
anything done or omitted by the Warrant Agent in the execution of this
Agreement except as a result of its negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Holders of Warrant Certificates shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrant Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent and any recovery of judgment shall be for
the ratable benefit of the Holders of the Warrants, as their respective rights
or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or employee
of it, may buy, sell or deal in any of the Warrants or other securities of the
Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under
this Agreement. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the express provisions
hereof. The Warrant Agent shall not be liable for anything which it may do or
refrain from doing in connection with this Agreement except for its own
negligence or bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or
with respect to the method employed in making the same. The Warrant Agent shall
not be accountable with respect to the validity or value or the kind or amount
of any Warrant Shares or of any securities or property which may at
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any time be issued or delivered upon the exercise of any Warrant or with
respect to whether any such Warrant Shares or other securities will when issued
be validly issued and fully paid and nonassessable, and makes no representation
with respect thereto.
(j) In no event shall the Warrant Agent be liable hereunder for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Warrant Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action. No
provision in this Agreement shall require the Warrant Agent to risk or expend
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder.
Section 19. Resignation and Removal of Warrant Agent; Appointment of
Successor. No resignation or removal of the Warrant Agent and no appointment
of a successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant
Agent may resign its duties and be discharged from all further duties and
liability hereunder (except liability arising as a result of the Warrant
Agent's own negligence or willful misconduct) after giving written notice to
the Company. The Company may remove the Warrant Agent upon written notice, and
the Warrant Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder, except as aforesaid. The Warrant Agent
shall, at the Company's expense, cause to be mailed (by first class mail,
postage prepaid) to each Holder of a Warrant at his last address as shown on
the register of the Company maintained by the Warrant Agent a copy of said
notice of resignation or notice of removal, as the case may be. Upon such
resignation or removal, the Company shall appoint in writing a new warrant
agent. If the Company shall fail to make such appointment within a period of
30 days after it has been notified in writing of such resignation by the
resigning Warrant Agent or after such removal, then the resigning or removed
Warrant Agent or the Holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a new warrant agent. Any new warrant
agent, whether appointed by the Company or by such a court, shall be a
corporation doing business under the laws of the United States or any state
thereof, in good standing and having a combined capital and surplus of not less
than $10,000,000. The combined capital and surplus of any such new warrant
agent shall be deemed to be the combined capital and surplus as set forth in
the most recent annual report of its condition published by such warrant agent
prior to its appointment, provided that such reports are published at least
annually pursuant to law or to the requirements of a federal or state
supervising or examining authority. After acceptance in writing of such
appointment by the new warrant agent, it shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein
as the Warrant Agent, without any further assurance, conveyance, act or deed;
but if for any reason it shall be necessary or expedient to execute and deliver
any further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and delivered
by the resigning or removed Warrant Agent. Not later than the effective date of
any such
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appointment, the Company shall give notice thereof to the resigning or removed
Warrant Agent. Failure to give any notice provided for in this Section,
however, or any defect therein, shall not affect the legality or validity of
the resignation of the Warrant Agent or the appointment of a new warrant agent,
as the case may be.
Section 20. Registration. The Company acknowledges that Holders shall
have the registration rights set forth in the Warrant Registration Rights
Agreement.
Section 21. Reports.
(a) So long as any of the Warrants remain outstanding, the Company shall
cause copies of all quarterly and annual financial reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act ("SEC Reports") to be filed with the Warrant Agent
and mailed to the Holders of the Warrants at their addresses appearing in the
register of Warrant Holders maintained by the Warrant Agent, in each case,
within 15 days of filing with the Commission. If the Company is not subject to
the requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
nevertheless continue to cause SEC Reports, comparable to those which it would
be required to file pursuant to Section 13 or 15(d) of the Exchange Act if it
were subject to the requirements of either such Section, to be so filed with
the Commission (but only if the Commission permits such filings) and with the
Warrant Agent and mailed to the Holders of the Warrants, in each case, within
the same time periods as would have applied (including under the preceding
sentence) had the Company been subject to the requirements of Section 13 or
15(d) of the Exchange Act.
(b) The Company shall provide the Warrant Agent with a sufficient number
of copies of all SEC Reports that the Warrant Agent may be required to deliver
to the Holders of the Warrants under this Section 21.
(c) The Warrant Agent shall not be responsible for reviewing any reports
filed with it by the Company pursuant to this Section 21.
Section 22. Rule 144A. The Company hereby agrees with each Holder, for
so long as any Registrable Securities remain outstanding, to make available,
upon request of any Holder of Registrable Securities, to any Holder or
beneficial owner of Registrable Securities in connection with any sale thereof
and any prospective purchaser of such Registrable Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A.
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Section 23. Notices to Company and Warrant Agent. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the
Holder of any Warrant Certificate to or on the Company shall be sufficiently
given or made when and if deposited in the mail, first class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent), as follows:
TeleHub Communications Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
In case the Company shall fail to maintain such office or agency or shall
fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or by the
Holder(s) of any Warrant Certificate to the Warrant Agent shall be sufficiently
given when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) to the Warrant Agent as follows:
State Street Bank and Trust Company
Corporate Trust Department
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Section 24. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any Holders of Warrant Certificates in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not in any way adversely affect the interests of the Holders of Warrant
Certificates. Any amendment or supplement to this Agreement that has a
material adverse effect on the interests of Holders shall require the written
consent of Holders representing a majority of the then outstanding Warrants
(excluding Warrants held by the Company or any of its Affiliates). The consent
of each Holder of a
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Warrant affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided for in Section 13 hereof). The Warrant Agent shall be
entitled to receive and, subject to Section 18, shall be fully protected in
relying upon, an officers' certificate and opinion of counsel as conclusive
evidence that any such amendment or supplement is authorized or permitted
hereunder, that it does or does not, as the case may be, require the written
consent of Holders to be effective hereunder, that it is not inconsistent
herewith, and that it will be valid and binding upon the Company in accordance
with its terms.
Section 25. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 26. Termination. This Agreement (other than any party's
obligations with respect to Warrants previously exercised and with respect to
indemnification or any other payment then owed to the Warrant Agent under
Section 18) shall terminate at 5:00 p.m., New York City time on the Expiration
Date.
Section 27. Governing Law. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF SAID STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
Section 28. Benefits of this Agreement.
(a) Nothing in this Agreement shall be construed to give to any person
other than the Company, the Warrant Agent and the Holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrant Agent and the Holders of the Warrant Certificates.
(b) Prior to the exercise of the Warrants, no Holder of a Warrant
Certificate, as such, shall be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of meetings of stockholders for the election of
directors of the Company or any other matter or to receive any notice of any
proceedings of the Company, except as may be specifically provided for herein.
The Holders of the Warrants are not entitled to share in the assets of the
Company in the event of the liquidation, dissolution or winding up of the
Company's affairs.
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(c) All rights of action in respect of this Agreement are vested in the
Holders of the Warrants, and any Holder of any Warrant, without the consent of
the Warrant Agent or the Holder of any other Warrant, may, on such Holder's own
behalf and for such Holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to
enforce, or otherwise in respect of, such Holder's rights hereunder, including
the right to exercise, exchange or surrender for purchase such Holder's
Warrants in the manner provided in this Agreement.
Section 29. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
TELEHUB COMMUNICATIONS CORPORATION
By: _______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
STATE STREET BANK AND TRUST COMPANY, as Warrant
Agent
By: _________________________________
Authorized Signatory
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SCHEDULE OF EXCHANGES OF DEFINITIVE WARRANTS(1)
The following exchanges of a part of this Global Warrant have been
made:
______________________
(1) This is to be included only if the Warrant is in global form.
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EXHIBIT A
EXHIBIT A
{FORM OF FACE OF WARRANT CERTIFICATE}
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART
OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 AGGREGATE PRINCIPAL
AMOUNT AT MATURITY OF 13 7/8% SENIOR DISCOUNT NOTES DUE 2005 (THE "NOTES") OF
TELEHUB COMMUNICATIONS CORPORATION (THE "COMPANY") AND A WARRANT. THE WARRANTS
AND THE NOTES WILL NOT TRADE SEPARATELY UNTIL THE EARLIEST OF (I) OCTOBER 30,
1998, (II) A "CHANGE OF CONTROL" (AS DEFINED IN THE INDENTURE GOVERNING THE
NOTES), (III) THE OCCURRENCE OF AN EVENT OF DEFAULT (AS DEFINED IN THE
INDENTURE GOVERNING THE NOTES), (IV) THE DATE ON WHICH A REGISTRATION STATEMENT
WITH RESPECT TO THE NOTES OR AN EXCHANGE OFFER (AS DEFINED IN THE INDENTURE
GOVERNING THE NOTES) FOR THE NOTES IS DECLARED EFFECTIVE, OR (V) SUCH EARLIER
DATE AS DETERMINED BY BANCBOSTON SECURITIES INC. IN ITS SOLE DISCRETION (SUCH
DATE, THE "SEPARATION DATE").(1)
No. { } Certificate for ______ Warrants
CUSIP No. [ ]
WARRANTS TO PURCHASE CLASS A COMMON STOCK
OF TELEHUB COMMUNICATIONS CORPORATION
___________
(1) UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
WARRANT AGREEMENT REFERRED TO HEREIN.
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THIS CERTIFICATES THAT _______________________, or its registered assigns,
is the registered holder of the number of Warrants set forth above (the
"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), at its
option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from TeleHub Communications
Corporation, a Nevada corporation (the "Company"), 16.662 shares of common
stock, par value $0.001 per share, of the Company (the "Common Stock") at the
per share exercise price of $0.01 (the "Exercise Price"). In addition, each
Warrant entitles the Holder to purchase an additional 8.678 shares of Common
Stock, at an exercise price of $0.01 per share, if on or before July 31, 1999
the Company has not (a) consummate a Qualified IPO, (b) repurchased all
outstanding Notes or (c) consummated a merger pursuant to which the shares of
Common Stock are converted into securities traded on NASDAQ or a national
securities exchange and have a market value of at least $100 million. This
Warrant Certificate shall terminate and become void as of the close of business
on July 31, 2005 (the "Expiration Date") or upon the exercise hereof as to all
the shares of Common Stock subject hereto. The number of shares issuable upon
exercise of the Warrants and the Exercise Price per share shall be subject to
adjustment from time to time as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement dated as of July 30 , 1998 (the "Warrant Agreement"), between the
Company and (the "Warrant Agent", which term includes any successor Warrant
Agent under the Warrant Agreement), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof. The Warrant
Agreement is hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties and obligations of the
Company, the Warrant Agent and the Holders of the Warrants. Capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Warrant Agreement. A copy of the Warrant Agreement may be obtained for
inspection by the Holder hereof upon written request to the Warrant Agent at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention of Corporate Trust
Administration.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time on
or after the Separation Date. Subject to the terms of the Warrant Agreement,
the Warrants may be exercised in whole or in part by presentation of this
Warrant Certificate with the Election to Purchase attached hereto duly executed
and with the simultaneous payment of the Exercise Price in cash or as provided
in the Warrant Agreement (subject to adjustment) to the Warrant Agent for the
account of the Company at the office of the Warrant Agent. If payment of the
Exercise Price in cash is permitted, then such payment shall be made by
certified or official bank check payable to the order of the Company or by wire
transfer of funds to an account designated by the Company for such purpose.
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As provided in the Warrant Agreement, the number of shares of Common Stock
issuable upon the exercise of the Warrants is subject to adjustment upon the
happening of certain events.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 9 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the issuance of the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be countersigned
and issued to the Holder hereof a new Warrant Certificate representing those
Warrants which were not exercised. This Warrant Certificate may be exchanged
at the office of the Warrant Agent by presenting this Warrant Certificate
properly endorsed with a request to exchange this Warrant Certificate for other
Warrant Certificates evidencing an equal number of Warrants. No fractional
Warrant Shares will be issued upon the exercise of the Warrants, but the
Company shall pay an amount in cash equal to the current market price per
Warrant Share, multiplied by such fraction computed to the nearest whole cent.
All shares of Common Stock issuable by the Company upon the exercise of
the Warrants shall, upon such issue, be duly and validly issued and fully paid
and non-assessable.
The holder in whose name the Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner
of the Warrant Certificate for all purposes whatsoever and neither the Company
nor the Warrant Agent shall be affected by notice to the contrary.
The Warrants do not entitle any holder hereof to any of the rights of a
stockholder of the Company.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
TELEHUB COMMUNICATIONS CORPORATION
By: ______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & Chief Executive Officer
Attest: ________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Chief Financial Officer, Treasurer
and Corporate Secretary
DATED: July 30, 1998
_____________________________
STATE STREET BANK AND TRUST
COMPANY, as Warrant Agent
By: _______________________________
Name: ▇▇▇ ▇▇
Title: Assistant Vice President
Attest: ______________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
Assistant Secretary
-36-
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FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
TELEHUB COMMUNICATIONS CORPORATION
The undersigned hereby irrevocably elects to exercise Warrants at an
exercise price per Warrant (subject to adjustment) of $ 0.01 to acquire
________ shares of Common Stock, par value $0.001 per share, of TeleHub
Communications Corporation on the terms and conditions specified within the
Warrant Certificate and the Warrant Agreement therein referred to, surrenders
this Warrant Certificate and all right, title and interest therein to TeleHub
Communications Corporation and directs that the shares of Common Stock
deliverable upon the exercise of such Warrants be registered or placed in the
name and at the address specified below and delivered thereto.
Date:
____________________________________________
(Signature of Owner)
____________________________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
____________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
____________________________________________
{Signature must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit
unions) with membership in an approved
guarantee medallion program pursuant to
Securities and Exchange Commission Rule
17Ad-5}
1. The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed.
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Securities and/or check to be issued to:
Please insert social security or identifying number:
Name: _______________________________________________________________
Street Address:______________________________________________________
City, State and Zip Code:____________________________________________
Any unexercised Warrants represented by the Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name: _______________________________________________________________
Street Address:______________________________________________________
City, State and Zip Code:____________________________________________
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EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of TELEHUB
COMMUNICATIONS CORPORATION.
This Certificate relates to ______ Warrants held in(1) __________
book-entry or _______________ definitive form by _________________ (the
"Transferor").
The Transferor:
[__] has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrants held by
the depositary a Warrant or Warrants in definitive, registered form
equal to its beneficial interest in such Global Warrant (or the
portion thereof indicated above); or
[__] has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such Warrant, the
Transferor does hereby certify that the Transferor is familiar with the Warrant
Agreement relating to the above captioned Warrants and that the transfer of
this Warrant does not require registration under the Securities Act of 1933, as
amended (the "Securities Act") because:
[__] Such Warrant is being acquired for the Transferor's own account
without transfer.
[__] Such Warrant is being transferred (i) to a qualified
institutional buyer (as defined in Rule 144A under the Securities
Act), in reliance on Rule 144A or (ii) pursuant to an exemption from
registration in accordance with Rule 904 under the Securities Act
(and, in the case of clause (ii), based on an opinion of counsel if
the Company or the Warrant Agent so requests).
[__] Such Warrant is being transferred (i) in accordance with Rule
144 under the Securities Act (and based on an opinion of counsel if
the Company or the Warrant Agent so requests) or (ii) pursuant to an
effective registration statement under the Securities Act.
_____________________
(1)Check applicable box
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[__] Such Warrant is being transferred to an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the Securities Act pursuant to a private placement exemption from
the registration requirements of the Securities Act (and based on an
opinion of counsel if the Company or the Warrant Agent so requests).
[__] Such Warrant is being transferred in reliance on and in compliance
with another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company or
the Warrant Agent so requests).
[INSERT NAME OF TRANSFEROR]
By: ______________________________
Name: ____________________________
Title: ___________________________
Date:
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EXHIBIT C
CERTIFICATE OF APPLICABLE TRANSFEREE
(Pursuant to Section 501(a)(1), (2), (3) and (7) of Securities Act of
1933, as amended)
Re: Warrants to Purchase Common Stock (the "Warrants") of TELEHUB
COMMUNICATIONS CORPORATION.
This Certificate relates to ______ Warrants held in __________ book-entry
or _______________ definitive form by _____________ (the "Transferor") to
_________________ (the "Transferee").
In connection with such request for the transfer of each such Warrant, the
Transferee does hereby certify that the Transferee is familiar with the Warrant
Agreement relating to the above captioned Warrants and that the transfer of
this Warrant does not require registration under the Securities Act of 1933, as
amended (the "Securities Act"), because:
(i) we are an "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act, or an entity in which all of the
equity owners are accredited investors within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act (an "Institutional Accredited
Investor");
(ii) any purchase of Warrants by us will be for our own account or for the
account of one or more other Institutional Accredited Investors;
(iii) in the event that we purchase any Warrants, we will acquire Warrants
having a minimum purchase price of at least $100,000 for our own account and
for each separate account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of purchasing
the Warrants;
(v) we are not acquiring Warrants with a view to any distribution thereof
in a transaction that would violate the Securities Act or the securities laws
of any State of the United States or any other applicable jurisdiction;
provided that the disposition of our property and the property of any accounts
for which we are acting as fiduciary shall remain at all times within our
control; and
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(vi) we have received a copy of the Offering Memorandum dated July 27,
1998 relating to the Warrants and acknowledge that we have had access to such
financial and other information, and have been afforded the opportunity to ask
such questions of representatives of the Company and receive answers thereto,
as we deem necessary in connection with our decision to purchase Warrants.
We understand that the Warrants are being offered in a transaction not
involving any public offering within the meaning of the Securities Act and that
the Warrants have not been registered under the Securities Act, and we agree,
on our own behalf and on behalf of each account for which we acquire any
Warrants, that such Warrants may be offered, resold, pledged or otherwise
transferred only (a) to a person whom we reasonably believe to be a qualified
institutional buyer (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, in a transaction meeting the
requirements of Rule 144 under the Securities Act, outside the United States in
a transaction meeting the requirements of Rule 904 under the Securities Act, or
in accordance with another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel if the Company so
requests), (b) to the Company or (c) pursuant to an effective registration
statement, and, in each case, in accordance with any applicable securities laws
of any State of the United States or any other applicable jurisdiction. We
understand that the registrar will not be required to accept for registration
of transfer any securities, except upon presentation of evidence satisfactory
to the Company that the foregoing restrictions on transfer have been complied
with. We further understand that the Warrants purchased by us will be in the
form of definitive physical certificates and that such certificates will bear a
legend reflecting the substance of this paragraph. We further agree to provide
to any person acquiring any of the Securities from us a notice advising such
person that resales of the Securities are restricted as stated herein.
We acknowledge that you, the Company and others will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING
TO CONFLICTS OF LAWS.
------------------------------
(Name of Purchaser)
By:
------------------------------
Name:
Title:
Address:
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