EXHIBIT 4.12
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SUPPLEMENTAL WARRANT AGREEMENT
Dated as of March 30, 2000
By and Between
PATHNET TELECOMMUNICATIONS, INC.
and
The Bank of New York,
Warrant Agent
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Warrants to Purchase Common Stock
Par Value $0.01 Per Share
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TABLE OF CONTENTS
PAGE
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrants..............................................................................2
SECTION 1.02. Form of Warrant Certificates......................................................................2
SECTION 1.03. Execution of Warrant Certificates.................................................................2
SECTION 1.04. Authentication and Delivery.......................................................................3
SECTION 1.05. [Intentionally Omitted]...........................................................................4
SECTION 1.06. Separation of Warrants and Notes..................................................................4
SECTION 1.07. Registration......................................................................................4
SECTION 1.08. Registration of Transfers or Exchanges............................................................4
SECTION 1.09. Lost, Stolen, Destroyed, Defaced or Mutilated Warrant Certificates................................9
SECTION 1.10. Offices for Exercise, etc........................................................................10
ARTICLE II
DURATION, EXERCISE OF WARRANTS; EXERCISE PRICE
AND REPURCHASE OF WARRANTS
SECTION 2.01. Duration of Warrants.............................................................................10
SECTION 2.02. Exercise, Exercise Price, Settlement and Delivery................................................10
SECTION 2.03. Cancellation of Warrant Certificates.............................................................13
SECTION 2.04. Notice of an Exercise Event......................................................................14
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. Enforcement of Rights............................................................................14
SECTION 3.02. Obtaining Stock Exchange Listings................................................................14
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Taxes.................................................................................14
SECTION 4.02. Rules 144 and 144A...............................................................................15
SECTION 4.03. Form of Initial Public Equity Offering...........................................................15
SECTION 4.04. Securities Act and Applicable State Securities Laws..............................................15
SECTION 4.05. Resolution of Preemptive Rights, If Any..........................................................15
ARTICLE V
ADJUSTMENTS
SECTION 5.01. Adjustment of Exercise Rate; Notices.............................................................16
SECTION 5.02. Fractional Shares................................................................................23
SECTION 5.03. Certain Distributions............................................................................23
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. Warrant Agent....................................................................................23
SECTION 6.02. Conditions of Warrant Agent's Obligations........................................................24
SECTION 6.03. Resignation and Appointment of Successor.........................................................27
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment........................................................................................29
SECTION 7.02. Notices and Demands to the Company and Warrant Agent.............................................29
SECTION 7.03. Addresses for Notices to Parties and for Transmission of Documents...............................30
SECTION 7.04. Notices to Holders...............................................................................30
SECTION 7.05. Applicable Law...................................................................................30
SECTION 7.06. Persons Having Rights Under Agreement............................................................30
SECTION 7.07. Headings.........................................................................................31
SECTION 7.08. Counterparts.....................................................................................31
SECTION 7.09. Inspection of Agreement..........................................................................31
SECTION 7.10. Availability of Equitable Remedies...............................................................31
SECTION 7.11. Obtaining of Governmental Approvals..............................................................31
EXHIBIT A - Form of Warrant Certificate EXHIBIT B - Form of Legend for Global Warrant
EXHIBIT C - Certificate To Be Delivered upon Exchange or Registration of Transfer of Warrants
EXHIBIT D - Form of Certificate to be Delivered in Connection with Regulation S Transfers
INDEX OF DEFINED TERMS
DEFINED TERM...................................................................................................PAGE
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Affiliate........................................................................................................18
Agreement..................................................................................................Preamble
Business Day.....................................................................................................10
Capital Stock....................................................................................................21
Cashless Exercise................................................................................................12
Cashless Exercise Ratio..........................................................................................12
CEO...............................................................................................................3
Common Stock......................................................................................................2
Company....................................................................................................Preamble
Convertible Preferred Stock......................................................................................21
Current Market Value.............................................................................................21
Definitive Warrants...............................................................................................2
Depositary .......................................................................................................2
Distribution.....................................................................................................23
Distribution Rights..............................................................................................23
Election to Exercise.............................................................................................11
Exercisability Date..............................................................................................11
Exercise Date....................................................................................................12
Exercise Event...................................................................................................11
Exercise Price...................................................................................................11
Exercise Rate....................................................................................................11
Expiration Date..................................................................................................10
Fair Market Value................................................................................................22
Fundamental Transaction..........................................................................................19
Global Shares....................................................................................................13
Global Warrants...................................................................................................2
Indenture..................................................................................................Recitals
Independent Financial Expert.....................................................................................22
Initial Public Equity Offering...................................................................................11
Initial Purchasers.........................................................................................Recitals
Notes......................................................................................................Recitals
Officers' Certificate.............................................................................................7
Pathnet....................................................................................................Recitals
Pathnet Warrant............................................................................................Recitals
Pathnet Warrant Agreement..................................................................................Recitals
Pathnet Warrant Registration Rights Agreement..............................................................Recitals
Person...........................................................................................................11
Private Placement Legend..........................................................................................8
Purchase Agreement.........................................................................................Recitals
QIB.............................................................................................................. 5
Registrar.........................................................................................................4
DEFINED TERM...................................................................................................PAGE
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Regulation S......................................................................................................5
Related Parties..................................................................................................24
Reorganization.............................................................................................Recitals
Requisite Warrant Holders........................................................................................29
Resale Restriction Termination Date...............................................................................5
Securities Act....................................................................................................5
Subject Class....................................................................................................15
Surviving Person.................................................................................................19
Time of Determination............................................................................................22
Triggering Date..................................................................................................11
Trustee....................................................................................................Recitals
Units......................................................................................................Recitals
Warrant....................................................................................................Recitals
Warrant Agent..............................................................................................Recitals
Warrant Agent Office.............................................................................................10
Warrant Certificates.......................................................................................Recitals
Warrant Exercise Office..........................................................................................11
Warrant Register..................................................................................................4
Warrant Registration Rights Agreement......................................................................Recitals
Warrant Shares.......................................................................................Recitals and 2
SUPPLEMENTAL WARRANT AGREEMENT
SUPPLEMENTAL WARRANT AGREEMENT dated as of March 30, 2000
("AGREEMENT"), by and between PATHNET TELECOMMUNICATIONS, INC. (the "COMPANY"),
a Delaware corporation, and THE BANK OF NEW YORK, warrant agent (with any
successor warrant agent, the "WARRANT AGENT").
WHEREAS, Pathnet, Inc. ("PATHNET") entered into a purchase
agreement (the "PURCHASE AGREEMENT") dated April 1, 1998, with, among others,
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., in which Pathnet agreed to sell to the Initial Purchasers
(as defined in the Purchase Agreement) an aggregate of 350,000 units (the
"UNITS"), each consisting of (i) $1,000 principal amount of 12-1/4% Senior Notes
due 2008 (the "NOTES") of Pathnet to be issued under an indenture dated as of
April 8, 1998, as amended (the "INDENTURE"), between Pathnet and The Bank of New
York, trustee (the "TRUSTEE") and (ii) one warrant (a "PATHNET WARRANT"),
initially entitling the holder thereof to purchase 1.1 shares of common stock of
Pathnet; and
WHEREAS, the holders of the Pathnet Warrants were entitled to
the benefits of a Warrant Agreement dated as of April 8, 1998 (the "PATHNET
WARRANT AGREEMENT") between Pathnet and the Trustee and a Warrant Registration
Rights Agreement dated as of April 8, 1998 (the "PATHNET WARRANT REGISTRATION
RIGHTS AGREEMENT"), among Pathnet, the Permitted Holders (as defined therein)
and the Initial Purchasers; and
WHEREAS, in conjunction with a reorganization (the
"REORGANIZATION") involving, among others, the Company, Pathnet, three new
investors, Pathnet's shareholders and holders of the Notes, Pathnet sought and
received the consent of the Requisite Warrant Holders (as defined herein) to
certain amendments to the Pathnet Warrant Agreement and Pathnet Warrant
Registration Rights Agreement (as so amended, the "WARRANT REGISTRATION RIGHTS
AGREEMENT"); and
WHEREAS, the Reorganization constituted a Fundamental
Transaction (as defined in the Pathnet Warrant Agreement, as amended)
culminating in the substitution of this Supplemental Warrant Agreement in lieu
of the Pathnet Warrant Agreement (which, as of such substitution, shall be
terminated) and the conversion of each Pathnet Warrant into a warrant issued by
the Company (a "WARRANT") which, as of the date hereof, entitles the holder
thereof to purchase 3.19 shares (the "WARRANT SHARES") of Company Common Stock
(as defined herein), subject to adjustments as provided herein and in the
Warrant. Upon such conversion, each of the Pathnet Warrants shall cease to be
outstanding, and any certificate evidencing a Pathnet Warrant shall evidence the
right to secure certificates evidencing Warrants. The certificates evidencing
the Warrants are herein referred to collectively as the "WARRANT CERTIFICATES";
and
WHEREAS, the Company desires the Warrant Agent to assist the
Company in connection with the issuance, exchange, cancellation, replacement and
exercise of the Warrants, and in this Agreement wishes to set forth, among other
things, the terms and conditions on which the Warrants may be issued, exchanged,
cancelled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. ISSUANCE OF WARRANTS. The Company hereby issues
Warrants to holders of Pathnet Warrants in exchange for such Pathnet Warrants at
the rate of one Warrant for each Pathnet Warrant.
Each Warrant Certificate shall evidence the number of Warrants
specified therein. Each Warrant evidenced by a Warrant Certificate, when it
becomes exercisable as provided herein and therein, shall represent the right,
subject to the provisions contained herein and therein, to purchase from the
Company (and the Company shall issue and sell to the holder of such Warrant)
3.19 fully paid, registered and non-assessable Warrant Shares at an exercise
price of $0.01 per share. The number of Warrant Shares issuable upon exercise of
a Warrant is subject to adjustment as provided herein and in the Warrant. The
number of shares of the Company's common stock, par value $0.01 per share, and
any other class or series of common equity equivalent shares of the Company into
which such common stock may be reclassified and sold to the Public in an Initial
Public Equity Offering (the "COMMON STOCK") issuable upon exercise of a Warrant
is subject to adjustment as provided herein and in the Warrant. Unless the
context otherwise requires, the term "WARRANT SHARES" shall also include any
other securities or property issuable and deliverable upon exercise of a Warrant
as provided in Article V, subject to adjustment as provided herein and in the
Warrant.
From and after the date hereof, any certificate that
previously evidenced a Pathnet Warrant shall evidence only the right to receive
a Warrant Certificate evidencing a Warrant and to secure the rights, benefits
and obligations of such Warrant and of this Warrant Agreement.
SECTION 1.02. FORM OF WARRANT CERTIFICATES. The Warrant
Certificates will initially be issued either in global form (the "GLOBAL
WARRANTS") or in registered form as definitive Warrant Certificates (the
"DEFINITIVE WARRANTS"), in either case substantially in the form of EXHIBIT A
attached hereto. Any Global Warrants to be delivered pursuant to this Agreement
shall bear the legend set forth in EXHIBIT B attached hereto. Such Global
Warrants shall represent such of the outstanding Warrants as shall be specified
therein and each shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of a Global Warrant to
reflect the amount of any increase or decrease in the amount of outstanding
Warrants represented thereby shall be made by the Warrant Agent and the
Depositary (as defined below) in accordance with instructions given by the
holder thereof. The Depository Trust Company shall act as the depositary (with
any successor depositary, the "DEPOSITARY") with respect to the Global Warrants
until a successor shall be appointed by the Company and the Warrant Agent. Under
the circumstances set forth in Section 1.08 hereof, a holder of Warrants may
receive from the Warrant Agent or the Depository Definitive Warrants upon
written request.
SECTION 1.03. EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by the Chairman of its
Board of Directors, its Chief Executive Officer ("CEO"), its President, its
Chief Financial Officer or any executive vice president or vice president and
attested by its Secretary or any Assistant Secretary. Such signatures may be the
manual or facsimile signatures of the present or any future such officers. 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. Typographical and other minor errors or defects in any such
reproduction of any such signature shall not affect the validity or
enforceability of any Warrant Certificate that has been duly countersigned and
delivered by the Warrant Agent.
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
Certificate so signed shall be authenticated and delivered by the Warrant Agent
or disposed of by the Company, such Warrant Certificate nevertheless may be
countersigned and delivered or disposed of as though the person who signed such
Warrant Certificate had not ceased to be such officer of the Company. Any
Warrant Certificate may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Warrant Certificate, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Agreement any such person was not such an officer.
SECTION 1.04. AUTHENTICATION AND DELIVERY. Subject to the
immediately following paragraph, Warrant Certificates shall be authenticated by
manual signature and dated the date of authentication by the Warrant Agent and
shall not be valid for any purpose unless so authenticated and dated. The
Warrant Certificates shall be numbered and shall be registered in the Warrant
Register (as defined in Section 1.07 hereof).
Upon the receipt by the Warrant Agent of a written order of
the Company, which order shall be signed by the Chairman of its Board of
Directors, its President, its CEO, its Chief Financial Officer or any executive
vice president or vice president and attested by its Secretary or any Assistant
Secretary, and shall specify the amount of Warrants to be authenticated, whether
the Warrants are to be Global Warrants or Definitive Warrants, the date of such
Warrants and such other information as the Warrant Agent may reasonably request,
without any further action by the Company, the Warrant Agent is authorized, upon
receipt from the Company at any time and from time to time of the Warrant
Certificates, duly executed as provided in Section 1.03 hereof, to authenticate
the Warrant Certificates and deliver them upon the Company's request. Such
authentication shall be by a duly authorized signatory of the Warrant Agent
(although it shall not be necessary for the same signatory to sign all Warrant
Certificates).
In case any authorized signatory of the Warrant Agent who
shall have authenticated any of the Warrant Certificates shall cease to be an
authorized signatory before the Warrant Certificate shall be disposed of by the
Company or the Warrant Agent, such Warrant Certificate nevertheless may be
delivered or disposed of as though the person who authenticated an Warrant
Certificate had not ceased to be an authorized signatory of the Warrant Agent.
Any Warrant Certificate may be authenticated on behalf of the Warrant Agent by
such persons as, at the actual time of authentication of such Warrant
Certificates, shall be the duly authorized signatories of the Warrant Agent,
although at the time of the execution and delivery of this Agreement any such
person is not an authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates
shall be in substantially the form set forth in EXHIBIT A hereto.
SECTION 1.05. [Intentionally omitted].
SECTION 1.06. SEPARATION OF WARRANTS AND NOTES. The Notes and
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the Warrants to which they initially related now are separately transferable.
SECTION 1.07. REGISTRATION. The Company will keep, at the
office or agency maintained by the Company for such purpose, a register or
registers in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of, and registration of transfer
and exchange of, Warrants as provided in this Article. Each person designated by
the Company from time to time as a person authorized to register the transfer
and exchange of the Warrants is hereinafter called, individually and
collectively, the "REGISTRAR." The Company hereby initially appoints the Warrant
Agent as Registrar. Upon written notice to the Warrant Agent and any acting
Registrar, the Company may appoint a successor Registrar for such purposes.
The Company will at all times designate one person (who may be
the Company and who need not be a Registrar) to act as repository of a master
list of names and addresses of the holders of Warrants (the "WARRANT REGISTER").
The Warrant Agent will act as such repository unless and until some other person
is, by written notice from the Company to the Warrant Agent and the Registrar,
designated by the Company to act as such. The Company shall cause each Registrar
to furnish to such repository, on a current basis, such information as to all
registrations of transfer and exchanges effected by such Registrar, as may be
necessary to enable such repository to maintain the Warrant Register on as
current a basis as is practicable.
SECTION 1.08. REGISTRATION OF TRANSFERS OR EXCHANGES.
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(a) TRANSFER OR EXCHANGE OF DEFINITIVE WARRANTS. When
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Definitive Warrants are presented to the Warrant Agent with a request from the
holder:
(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 requirements for such transactions set forth in this Section 1.08 are
met; provided, however, that the Definitive Warrants presented or surrendered by
a holder for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction
of transfer or exchange in form satisfactory to the Company
and the Warrant Agent, duly executed by such holder or by his
attorney, duly authorized in writing; and
(y) in the case of Warrants the offer and sale of which have not
been registered under the Securities Act and are presented for
transfer or exchange prior to (1) the date which is two years
(or such shorter period as may be permitted by Rule 144(k)
under the Securities Act (or any successor provision thereto))
after the later of the date of original issuance of the
Warrants and the last date on which the Company or any
affiliate of the Company (or any predecessor thereto) was the
owner of such Warrants, or (2) such later date, if any, as may
be required by any applicable law (the "RESALE RESTRICTION
TERMINATION DATE"), such Warrants shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Warrants are being delivered to the Warrant
Agent by a holder for registration in the name of
such holder, without transfer, a certification from
such holder to that effect (in substantially the form
of EXHIBIT C hereto); or
(B) if such Warrants are being transferred to a qualified
institutional buyer (as defined in Rule 144A under
the Securities Act), (a "QIB") in accordance with
Rule 144A under the Securities Act, a certification
from the transferor to that effect (in substantially
the form of EXHIBIT C hereto);
(C) if such Warrants are being transferred in reliance on
Regulation S ("REGULATION S") under the Securities
Act of 1933, as amended (the "SECURITIES ACT"),
delivery by the transferor of a certification to that
effect (in substantially the form of EXHIBIT C
hereto), and a Certificate for Regulation S Transfers
in the form of EXHIBIT D hereto; or
(D) if such Warrants are being transferred in reliance on
Rule 144 under the Securities Act, delivery by the
transferor of (i) a certification from the transferor
to that effect (in substantially the form of EXHIBIT
C hereto), and (ii) an opinion of counsel reasonably
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(E) if such Warrants are being transferred in reliance on
another exemption from the registration requirements
of the Securities Act, a certification from the
transferor to that effect (in substantially the form
of EXHIBIT C hereto) and an opinion of counsel
reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the
Securities Act; PROVIDED that the Company may, based
upon the views of its own counsel, instruct the
Warrant Agent not to register such transfer in any
case where the proposed transferee is not a QIB or
Non-U.S. Person.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE WARRANT FOR A
BENEFICIAL INTEREST IN A GLOBAL WARRANT. A Definitive Warrant may not be
transferred by a holder 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
(A) certification from such holder (in substantially the
form of EXHIBIT C hereto) that such Definitive
Warrant is being transferred to a QIB in accordance
with Rule 144A under the Securities Act; and
(B) written instructions directing the Warrant Agent to
make, or to direct the Depositary to make, an
endorsement on the Global Warrant to reflect an
increase in the aggregate amount of the Warrants
represented by the Global Warrant,
then the Warrant Agent shall cancel such 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 represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue, and the Warrant
Agent upon written instructions from the Company shall authenticate a new Global
Warrant in the appropriate amount.
(c) TRANSFER OR EXCHANGE OF GLOBAL WARRANTS. The transfer or
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Section 1.08, the Private
Placement Legend (as defined herein), this Agreement (including the restrictions
on transfer set forth herein) and the procedures of the Depositary therefor.
(d) TRANSFER OR EXCHANGE OF A BENEFICIAL INTEREST IN A
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GLOBAL WARRANT FOR A DEFINITIVE WARRANT.
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(i) Any person having a beneficial interest in a Global Warrant
may transfer or 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, including a written order containing
registration instructions and, in the case of any such
transfer or exchange prior to the Resale Restriction
Termination Date, the following additional information and
documents:
(A) if such beneficial interest is being transferred to
the person designated by the Depositary as being the
beneficial owner, a certification from such person to
that effect (in substantially the form of EXHIBIT C
hereto); or
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities
Act, a certification from the transferor to that
effect (in substantially the form of EXHIBIT C
hereto); or
(C) if such beneficial interest is being transferred in
reliance on Regulation S under the Securities Act,
delivery by the transferor if (i) a certification to
that effect (in substantially in the form of EXHIBIT
C hereto), and (ii) a Certificate for Regulation S
Transfers (in substantially the form of EXHIBIT D
hereto); or
(D) if such beneficial interest is being transferred in
reliance on Rule 144 under the Securities Act,
delivery by the transferor of (i) a certification to
that effect (in substantially the form of EXHIBIT C
hereto) and (ii) an opinion of counsel reasonably
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification
from the transferor to that effect (in substantially
the form of EXHIBIT C hereto) and an opinion of
counsel reasonably satisfactory to the Company to the
effect that such transfer is in compliance with the
Securities Act; provided that the Company may
instruct the Warrant Agent not to register such
transfer in any case where the proposed transferee is
not a QIB or Non-U.S. Person, then the Warrant Agent
will cause, in accordance with the standing
instructions and procedures existing between the
Depositary and the Warrant Agent, the aggregate
amount of the Global Warrant to be reduced and,
following such reduction, the Company will execute
and, upon receipt of an authentication order in the
form of an officers' certificate (a certificate
signed by two officers of such company, one of whom
must be the principal executive officer, principal
financial officer or principal accounting officer)
(an "OFFICERS' Certificate"), the Warrant Agent will
authenticate and deliver to the transferee a
Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 1.08(d)
shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from
its direct or indirect participants or otherwise, shall
instruct the Warrant Agent in writing. The Warrant Agent shall
deliver such Definitive Warrants to the persons in whose names
such Warrants are so registered and adjust the Global Warrant
pursuant to paragraph (h) of this Section 1.08.
(e) RESTRICTIONS ON TRANSFER OR EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in subsection (f) of this Section 1.08), a Global Warrant
may not be transferred or exchanged 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) AUTHENTICATION OF DEFINITIVE WARRANTS IN ABSENCE OF
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DEPOSITARY. If at any time:
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(i) the Depositary for the Global Warrants notifies the Company
that the Depositary is unwilling or unable to continue as
Depositary for the Global Warrant and a successor Depositary
for the Global Warrant is not appointed by the Company within
90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of
Definitive Warrants for all Global Warrants under this
Agreement,
then the Company will execute, and the Warrant Agent will, upon receipt of an
Officers' Certificate requesting the authentication and delivery of Definitive
Warrants, authenticate and deliver Definitive Warrants, in an aggregate number
equal to the aggregate number of warrants represented by the Global Warrant, in
exchange for such Global Warrant.
(g) PRIVATE PLACEMENT LEGEND. Upon the transfer or exchange of
Warrant Certificates not bearing the legend set forth on EXHIBIT A attached
hereto (the "PRIVATE PLACEMENT LEGEND"), the Warrant Agent shall deliver Warrant
Certificates that do not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of Warrant Certificates bearing the Private Placement
Legend, the Warrant Agent shall deliver Warrant Certificates that bear the
Private Placement Legend unless, and the Warrant Agent is hereby authorized to
deliver Warrant Certificates without the Private Placement Legend if, (i) there
is delivered to the Warrant Agent an opinion of counsel reasonably satisfactory
to the Company and the Warrant Agent to the effect that neither such legend nor
the related restrictions on transfer are required in order to maintain
compliance with the provisions of the Securities Act or (ii) the Warrants to be
transferred or exchanged represented by such Warrant Certificates are being
transferred or exchanged pursuant to an effective registration statement under
the Securities Act.
(h) CANCELLATION OR ADJUSTMENT OF A GLOBAL WARRANT. At such
time as all beneficial interests in a Global Warrant have either been exchanged
for Definitive Warrants, redeemed, repurchased or canceled, such Global Warrant
shall be returned to the Company or, upon written order to the Warrant Agent in
the form of an Officers' Certificate from the Company, retained and canceled by
the Warrant Agent. At any time prior to such cancellation, if any beneficial
interest in a Global Warrant is exchanged for Definitive Warrants, redeemed,
repurchased or canceled, the number of Warrants represented by such Global
Warrant shall be reduced and an endorsement shall be made on such Global Warrant
by the Warrant Agent to reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS OR EXCHANGES OF
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DEFINITIVE WARRANTS.
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(i) To permit registrations of transfers or exchanges, the Company
shall execute, and the Warrant Agent shall authenticate,
Definitive Warrants and Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration, 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 Agreement as
the Definitive Warrants or Global Warrants surrendered upon
the registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat
the person in whose name any Warrant is registered as the
absolute owner of such Warrant, and neither the Warrant Agent
nor the Company shall be affected by notice to the contrary.
SECTION 1.09. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED
WARRANT CERTIFICATES. Upon receipt by the Company and the Warrant Agent (or any
agent of the Company or the Warrant Agent, if requested by the Company) of
evidence satisfactory to them of the loss, theft, destruction, defacement, or
mutilation of any Warrant Certificate and of indemnity satisfactory to them and,
in the case of mutilation or defacement, upon surrender of such Warrant
Certificate to the Warrant Agent for cancellation, then, in the absence of
notice to the Company or the Warrant Agent that such Warrant Certificate has
been acquired by a BONA FIDE purchaser or holder in due course, the Company
shall execute, and an authorized signatory of the Warrant Agent shall manually
authenticate and deliver, in exchange for or in lieu of the lost, stolen,
destroyed, defaced or mutilated Warrant Certificate, a new Warrant Certificate
representing a like number of Warrants, bearing a number or other distinguishing
symbol not contemporaneously outstanding. Upon the issuance of any new Warrant
Certificate under this Section in a name other than the prior registered holder
of the lost, stolen, destroyed, defaced or mutilated Warrant Certificate, the
Company may require the payment from the holder of such Warrant Certificate of a
sum sufficient to cover any tax, stamp tax or other governmental charges that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Warrant Agent and the Registrar) in connection therewith.
Every substitute Warrant Certificate executed and delivered
pursuant to this Section in lieu of any lost, stolen or destroyed Warrant
Certificate shall constitute an additional contractual obligation of the
Company, whether or not the lost, stolen or destroyed Warrant Certificate shall
be at any time enforceable by anyone, and shall be entitled to the benefits of
(but shall be subject to all the limitations of rights set forth in) this
Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder. The provisions of this
Section 1.09 are exclusive with respect to the replacement of lost, stolen,
destroyed, defaced or mutilated Warrant Certificates and shall preclude (to the
extent lawful) any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates.
The Warrant Agent is hereby authorized to authenticate in
accordance with the provisions of this Agreement, and deliver the new Warrant
Certificates required pursuant to the provisions of this Section.
SECTION 1.10. OFFICES FOR EXERCISE, ETC. So long as any of the
Warrants remain outstanding, the Company will designate and maintain in the
Borough of Manhattan, The City of New York: (a) an office or agency where the
Warrant Certificates may be presented for exercise, (b) an office or agency
where the Warrant Certificates may be presented for registration of transfer and
for exchange, and (c) an office or agency where notices and demands to or upon
the Company in respect of the Warrants or of this Agreement may be served. The
Company may from time to time change or rescind such designation, as it may deem
desirable or expedient; provided, however, that an office or agency shall at all
times be maintained in the Borough of Manhattan, The City of New York, as
provided in the first sentence of this Section. In addition to such office or
offices or agency or agencies, the Company may from time to time designate and
maintain one or more additional offices or agencies within or outside The City
of New York, where Warrant Certificates may be presented for exercise or for
registration of transfer or for exchange, and the Company may from time to time
change or rescind such designation, as it may deem desirable or expedient. The
Company will give to the Warrant Agent written notice of the location of any
such office or agency and of any change of location thereof. The Company hereby
designates the Warrant Agent at its principal corporate trust office identified
in Section 7.03 in the Borough of Manhattan, The City of New York (the "WARRANT
AGENT OFFICE"), as the initial agency maintained for each such purpose. In case
the Company shall fail to maintain any such office or agency or shall fail to
give such notice of the location or of any change in the location thereof,
presentations and demands may be made and notice may be served at the Warrant
Agent Office and the Company appoints the Warrant Agent as its agent to receive
all such presentations, surrenders, notices and demands.
ARTICLE II
DURATION, EXERCISE OF WARRANTS; EXERCISE PRICE
AND REPURCHASE OF WARRANTS
SECTION 2.01. DURATION OF WARRANTS. Subject to the terms and
conditions established herein, the Warrants shall expire at 5:00 p.m., New York
City time, on April 15, 2008. The applicable date of expiration of a particular
Warrant is referred to herein as the "EXPIRATION DATE" of such Warrant. Each
Warrant may be exercised on any Business Day (as defined below) on or after the
Exercisability Date (as defined in Section 2.02) and on or prior to the close of
business on the Expiration Date.
Any Warrant not exercised before the close of business on the
Expiration Date shall become void, and all rights of the holder under the
Warrant Certificate evidencing such Warrant and under this Agreement shall
cease.
"BUSINESS DAY" shall mean any day on which (i) banks in The
City of New York, (ii) the principal U.S. securities exchange or market, if any,
on which any Common Stock is listed or admitted to trading and (iii) the
principal U.S. securities exchange or market, if any, on which the Warrants are
listed or admitted to trading are open for business.
SECTION 2.02. EXERCISE, EXERCISE PRICE, SETTLEMENT AND
DELIVERY. (a) Subject to the provisions of this Agreement, each holder of a
Warrant shall have the right to purchase from the Company on or after the
Exercisability Date and on or prior to the close of business on the Expiration
Date the number of fully paid, registered and non-assessable Warrant Shares (and
any other securities or property purchasable or deliverable upon exercise of
such Warrant as provided in Article V) which the holder may at the time be
entitled to receive on exercise of such Warrant, subject to adjustment in
accordance with Article V hereof, at the purchase price of $0.01 for each
Warrant Share purchased (the "EXERCISE PRICE"). The number and amount of Warrant
Shares for which a particular Warrant may be exercised (the "EXERCISE RATE")
shall be subject to adjustment from time to time as set forth in Article V
hereof.
"EXERCISABILITY DATE" means the first day on or after the date
hereof on which there will have occurred an Exercise Event.
"EXERCISE EVENT" means the date of the occurrence of the
earliest of: (i) the time immediately prior to the occurrence of a Change of
Control (as defined in the Indenture), (ii) (a) the 180th day (or such earlier
date as determined by the Company in its sole discretion) following the closing
of an Initial Public Equity Offering (as defined herein) or (b) upon the closing
of an Initial Public Equity Offering but only in respect of Warrants, if any,
required to be exercised to permit the holders thereof to sell Warrant Shares
pursuant to their respective registration rights, (iii) the time when a class of
equity securities of the Company is listed on a national securities exchange or
authorized for quotation on the Nasdaq National Market or is otherwise subject
to registration under the Exchange Act, or (iv) April 30, 2001.
"INITIAL PUBLIC EQUITY OFFERING" means a primary public
offering (whether or not underwritten, but excluding any offering pursuant to
Form S-8 under the Securities Act or any other publicly registered offering
pursuant to the Securities Act pertaining to an issuance of shares of Common
Stock or securities exercisable therefor under any benefit plan, employee
compensation plan, or employee or director stock purchase plan) of Common Stock
pursuant to an effective registration statement under the Securities Act.
"PERSON" means any individual, corporation, partnership,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, business trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity, including any
predecessor of any such entity.
"TRIGGERING DATE" means the date of the consummation of a bona
fide underwritten public offering of Common Stock, as a result of which at least
20% of the outstanding shares of Common Stock are listed on a United States
national securities exchange or the Nasdaq National Market.
(b) Warrants may be exercised on or after the date they are
exercisable hereunder by (i) surrendering at any office or agency maintained for
that purpose by the Company pursuant to Section 1.10 (each a "WARRANT EXERCISE
OFFICE") the Warrant Certificate evidencing such Warrants with the form of
election to purchase Warrant Shares set forth on the reverse side of the Warrant
Certificate (the "ELECTION TO EXERCISE") duly completed and signed by the
registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney, and in the case of a
transfer, such signature shall be guaranteed by an eligible guarantor
institution, and (ii) paying in full the Exercise Price for each such Warrant
exercised. Each Warrant may be exercised only in whole.
(c) Simultaneously with the exercise of each Warrant, payment
in full of the aggregate Exercise Price may be made, at the option of the
holder, (i) in cash in United States dollars or by certified or official bank
check, (ii) by a Cashless Exercise (as defined below) or (iii) by any
combination of (i) and (ii), to the Warrant Exercise Office where the Warrant
Certificate is being surrendered. A "CASHLESS EXERCISE" shall mean an exercise
of a Warrant in accordance with the immediately following two sentences. To
effect a Cashless Exercise, the holder may exercise a Warrant or Warrants
without payment of the Exercise Price in cash by surrendering such Warrant or
Warrants (represented by one or more Warrant Certificates ) and, in exchange
therefor, receiving such number of shares of Common Stock equal to the product
of (1) that number of shares of Common Stock for which such Warrant are
exercisable and which would be issuable in the event of an exercise with payment
in cash of the Exercise Price and (2) the Cashless Exercise Ratio (as defined
below). The "CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator of
which is the excess of the Current Market Value (calculated as set forth in this
Agreement) per share of Common Stock on the date of exercise over the Exercise
Price per share of Common Stock as of the date of exercise and the denominator
of which is the Current Market Value per share of Common Stock on the date of
exercise. Upon surrender of a Warrant Certificate representing more than one
Warrant in connection with a holder's option to elect a Cashless Exercise, such
holder must specify the number of Warrants for which such Warrant Certificate is
to be exercised (without giving effect to such Cashless Exercise). All
provisions of this Agreement shall be applicable with respect to a Cashless
Exercise of a Warrant Certificate for less than the full number of Warrants
represented thereby. No payment or adjustment shall be made on account of any
distributions of dividends on the Common Stock issued upon exercise of a
Warrant.
If the Company has not effected the registration under the
Securities Act of the offer and sale of the Warrant Shares by the Company to the
holders of the Warrants on or prior to the EXERCISE DATE (as defined herein),
the Company may elect to require that the holders of the Warrants effect the
exercise thereof solely pursuant to the Cashless Exercise option and may amend
the Warrants and this Agreement to eliminate the option to pay the Exercise
Price in cash. The Company shall calculate and transmit to the Warrant Agent,
and the Warrant Agent shall have no obligation under this section to calculate,
the Cashless Exercise Ratio.
(d) Upon surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Exercise Office (other than any
Warrant Exercise Office that also is an office of the Warrant Agent), such
Warrant Certificate and payment shall be promptly delivered to the Warrant
Agent. The "EXERCISE DATE" shall be the date when all of the items referred to
in the first sentence of each of paragraphs (b) and (c) of this Section 2.02 are
received by the Warrant Agent at or prior to 11:00 a.m., New York City time, on
a Business Day and the exercise of the Warrants will be effective as of such
Exercise Date. If any items referred to in the first sentence of each of
paragraphs (b) and (c) are received after 11:00 a.m., New York City time, on a
Business Day, the exercise of the Warrants to which such item relates will be
effective on the next succeeding Business Day. Notwithstanding the foregoing, in
the case of an exercise of Warrants on the Expiration Date, if all of the items
referred to in the first sentence of each of paragraphs (b) and (c) are received
by the Warrant Agent at or prior to 5:00 p.m., New York City time, on the
Expiration Date, the exercise of the Warrants to which such items relate will be
effective on the Expiration Date.
(e) Upon the exercise of a Warrant in accordance with the
terms hereof, the receipt of a Warrant Certificate and payment of the Exercise
Price (or election of the Cashless Exercise option), the Warrant Agent shall:
(i) except to the extent exercise of the Warrant has been effected through
Cashless Exercise, cause an amount equal to the aggregate Exercise Price to be
paid to the Company by crediting the same to the account designated by the
Company in writing to the Warrant Agent for that purpose; (ii) advise the
Company promptly by telephone of the amount so deposited to the Company's
account and promptly confirm such telephonic advice in writing; and (iii) as
soon as practicable, advise the Company in writing of the number of Warrants
exercised in accordance with the terms and conditions of this Agreement and the
Warrant Certificates, the instructions of each exercising holder of the Warrant
Certificates with respect to delivery of the Warrant Shares to which such holder
is entitled upon such exercise, and such other information as the Company shall
reasonably request.
(f) Subject to Section 5.02 hereof, as soon as practicable
after the exercise of any Warrant or Warrants in accordance with the terms
hereof, the Company shall issue or cause to be issued to, or upon the written
order of, the registered holder of the Warrant Certificate evidencing such
exercised Warrant or Warrants, a certificate or certificates evidencing the
Warrant Shares to which such holder is entitled, in fully registered form,
registered in such name or names as may be directed by such holder pursuant to
the Election to Exercise, as set forth on the reverse of the Warrant
Certificate. Such certificate or certificates evidencing the Warrant Shares
shall be deemed to have been issued and any persons who are designated to be
named herein shall be deemed to have become the holder of record of such Warrant
Shares as of the close of business on the Exercise Date, the Warrant Shares may
initially be issued in global form (the "GLOBAL SHARES"). Such Global Shares
shall represent such of the outstanding Warrant Shares as shall be specified
therein and each shall provide that it shall represent the aggregate amount of
outstanding Warrant Shares from time to time endorsed thereon and that the
aggregate amount of outstanding Warrant Shares represented thereby may from time
to time be reduced or increased, as appropriate. Any endorsement of a Global
Share to reflect the amount of any increase or decrease in the amount of
outstanding Shares represented thereby shall be made by the registrar for the
Warrant Shares and the Depositary in accordance with instructions given by the
holder thereof. The Depository Trust Company (or its nominee) shall (if
possible) act as the Depositary with respect to the Global Shares until a
successor shall be appointed by the Company and the registrar for the Warrant
Shares. After such exercise of any Warrant or Warrant Shares, the Company shall
also issue or cause to be issued to or upon the written order of the registered
holder of such Warrant Certificate, a new Warrant Certificate, countersigned by
the Warrant Agent pursuant to written instruction, evidencing the number of
Warrants, if any, remaining unexercised unless such Warrants shall have expired.
SECTION 2.03. CANCELLATION OF WARRANT CERTIFICATES. In the
event the Company shall purchase or otherwise acquire Warrants, the Warrant
Certificates evidencing such Warrants may thereupon be delivered to the Warrant
Agent, and if so delivered, shall at the Company's written instruction be
canceled by it and retired. The Warrant Agent shall cancel all Warrant
Certificates properly surrendered for exchange, substitution, transfer or
exercise. Upon the Company's written request, the Warrant Agent shall deliver
such canceled Warrant Certificates to the Company.
SECTION 2.04. NOTICE OF AN EXERCISE EVENT. As soon as
practicable after the occurrence of an Exercise Event, the Company shall send or
cause to be sent to each holder of Warrants with respect to which such Exercise
Event has occurred, to the extent that the Warrants are held of record by a
depositary or other agent (with a copy to the Warrant Agent), by first-class
mail, at the addresses appearing on the Warrant Register, a notice prepared by
the Company advising such holder of the Exercise Event which has occurred, which
notice shall describe the type of Exercise Event and the date of the occurrence
thereof, as applicable, and, in either case, the date of expiration of the right
to exercise the Warrants prominently set forth in the face of such notice.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. ENFORCEMENT OF RIGHTS. (a) Notwithstanding any
of the provisions of this Agreement, any holder of any Warrant Certificate,
without the consent of the Warrant Agent, the holder of any Warrant Shares or
the holder of any other Warrant Certificate, may, in and for his own behalf,
enforce, and may institute and maintain any suit, action or proceeding against
the Company suitable to enforce, his right to exercise the Warrant or Warrants
evidenced by his Warrant Certificate in the manner provided in such Warrant
Certificate and in this Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall
entitle the holders thereof to any of the rights of a holder of shares of Common
Stock, including, without limitation, the right to vote or to receive any
dividends or other payments or to consent or to receive notice as stockholders
in respect of the meetings of stockholders or for the election of directors of
the Company or any other matter, or any rights whatsoever as a holder of shares
of Common Stock, except as expressly provided herein (including Section 5.03
hereof).
SECTION 3.02. OBTAINING STOCK EXCHANGE LISTINGS. The Company
will from time to time 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 within the
United States or Canada (including the Nasdaq National Market), if any, on which
other shares of Common Stock are then listed or quoted.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Warrants and of
the Warrant Shares upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any tax or other governmental charge which
may be payable in respect of any transfer or exchange of any Warrant
Certificates or any certificates for Warrant Shares in a name other than the
registered holder of a Warrant Certificate surrendered upon the exercise of a
Warrant. In any such case, no transfer or exchange shall be made unless or until
the person or persons requesting issuance thereof shall have paid to the Company
the amount of such tax or other governmental charge or shall have established to
the satisfaction of the Company that such tax or other governmental charge has
been paid or an exemption is available therefrom.
SECTION 4.02. RULES 144 AND 144A. While any Warrants remain
outstanding, the Company covenants that it shall file the reports required to be
filed by it under the Exchange Act, and the rules and regulations adopted by the
Securities and Exchange Commission thereunder, in a timely manner in accordance
with the requirements of the Exchange Act. If at any time the Company is not
required to file such reports, it will distribute to each holder or beneficial
owner of Warrants that are "restricted securities" within the meaning of Rule
144 and are not saleable in full under paragraph (k) of Rule 144, such
information as is necessary to permit sales pursuant to Rule 144A under the
Securities Act.
SECTION 4.03. FORM OF INITIAL PUBLIC EQUITY OFFERING. The
Company agrees that it shall not make an Initial Public Equity Offering of any
class of its Capital Stock (other than the class of Capital Stock into which the
Warrants are exercisable) without adopting such amendments to the terms of the
Company's Articles of Incorporation as may be necessary to provide that the
Warrant Shares are convertible into the class of Capital Stock subject to the
Initial Public Equity Offering (the "SUBJECT CLASS") on a share-for-share or
other equitable basis; PROVIDED that the rights, conditions and privileges
attaching to the Subject Class as compared to the rights, conditions and
privileges attaching to the Common Stock into which such Warrants would be
convertible on the date hereof (if the Warrants were immediately exercisable)
would not adversely affect holders of the Warrant Shares; it being understood
that the Capital Stock into which the Warrants shall be convertible (a) shall
represent the same economic interests, but may not have the same voting rights,
in the Company as the Common Stock outstanding on the date hereof and (b) shall
be identical to the class of Capital Stock issued and sold by the Company in the
Initial Public Equity Offering, if any.
SECTION 4.04. SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS. The Company shall comply with all applicable laws, including the
Securities Act and any applicable state securities laws, in connection with the
offer and sale of Common Stock (and other securities and property deliverable )
upon exercise of the Warrants.
SECTION 4.05. RESOLUTION OF PREEMPTIVE RIGHTS, IF ANY.
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Neither the Warrants or the Warrant Shares shall be subject to any preemptive or
similar rights.
ARTICLE V
ADJUSTMENTS
SECTION 5.01. ADJUSTMENT OF EXERCISE RATE; NOTICES. The
------------------------------------
Exercise Rate is subject to adjustment from time to time as provided in this
Section.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If,after the
--------------------------------------
date hereof, the Company:
(i) pays a dividend or makes a distribution on shares of
Common Stock in shares of Common Stock (other than any such dividend to
the extent covered by Section 5.03);
(ii) subdivides any of its outstanding shares of Common Stock
into a greater number of shares;
(iii) combines any of its outstanding shares of Common Stock
into a smaller number of shares;
(iv) pays a dividend or makes a distribution on shares of
Common Stock in shares of Capital Stock (as defined below) (other than
Common Stock or rights, warrants, or options for its Common Stock to
the extent such issuance or distribution is covered by Section 5.03);
or
(v) issues by reclassification of any of its Common Stock or
any shares of any of its Capital Stock;
then the Company shall adjust the Exercise Rate in effect immediately prior to
such action for each Warrant then outstanding so that the holder of a Warrant
thereafter exercised may receive the number of shares of Capital Stock of the
Company which such holder would have owned immediately following such action if
such holder had exercised the Warrant immediately prior to such action or
immediately prior to the record date applicable thereto, if any (regardless of
whether the Warrants then outstanding are then exercisable and without giving
effect to the Cashless Exercise option). If there are no outstanding shares of
Common Stock that are of the same class as the Warrant Shares at the time of any
such action and such action has therefore been taken only in respect of Common
Stock, the adjustment shall relate to the Warrant Shares in their same form (and
not in the form of Common Shares) if it would not frustrate the intent and
purposes of this Section 5.01.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification. In
the event that such dividend or distribution is not so paid or made or such
subdivision, combination or reclassification is not effected, the Exercise Rate
shall again be adjusted to be the Exercise Rate which would then be in effect if
such record date or effective date had not been so fixed.
If after an adjustment a holder of a Warrant upon exercise of
such Warrant may receive shares of two or more classes of Capital Stock of the
Company, the Exercise Rate shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is contemplated by this Article V with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article V.
Nothing in this Section 5.01(a) shall require any adjustment
in the Exercise Rate upon (i) the issuance, conversion, exchange or exercise of
options to acquire shares of Common Stock by, or the issuance of restricted
stock or other similar equity-based payments to, officers, directors or
employees of the Company; provided that the exercise price of such options or
the purchase price of such restricted stock, as the case may be, at the time of
issuance thereof, is at least equal to the then Current Market Value of the
Common Stock underlying such options or restricted stock or (ii) the
reclassification of the Company's Common Stock into two or more series of common
stock with different voting powers but otherwise representing the same economic
interests; PROVIDED that such series of common stock will automatically convert
into shares of Common Stock when the holder sells, exchanges or otherwise
transfers such shares to any person other than an affiliate of the holder.
(b) ADJUSTMENT FOR SALE OF COMMON STOCK BELOW CURRENT
-------------------------------------------------
MARKET VALUE.
-------------
If, after the date hereof, the Company grants or sells to an Affiliate of the
Company (other than a wholly-owned subsidiary) any shares of Common Stock or of
securities convertible into or exchangeable or exercisable for any shares of
Common Stock at a price below the then Current Market Value (other than (1)
pursuant to the exercise of the Warrants, (2) upon the conversion, exchange or
exercise of any security convertible, exchangeable or exercisable for, shares of
Common Stock outstanding on the date hereof, (3) upon conversion, exchange or
exercise of convertible, exchangeable or exercisable security as to which, upon
the issuance thereof, has previously been the subject of any required adjustment
pursuant to this Section 5 or (4) upon the conversion, exchange or exercise of
convertible, exchangeable or exercisable securities of the Company outstanding
on the date hereof (to the extent permitted by the terms of such securities as
in effect on the date of this Agreement)) (calculated as set forth in Section
5.01(l) hereof), the Exercise Rate for each Warrant then outstanding shall be
adjusted in accordance with the formula:
E1 = E (O + N)____
----------------------
(O + (N x P/M))
where:
E1 =........the adjusted Exercise Rate for each Warrant then outstanding;
E =........the then current Exercise Rate for each Warrant then
outstanding;
O = the number of shares of Common Stock outstanding immediately
prior to the sale of Common Stock or issuance of securities
convertible, exchangeable or exercisable for Common Stock;
N = the number of shares of Common Stock so sold or the maximum
stated number of shares of Common Stock issuable upon the
conversion, exchange or exercise of any such convertible,
exchangeable or exercisable securities, as the case may be;
P = the proceeds per share of Common Stock received by the
Company, which (i) in the case of shares of Common Stock is
the amount received by the Company in consideration for the
sale and issuance of such shares; and (ii) in the case of
securities convertible into or exchangeable or exercisable for
shares of Common Stock is the amount received by the Company
in consideration for the sale and issuance of such convertible
or exchangeable or exercisable securities, plus the minimum
aggregate amount of additional consideration, other than the
surrender of such convertible or exchangeable securities,
payable to the Company upon exercise, conversion or exchange
thereof; and
M = the Current Market Value as of the Time of Determination or
at the time of sale, as the case may be (calculated as set
forth in Section 5.01(l) hereof).
The adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, warrants or options to which this paragraph (b) applies or upon
consummation of the sale of Common Stock, as the case may be. To the extent that
shares of Common Stock are not delivered after the expiration of such rights or
warrants, the Exercise Rate for each Warrant then outstanding shall be
readjusted to the Exercise Rate which would otherwise be in effect had the
adjustment made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not so issued, the
Exercise Rate for each Warrant then outstanding shall again be adjusted to be
the Exercise Rate which would then be in effect if such date fixed for
determination of stockholders entitled to receive such rights or warrants had
not been so fixed.
No adjustment shall be made under this paragraph (b) if the
application of the formula stated above in this paragraph (b) would result in a
value of E1 that is lower than the value of E.
No adjustment shall be made under this paragraph (b) for any
adjustment which is the subject of paragraph (c), (d) or (e) of this Section
5.01.
"AFFILIATE" means, with respect to any specified Person, (i)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person or (ii) any other
Person that owns, directly or indirectly, 10% or more of such specified Person's
Voting Stock or any executive officer or director of any such specified Person
or other Person or, with respect to any natural Person, any other Person in such
Person's immediate family. For the purposes of this definition, "control," when
used with respect to any specified 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.
Notwithstanding the foregoing, no individual shall be deemed to be an Affiliate
of a Person solely by reason of (a) such Person being a party to an Incumbent
Agreement (as defined in the Indenture) or (b) such Person owning an interest in
a Restricted Subsidiary (as defined in the Indenture) pursuant to, or as a
result of, an Incumbent Agreement (as defined in the Indenture).
(c) NOTICE OF ADJUSTMENT. Whenever the Exercise Rate is
adjusted, the Company shall promptly mail to holders of Warrants then
outstanding at the addresses appearing on the Warrant Register a notice of the
adjustment. The Company shall file with the Warrant Agent and any other
Registrar such notice and a certificate from the Company's independent public
accountants briefly stating the facts requiring the adjustment and the manner of
computing it. The certificate shall be conclusive evidence that the adjustment
is correct. Neither the Warrant Agent nor any such Registrar shall be under any
duty or responsibility with respect to any such certificate except to exhibit
the same during normal business hours to any holder desiring inspection thereof.
(d) REORGANIZATION OF COMPANY; SPECIAL DISTRIBUTIONS. (i) If
the Company, in a single transaction or through a series of related
transactions, consolidates with or merges with or into any other person or
sells, assigns, transfers, leases, conveys or otherwise disposes of all or
substantially all of its properties and assets to another person or group of
affiliated persons or is a party to a merger or binding share exchange which
reclassifies or changes its outstanding Common Stock (a "FUNDAMENTAL
TRANSACTION"), (it being understood that a single transaction or series of
related transactions pursuant to which not less than ninety-five percent of the
outstanding shares of capital stock of the Company are exchanged for shares in a
single Affiliate (or any Person who, pursuant to such transaction, will become
such an Affiliate) shall be deemed to be a Fundamental Transaction, and the
Affiliate acquiring such shares shall, for purposes of this clause, be deemed to
be the Surviving Person (as defined below)), as a condition to consummating any
such transaction the person formed by or surviving any such consolidation or
merger if other than the Company or the person to whom such transfer has been
made (the "SURVIVING PERSON") shall enter into a supplemental warrant agreement.
The supplemental warrant agreement shall provide (a) that the holder of a
Warrant then outstanding may exercise it for the kind and amount of securities,
cash or other assets which such holder would have received immediately after the
Fundamental Transaction if such holder had exercised the Warrant immediately
before the effective date of the transaction (whether or not the Warrants were
then exercisable and without giving effect to the Cashless Exercise option) (it
being understood that the Warrants will remain exercisable only in accordance
with their terms and that conditions to exercise, such as payment of Exercise
Price, will remain applicable), assuming (to the extent applicable) that such
holder (i) was not a constituent person or an affiliate of a constituent person
to such transaction, (ii) made no election with respect thereto, and (iii) was
treated alike with the plurality of non-electing holders, and (b) that the
Surviving Person shall succeed to and be substituted to every right and
obligation of the Company in respect of this Agreement and the Warrants. The
supplemental warrant agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article V. The Surviving Person shall mail to holders of Warrants at the
addresses appearing on the Warrant Register a notice briefly describing the
supplemental warrant agreement. If the issuer of securities deliverable upon
exercise of Warrants is an affiliate of the Surviving Person, that issuer shall
join in the supplemental warrant agreement.
(ii) Notwithstanding the foregoing, if the Company enters into
a Fundamental Transaction with another Person (other than a subsidiary of the
Company) and consideration is payable to holders of the shares of Capital Stock
(or other securities or property) issuable or deliverable upon exercise of the
Warrants in exchange for such shares of Capital Stock in connection with such
Fundamental Transaction which consists solely of cash, then the holders of
Warrants shall be entitled to receive distributions on the date of such event on
an equal basis with holders of such shares of Capital Stock (or other securities
issuable upon exercise of the Warrants) as if the Warrants had been exercised
immediately prior to such event, less the aggregate Exercise Price. Upon receipt
of such payment, if any, the rights of a holder of a Warrant shall terminate and
cease and such holder's Warrants shall expire.
(iii) If this paragraph (d) applies, it shall supersede the
application of paragraph (a) of this Section 5.01.
(e) COMPANY DETERMINATION FINAL. Any determination that the
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Company or the board of directors of the Company must make pursuant to this
Article V is conclusive.
(f) WARRANT AGENT'S ADJUSTMENT DISCLAIMER. The Warrant Agent
shall have no duty to determine when an adjustment under this Article V should
be made, how it should be made or what it should be. The Warrant Agent shall
have no duty to determine whether a supplemental warrant agreement under
paragraph (d) need be entered into or whether any provisions of any supplemental
warrant agreement are correct. The Warrant Agent shall not be accountable for
and makes no representation as to the validity or value of any securities or
assets issued upon exercise of Warrants. The Warrant Agent shall not be
responsible for the Company's failure to comply with this Article V.
(g) ADJUSTMENT FOR TAX PURPOSES. In the event of a taxable
distribution to holders of shares of Common Stock which results in an adjustment
to the number of shares of Common Stock or other consideration for which a
Warrant may be exercised, the holders of the Warrants may, in certain
circumstances, be deemed to have received a distribution subject to United
States federal income tax as a dividend. The Company may make such increases in
the Exercise Rate, in addition to those otherwise required by this Section, as
it considers to be advisable in order that any event treated for federal income
tax purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.
(h) UNDERLYING SHARES. The Company shall at all times reserve
and keep available, free from preemptive rights, out of its authorized but
unissued Common Stock or Common Stock held in the treasury of the Company, for
the purpose of effecting the exercise of Warrants, the full number of Warrant
Shares then deliverable upon the exercise of all Warrants then outstanding and
payment of the exercise price, and the shares so deliverable shall be fully paid
and nonassessable and free from all liens and security interests.
(i) SPECIFICITY OF ADJUSTMENT. Regardless of any adjustments
in the number or kind of shares purchasable upon the exercise of the Warrants,
Warrant Certificates theretofore or thereafter issued may continue to express
the same number and kind of Shares per Warrant as are stated on the Warrant
Certificates initially issuable pursuant to this Agreement.
(j) VOLUNTARY ADJUSTMENT. The Company from time to time may
increase the Exercise Rate by any number and for any period of time (provided
that such period shall not be less than 20 Business Days). Whenever the Exercise
Rate is so increased, the Company shall mail to holders at the addresses
appearing on the Warrant Register and file with the Warrant Agent a notice of
the increase. The Company shall give the notice at least 15 days before the date
the increased Exercise Rate takes effect. The notice shall state the increased
Exercise Rate and the period it will be in effect. A voluntary increase in the
Exercise Rate does not change or adjust the Exercise Rate otherwise in effect as
determined by this Section 5.01.
(k) MULTIPLE ADJUSTMENTS. After an adjustment to the Exercise
Rate for outstanding Warrants under this Article V, any subsequent event
requiring an adjustment under this Article V shall cause an adjustment to the
Exercise Rate for outstanding Warrants as so adjusted.
(l) DEFINITIONS.
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"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, partnership interests, participations, rights in or other
equivalents (however designated and whether voting or non-voting) of, such
Person's capital stock, and any rights (other than debt securities convertible
into Capital Stock), warrants or options exchangeable for or convertible into
such capital stock, whether outstanding on the date hereof or issued hereafter.
"CONVERTIBLE PREFERRED STOCK" means any securities convertible
or exercisable or exchangeable into Common Stock, whether outstanding on the
date hereof or hereafter issued.
"CURRENT MARKET VALUE" per share of Common Stock or any other
security at any date means (i) if the security is not registered under the
Exchange Act, (a) the value of the security, determined in good faith by the
board of directors of the Company and certified in a board resolution, based on
the most recently completed arm's-length transaction between the Company and a
person other than an Affiliate of the Company and the closing of which occurs on
such date or shall have occurred within the six-month period preceding such
date, or (b) if no such transaction shall have occurred on such date or within
such six-month period or if the board of directors of the Company otherwise
elects, the Fair Market Value of the security as determined by a nationally or
regionally recognized independent financial expert (provided that, in the case
of the calculation of Current Market Value for determining the cash value of
fractional shares, any such determination within six months that is, in the good
faith judgment of the board or directors of the Company, a reasonable
determination of value, may be utilized) or (ii) (a) if the security is
registered under the Exchange Act, the average of the daily closing sales prices
of the securities for the 20 consecutive trading days immediately preceding such
date, or (b) if the security has been registered under the Exchange Act for less
than 20 consecutive trading days before such date, then the average daily
closing sales prices for all of the trading days before such date for which
closing sales prices are available, in the case of each of (ii) (a) and (ii)
(b), as certified to the Warrant Agent by the President or any vice president or
the Chief Financial Officer of the Company. The closing sales price for each
such trading day shall be: (A) in the case of a security listed or admitted to
trading on any United States national securities exchange or quotation system,
the closing sales price, regular way, on such day, or if no sale takes place on
such day, the average of the closing bid and asked prices on such day, (B) in
the case of a security not then listed or admitted to trading on any national
securities exchange or quotation system, the last reported sale price on such
day, or if no sale takes place on such day, the average of the closing bid and
asked prices on such day, as reported by a reputable quotation source designated
by the Company, (C) in the case of a security not then listed or admitted to
trading on any national securities exchange or quotation system and as to which
no such reported sale price or bid and asked prices are available, the average
of the reported high bid and low asked prices on such day, as reported by a
reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, The City and State of New York, customarily published on
each business day, designated by the Company, or, if there shall be no bid and
asked prices on such day, the average of the high bid and low asked prices, as
so reported, on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported and (D) if there are not bid
and asked prices reported during the 30 days prior to the date in question, the
Current Market Value shall be determined as if the securities were not
registered under the Exchange Act.
"FAIR MARKET VALUE" means, with respect to any asset or
property, the sale value that would be obtained in an arm's length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy. Unless otherwise
specified in this Agreement, Fair Market Value shall be determined by the board
of directors of the Company acting in good faith and as of the date on which
such determination is made.
"INDEPENDENT FINANCIAL EXPERT" means a nationally or
regionally recognized investment banking or public accounting firm in the United
States or, if the Company believes that an investment banking or public
accounting firm is generally not qualified to give such an opinion, a nationally
recognized appraisal firm, in any case (i) which does not, and whose directors,
officers and employees or Affiliates do not, have a direct or indirect material
financial interest for its proprietary account in the Company or any of its
Affiliates and (ii) which, in the judgment of the Board of Directors of the
Company, is otherwise independent with respect to the Company and its Affiliates
and qualified to perform the task for which it is to be engaged.
"TIME OF DETERMINATION" means, (i) in the case of any
distribution of securities or other property to existing stockholders to which
paragraph (b) applies, the time and date of the determination of stockholders
entitled to receive such securities or property or (ii) in the case of any other
issuance and sale to which paragraph (b) applies, the time and date of such
issuance or sale.
(m) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment
in the Exercise Rate need be made unless the adjustment would require an
increase of at least 1% in the Exercise Rate. Any adjustments that are not made
shall be carried forward and taken into account in any subsequent adjustments.
All calculations under this Section 5 shall be made to the nearest 1/1000th of a
share, as the case may be.
SECTION 5.02. FRACTIONAL SHARES. The Company will not be
required to issue fractional Warrant Shares upon exercise of the Warrants or
distribute Warrant Share certificates that evidence fractional Warrant Shares.
In the event a holder is required by Section 2.02(c) to make a Cashless
Exercise, the number of Warrant Shares issuable shall be rounded up to the
nearest whole number. In addition, in no event shall any holder of Warrants be
required to make any payment of a fractional cent. In lieu of fractional Warrant
Shares, there shall be paid to the registered holders of Warrant Certificates at
the time Warrants evidenced thereby are exercised as herein provided an amount
in cash equal to the same fraction of the Current Market Value, as defined in
paragraph (l) of Section 5.01 of this Agreement per Warrant Share on the
Business Day preceding the date the Warrant Certificates evidencing such
Warrants are surrendered for exercise. Such payments will be made by check or by
transfer to an account maintained by such registered holder with a bank in The
City of New York. If any holder surrenders for exercise more than one Warrant
Certificate, the number of Warrant Shares deliverable to such holder may, at the
option of the Company, be computed on the basis of the aggregate amount of all
the Warrants exercised by such holder.
SECTION 5.03. CERTAIN DISTRIBUTIONS. If at any time after the
Exercisability Date, the Company grants, issues or sells options, convertible
securities, or rights to purchase Capital Stock, warrants or other securities
pro rata to the record holders of any Common Stock ("DISTRIBUTION RIGHTS") or,
without duplication, makes any dividend or otherwise makes any distribution,
including (subject to applicable law) pursuant to any plan of liquidation (each,
a "DISTRIBUTION"), on the Common Stock (whether in cash, property, evidences of
indebtedness or otherwise), then the Company shall grant, issue, sell or make to
each registered holder of Warrants then outstanding the aggregate Distribution
Rights or Distribution, as the case may be, which such holder would have
acquired if such holder had held the maximum number of shares of Common Stock
acquirable upon complete exercise of such holder's Warrants (regardless of
whether the exercise of the Warrants is then suspended and without giving effect
to the Cashless Exercise option) immediately before the record date for the
grant, issuance or sale of such Distribution Rights or Distribution, as the case
may be, or, if there is no such record date, the date as of which the record
holders of Common Stock are to be determined for the grant, issue or sale of
such Distribution Rights or Distribution, as the case may be.
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. WARRANT AGENT. The Company hereby appoints The
Bank of New York as Warrant Agent of the Company in respect of the Warrants and
the Warrant Certificates upon the terms and subject to the conditions set forth
herein and in the Warrant Certificates; and The Bank of New York hereby accepts
such appointment. The Warrant Agent shall have the powers and authority
specifically granted to and conferred upon it in the Warrant Certificates and
hereby and such further powers and authority to act on behalf of the Company as
the Company may hereafter grant to or confer upon it and it shall accept in
writing. All of the terms and provisions with respect to such powers and
authority contained in the Warrant Certificates are subject to and governed by
the terms and provisions hereof. The Warrant Agent may act through agents and
shall not be responsible for the misconduct or negligence of any such agent
appointed with due care.
SECTION 6.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The
Warrant Agent accepts its obligations set forth herein upon the terms and
conditions hereof and in the Warrant Certificates, including the following, to
all of which the Company agrees and to all of which the rights hereunder of the
holders from time to time of the Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to compensation to be
agreed upon with the Company in writing for all services rendered by it
and the Company agrees promptly to pay such compensation and to
reimburse the Warrant Agent for its reasonable out-of-pocket expenses
(including reasonable fees and expenses of counsel) incurred without
gross negligence or willful misconduct on its part in connection with
the services rendered by it hereunder. The Company also agrees to
indemnify the Warrant Agent and any predecessor Warrant Agent, their
directors, officers, affiliates, agents and employees for, and to hold
them and their directors, officers, affiliates, agents and employees
harmless against, any loss, liability or expense of any nature
whatsoever (including, without limitation, reasonable fees and expenses
of counsel) incurred without gross negligence or willful misconduct on
the part of the Warrant Agent, arising out of or in connection with its
acting as such Warrant Agent hereunder and its exercise of its rights
and performance of its obligations hereunder. The obligations of the
Company under this Section 6.02 shall survive the exercise and the
expiration of the Warrant Certificates and the resignation and removal
of the Warrant Agent.
(b) In acting under this Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of
the Company and does not assume any obligation or relationship of
agency or trust for or with any of the owners or holders of the Warrant
Certificates.
(c) The Warrant Agent may consult with counsel of its
selection and any advice or written opinion of such counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion.
(d) The Warrant Agent shall be fully protected and shall incur
no liability for or in respect of any action taken or omitted to be
taken or thing suffered by it in reliance upon any Warrant Certificate,
notice, direction, consent, certificate, affidavit, opinion of counsel,
instruction, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper
parties.
(e) The Warrant Agent, and its officers, directors, affiliates
and employees ("RELATED PARTIES"), may become the owners of, or acquire
any Interest in, Warrant certificates, shares or other obligations of
the Company with the same rights that it or they would have if it were
not the Warrant Agent hereunder and, to the extent permitted by
applicable law, it or they may engage or be interested in any financial
or other transaction with the Company and may act on, or as depositary,
trustee or agent for, any committee or body of holders of shares or
other obligations of the Company as freely as if it were not the
Warrant Agent hereunder. Nothing in this Agreement shall be deemed to
prevent the Warrant Agent or such Related Parties from acting in any
other capacity for the Company.
(f) The Warrant Agent shall not be under any liability for
interest on, and shall not be required to invest, any monies at any
time received by it pursuant to any of the provisions of this Agreement
or of the Warrant Certificates.
(g) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement (or any term or provision
hereof) or the execution and delivery hereof (except the due execution
and delivery hereof by the Warrant Agent) or in respect of the validity
or execution of any Warrant Certificate (except its authentication
thereof).
(h) The recitals and other statements contained herein and in
the Warrant Certificates (except as to the Warrant Agent's
authentication thereon) shall be taken as the statements of the Company
and the Warrant Agent assumes no responsibility for the correctness of
the same. The Warrant Agent does not make any representation as to the
validity or sufficiency of this Agreement or the Warrant Certificates,
except for its due execution and delivery of this Agreement; provided,
however, that the Warrant Agent shall not be relieved of its duty to
authenticate the Warrant Certificates as authorized by this Agreement.
The Warrant Agent shall not be accountable for the use or application
by the Company of the Proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrains from acting with
respect to any matter contemplated by this Supplemental Warrant
Agreement, it may require:
(1) an Officers' Certificate (as defined in the Indenture) stating
on behalf of the Company that, in the opinion of the signers,
all conditions precedent, if any, provided for in this
Supplemental Warrant Agreement relating to the proposed action
have been complied with; and
(2) if reasonably necessary in the sole judgment of
the Warrant Agent, an opinion of counsel for the Company
stating that, in the opinion of such counsel, all such
conditions precedent have been complied with provided that
such matter is one customarily opined on by counsel.
Each Officers' Certificate or, if requested, an opinion of
counsel with respect to compliance with a condition or covenant provided for in
this Supplemental Warrant Agreement shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she
has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform such
duties as are specifically set forth herein and in the Warrant Certificates, and
no implied duties or obligations shall be read into this Agreement or the
Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be
accountable or be under any duty or responsibility for the use by the Company of
any of the Warrant Certificates authenticated by the Warrant Agent and delivered
by it to the Company pursuant to this Agreement. The Warrant Agent shall have no
duty or responsibility in case of any default by the Company in the performance
of its covenants or agreements contained in the Warrant Certificates or in the
case of the receipt of any written demand from a holder of a Warrant Certificate
with respect to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or, except as provided in Section 7.02 hereof,
to make any demand upon the Company.
(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from the Company
made or given under any provision of this Agreement shall be sufficient if
signed by its chairman of the board of directors, its president, its treasurer,
its controller or any vice president or its secretary or any assistant
secretary.
(l) The Warrant Agent shall have no responsibility in respect
of any adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute,
acknowledge and deliver, or cause to be performed, executed, acknowledged and
delivered, all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
by the Warrant Agent of the provisions of this Agreement.
(n) The Warrant Agent is hereby authorized and directed to
accept written instructions with respect to the performance of its duties
hereunder from any one of the chairman of the board of directors, the president,
the treasurer, the controller, any vice president or the secretary or assistant
secretary of the Company or any other officer or official of the Company
reasonably believed to be authorized to give such instructions and to apply to
such officers or officials for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions with respect to any matter
arising in connection with the Warrant Agent's duties and obligations arising
under this Agreement. Such application by the Warrant Agent for written
instructions from the Company may, at the option of the Warrant Agent, set forth
in writing any action proposed to be taken or omitted by the Warrant Agent with
respect to its duties or obligations under this Agreement and the date on or
after which such action shall be taken and the Warrant Agent shall not be liable
for any action taken or omitted in accordance with a proposal included in any
such application on or after the date specified therein (which date shall be not
less than 10 Business Days after the Company receives such application unless
the Company consents to a shorter period), provided that (i) such application
includes a statement to the effect that it is being made pursuant to this
paragraph (n) and that unless objected to prior to such date specified in the
application, the Warrant Agent will not be liable for any such action or
omission to the extent set forth in this paragraph (n) and (ii) prior to taking
or omitting any such action, the Warrant Agent has not received written
instructions objecting to such proposed action or omission.
(o) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed on behalf of the Company by any
one of the chairman of the board of directors, CEO, the president, the
treasurer, the controller, any executive vice president, any vice president or
the secretary or any assistant secretary of the Company or any other officer or
official of the Company reasonably believed to be authorized to give such
instructions and delivered to the Warrant Agent; and such certificate shall be
full authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(p) The Warrant Agent shall not be required to risk or expend
its own funds in the performance of its obligations and duties
hereunder.
SECTION 6.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR.
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(a) The Company agrees, for the benefit of the holders from
time to time of the Warrant Certificates, that there shall at all times be a
Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent
by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective;
provided, however, that such date shall be at least 60 days after the date on
which such notice is given unless the Company agrees to accept less notice. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor Warrant Agent, qualified as provided in Section 6.03(d) hereof, by
written instrument in duplicate signed on behalf of the Company, one copy of
which shall be delivered to the resigning Warrant Agent and one copy to the
successor Warrant Agent. As provided in Section 6.03(d) hereof, such resignation
shall become effective upon the earlier of (x) the acceptance of the appointment
by the successor Warrant Agent or (y) 60 days after receipt by the Company of
notice of such resignation. The Company may, at any time and for any reason, and
shall, upon any event set forth in the next succeeding sentence, remove the
Warrant Agent and appoint a successor Warrant Agent by written instrument in
duplicate, specifying such removal and the date on which it is intended to
become effective, signed on behalf of the Company, one copy of which shall be
delivered to the Warrant Agent being removed and one copy to the successor
Warrant Agent. The Warrant Agent shall be removed as aforesaid if it shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Warrant Agent or of its property shall be appointed, or any
public officer shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation. Any removal of
the Warrant Agent and any appointment of a successor Warrant Agent shall become
effective upon acceptance of appointment by the successor Warrant Agent as
provided in Section 6.03(d). As soon as practicable after appointment of the
successor Warrant Agent, the Company shall cause written notice of the change in
the Warrant Agent to be given to each of the registered holders of the Warrants
in the manner provided for in Section 7.04 hereof.
(c) Upon resignation or removal of the Warrant Agent, if the
Company shall fail to appoint a successor Warrant Agent within a period of 60
days after receipt of such notice of resignation or removal, then the holder of
any Warrant Certificate or the retiring Warrant Agent may apply to a court of
competent jurisdiction for the appointment of a successor to the Warrant Agent.
Pending appointment of a successor to the Warrant Agent, either by the Company
or by such a court, the duties of the Warrant Agent shall be carried out by the
Company.
(d) Any successor Warrant Agent, whether appointed by the
Company or by a court, shall be a bank or trust company in good standing,
incorporated under the laws of the United States of America or any State thereof
and having, at the time of its appointment, a combined capital surplus of at
least $50 million. Such successor Warrant Agent shall execute and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder and all the provisions of this Agreement, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Warrant Agent hereunder,
and such predecessor shall thereupon become obligated to (i) transfer and
deliver, and such successor Warrant Agent shall be entitled to receive, all
securities, records or other property on deposit with or held by such
predecessor as Warrant Agent hereunder and (ii) upon payment of the amounts then
due it pursuant to Section 6.02(a) hereof, pay over, and such successor Warrant
Agent shall be entitled to receive, all monies deposited with or held by any
predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent
hereunder may be merged or converted, or any corporation or bank with which the
Warrant Agent may be consolidated, or any corporation or bank resulting from any
merger, conversion or consolidation to which the Warrant Agent shall be a party,
or any corporation or bank to which the Warrant Agent shall sell or otherwise
transfer all or substantially all of its corporate trust business, shall be the
successor to the Warrant Agent under this Agreement (provided that such
corporation or bank shall be qualified as aforesaid) without the execution or
filing of any document or any further act on the part of any of the parties
hereto.
(f) No Warrant Agent under this Supplemental Warrant Agreement
shall be personally liable for any action or omission of any successor Warrant
Agent.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENT. This Agreement and the terms of the
Warrants may be amended by the Company and the Warrant Agent, without the
consent of the holder of any Warrant Certificate, for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein, or to effect any assumptions
of the Company's obligations hereunder and thereunder by a successor corporation
under the circumstances described in Section 5.01(d) hereof or in any other
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of the Warrant Certificates.
The Company and the Warrant Agent may amend, modify or
supplement this Agreement and the terms of the Warrants, and waivers to
departures from the terms hereof and thereof may be given, with the consent of
the Requisite Warrant Holders (as defined below) for the purpose of adding any
provision to or changing in any manner or eliminating any of the provisions of
this Agreement or modifying in any manner the rights of the holders of the
outstanding Warrants. "REQUISITE WARRANT HOLDERS" means (i) in the case of any
amendment, modification, supplement or waiver affecting only Warrant Holders as
such, holders of a majority in number of the outstanding Warrants, voting
separately as a class, or (ii) in the case of any amendment, modification,
supplement or waiver affecting Warrant Holders, a majority in number of Warrant
Shares represented by the Warrants that would be issuable assuming exercise
thereof at the time such amendment, modification, supplement or waiver is voted
upon. Notwithstanding any other provision of this Agreement, the Warrant Agent's
consent must be obtained regarding any supplement or amendment which alters the
Warrant Agent's rights or duties (it being expressly understood that the
foregoing shall not be in derogation of the right of the Company to remove the
Warrant Agent in accordance with Section 6.03 hereof). For purposes of any
amendment, modification or waiver hereunder, Warrants held by the Company or any
of its Affiliates shall be disregarded.
Any modification or amendment made in accordance with this
Agreement will be conclusive and binding on all present and future holders of
Warrant Certificates whether or not they have consented to such modification or
amendment or waiver and whether or not notation of such modification or
amendment is made upon such Warrant Certificates. Any instrument given by or on
behalf of any holder of a Warrant Certificate in connection with any consent to
any modification or amendment will be conclusive and binding on all subsequent
holders of such Warrant Certificate.
SECTION 7.02. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT
AGENT. If the Warrant Agent shall receive any notice or demand addressed to the
Company by the holder of a Warrant Certificate pursuant to the provisions hereof
or of the Warrant Certificates, the Warrant Agent shall promptly forward such
notice or demand to the Company.
SECTION 7.03. ADDRESSES FOR NOTICES TO PARTIES AND FOR
TRANSMISSION OF DOCUMENTS. All notices hereunder to the parties hereto shall be
deemed to have been given when sent by certified or registered mail, postage
prepaid, or by facsimile transmission, confirmed by first class mail, postage
prepaid, addressed to any party hereto as follows:
To the Company:
Pathnet Telecommunications, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with copies to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Facsimile: 202-662-6291
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
To the Warrant Agent:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Trustee Administration
or at any other address of which either of the foregoing shall have notified the
other in writing.
SECTION 7.04. NOTICES TO HOLDERS. Notices to holders of
Warrants shall be mailed to such holders at the addresses of such holders as
they appear in the Warrant Register. Any such notice shall be sufficiently given
if sent by first-class mail, postage prepaid.
SECTION 7.05. APPLICABLE LAW. THIS AGREEMENT AND EACH WARRANT
--------------
CERTIFICATE ISSUED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.06. PERSONS HAVING RIGHTS UNDER AGREEMENT. Nothing
in this Agreement expressed or implied and nothing that may be inferred from any
of the provisions hereof is intended, or shall be construed, to confer upon, or
give to, any person or corporation other than the Company, the Warrant Agent,
the holders of the Warrant Certificates and, with respect to Sections 4.03, 4.04
and 4.05, the holders of Warrant Shares issued pursuant to Warrants, any right,
remedy or claim under or by reason of this Agreement or of any covenant,
condition, stipulation, promise or agreement hereof; and all covenants (except
for Section 4.03 which shall be for the benefit of all holders of Warrant Shares
issued pursuant to Warrants), conditions, stipulations, promises and agreements
in this Agreement contained shall be for the sole and exclusive benefit of the
Company and the Warrant Agent and their successors and of the holders of the
Warrant Certificates.
SECTION 7.07. HEADINGS. The descriptive headings of the
--------
several Articles and Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 7.08. COUNTERPARTS. This Agreement may be executed in
------------
any number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 7.09. INSPECTION OF AGREEMENT. A copy of this
Agreement shall be available during regular business hours at the principal
corporate trust office of the Warrant Agent, for inspection by the holder of any
Warrant Certificate. The Warrant Agent may require such holder to submit his
Warrant Certificate for inspection by it.
SECTION 7.10. AVAILABILITY OF EQUITABLE REMEDIES. Since a
breach of the provisions of this Agreement could not adequately be compensated
by money damages, holders of Warrants shall be entitled, in addition to any
other right or remedy available to them, to an injunction restraining such
breach or a threatened breach and to specific performance of any such provision
of this Agreement, and in either case no bond or other security shall be
required in connection therewith, and the parties hereby consent to such
injunction and to the ordering of specific performance.
SECTION 7.11. OBTAINING OF GOVERNMENTAL APPROVALS. The Company
will from time to time take all action required to be taken by it which may be
necessary to obtain and keep effective any and all permits, consents and
approvals of governmental agencies and authorities and securities acts filings
under United States Federal and state laws, if applicable, and the rules and
regulations of all stock exchanges on which the Warrants are listed which may be
or become requisite in connection with (i) the issuance, sale, transfer, and
delivery to the Company of the Warrant Certificates, (ii) the exercise of the
Warrants or (iii) the issuance, sale, transfer and delivery by the Company of
the Warrant Shares issued to the holders of the Warrants, each upon the exercise
of the Warrants by the holders of Warrants.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.
PATHNET TELECOMMUNICATIONS, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇ V
---------------------------------------
Name:
Title:
THE BANK OF NEW YORK,
Warrant Agent
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
▇-▇▇
▇-▇
▇▇▇▇▇▇▇ A
[FORM OF WARRANT CERTIFICATE]
[FACE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS
SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
"OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER THE SECURITIES ACT, (2)
AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR A SHORTER
PERIOD AS MAY BE PRESCRIBED BY RULE 144(K) (OR ANY SUCCESSOR PROVISION THEREOF)
UNDER THE SECURITIES ACT) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR
OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH PATHNET
TELECOMMUNICATIONS, INC. OR ANY OF ITS AFFILIATES WAS THE OWNER OF THIS SECURITY
OR ANY PREDECESSOR OF THIS SECURITY AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO PATHNET
TELECOMMUNICATIONS, INC. OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇ (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE WARRANT AGENT SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (E)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. IN CONNECTION WITH ANY TRANSFER OF
THESE SECURITIES WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE WARRANT AGENT. THIS LEGEND WILL
BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
CUSIP #[ ]
No. [ ] [ ] Warrants
WARRANT CERTIFICATE
PATHNET TELECOMMUNICATIONS, INC.
This Warrant Certificate certifies that [ ], or registered
assigns, is the registered holder of [ ] Warrants (the "WARRANTS") to purchase
shares of Common Stock, par value $0.01 per share, issuable upon exercise of the
Warrants (the "WARRANT SHARES") of PATHNET TELECOMMUNICATIONS, INC., a Delaware
corporation (the "COMPANY," which term includes its successors and assigns).
Each Warrant entitles the holder to purchase from the Company at any time from
9:00 a.m. New York City time on or after the Exercisability Date until 5:00
p.m., New York City time, on April 15, 2008 (the "EXPIRATION DATE"), 3.19 fully
paid, registered and non-assessable Warrant Shares, subject to adjustment as
provided in Article V of the Supplemental Warrant Agreement, at an exercise
price of $0.01 for each share purchased (the "EXERCISE PRICE"); upon surrender
of this Warrant Certificate and payment of the Exercise Price (i) in cash or by
certified or official bank check, (ii) by a Cashless Exercise or (iii) by any
combination of (i) and (ii), at any office or agency maintained for that purpose
by the Company (the "WARRANT EXERCISE OFFICE"), subject to the conditions set
forth herein and in the Supplemental Warrant Agreement. For purposes of this
Warrant, a "CASHLESS EXERCISE" shall mean an exercise of a Warrant in accordance
with the immediately following two sentences. To effect a Cashless Exercise, the
holder may exercise a Warrant or Warrants without payment of the Exercise Price
in cash by surrendering such Warrant or Warrants (represented by one or more
Warrant Certificates) and in exchange therefor, receiving such number of shares
of Common Stock equal to the product of (1) that number of shares of Common
Stock for which such Warrant or Warrants are exercisable and which would be
issuable in the event of an exercise with payment of the Exercise Price and (2)
the Cashless Exercise Ratio. The "CASHLESS EXERCISE RATIO" shall equal a
fraction, the numerator of which is the excess of the Current Market Value
(calculated as set forth in this Warrant) per share of Common Stock on the date
of exercise over the Exercise Price per share of Common Stock as of the date of
exercise and the denominator of which is the Current Market Value per share of
Common Stock on the date of exercise. Upon surrender of a Warrant Certificate
representing more than one Warrant in connection with the holder's option to
elect a Cashless Exercise, the holder must specify the number of Warrants for
which such Warrant Certificate is to be exercised (without giving effect to the
Cashless Exercise). All provisions of the Supplemental Warrant Agreement shall
be applicable with respect to a Cashless Exercise of a Warrant Certificate for
less than the full number of Warrants represented thereby. Capitalized terms
used herein without being defined herein shall have the definitions ascribed to
such terms in the Supplemental Warrant Agreement.
"CURRENT MARKET VALUE" per share of Common Stock or any other
security at any date means (i) if the security is not registered under the
Exchange Act, (a) the value of the security, determined in good faith by the
board of directors of the Company and certified in a board resolution, based on
the most recently completed arm's-length transaction between the Company and a
person other than an Affiliate of the Company and the closing of which occurs on
such date or shall have occurred within the six-month period preceding such
date, or (b) if no such transaction shall have occurred on such date or within
such six-month period or if the board of directors of the Company otherwise
elects, the Fair Market Value of the security as determined by a nationally or
regionally recognized Independent Financial Expert (as defined herein) (PROVIDED
that, in the case of the calculation of Current Market Value for determining the
cash value of fractional shares, any such determination within six months that
is, in the good faith judgment of the board of directors of the Company, a
reasonable determination of value, may be utilized) or (ii) (a) if the security
is registered under the Exchange Act, the average of the daily closing sales
prices of the securities for the 20 consecutive trading days immediately
preceding such date, or (b) if the security has been registered under the
Exchange Act for less than 20 consecutive trading days before such date, then
the average daily closing sales prices for all of the trading days before such
date for which closing sales prices are available, in the case of each of (ii)
(a) and (ii) (b), as certified to the Warrant Agent by the President or any vice
president or the Chief Financial Officer of the Company. The closing sales price
for each such trading day shall be: (A) in the case of a security listed or
admitted to trading on any United States national securities exchange or
quotation system, the closing sales price, regular way, on such day, or if no
sale takes place on such day, the average of the closing bid and asked prices on
such day, (B) in the case of a security not then listed or admitted to trading
on any national securities exchange or quotation system, the last reported sale
price on such day, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reputable quotation
source designated by the Company, (C) in the case of a security not then listed
or admitted to trading on any national securities exchange or quotation system
and as to which no such reported sale price or bid and asked prices are
available, the average of the reported high bid and low asked prices on such
day, as reported by a reputable quotation service, or a newspaper of general
circulation in the Borough of Manhattan, The City and State of New York,
customarily published on each Business Day, designated by the Company, or, if
there shall be no bid and asked prices on such day, the average of the high bid
and low asked prices, as so reported, on the most recent day (not more than 30
days prior to the date in question) for which prices have been so reported and
(D) if there are not bid and asked prices reported during the 30 days prior to
the date in question, the Current Market Value shall be determined as if the
securities were not registered under the Exchange Act.
"EXERCISE EVENT" means, with respect to each Warrant, the date
of the occurrence of the earliest of: (i) the time immediately prior to a Change
of Control (as such term is defined in the Indenture); (ii)(a) the 180th day (or
such earlier date as determined by the Company in its sole discretion) following
the closing of an Initial Public Equity Offering (as defined herein) or (b) upon
the closing of an Initial Public Equity Offering, but only in respect of
Warrants, if any, required to be exercised to permit the holders thereof to sell
Warrant Shares pursuant to their respective registration rights, (iii) the time
when a class of equity securities of the Company is listed on a national
securities exchange or authorized for quotation on the Nasdaq National Market or
is otherwise subject to registration under the Exchange Act, or (iv) April 30,
2001.
"INDEPENDENT FINANCIAL EXPERT" means a nationally or
regionally recognized investment banking or public accounting firm in the United
States or, if the Company believes that an investment banking or public
accounting firm is generally not qualified to give such an opinion, a nationally
recognized appraisal firm, in any case (i) which does not, and whose directors,
officers and employees or Affiliates do not, have a direct or indirect material
financial interest for its proprietary account in the Company or any of its
Affiliates and (ii) which, in the judgment of the Board of Directors of the
Company, is otherwise independent with respect to the Company and its Affiliates
and qualified to perform the task for which it is to be engaged.
The Company has initially designated the principal corporate
trust office of the Warrant Agent in the Borough of Manhattan, The City of New
York, as the initial Warrant Agent Office. The number of shares of Common Stock
issuable upon exercise of the Warrants ("Exercise Rate") is subject to
adjustment upon the occurrence of certain events set forth in the Supplemental
Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York
City time, on April 15, 2008 shall thereafter be void.
If the Company, in a single transaction or through a series of
related transactions, consolidates with or merges with or into, or sells all or
substantially all of its property and assets to, another Person (other than a
subsidiary of the Company) solely for cash, the holders of Warrants which are
then exercisable shall be entitled to receive distributions on the date of such
event on an equal basis with holders of shares of Capital Stock (or other
securities issuable upon exercise of the Warrants) as if the Warrants had been
exercised immediately prior to such event less the aggregate Exercise Price
therefor.
Reference is hereby made to the further provisions on the
reverse hereof which provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Warrant Certificate shall not be valid unless
authenticated by the Warrant Agent, as such term is used in the Supplemental
Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
WITNESS the facsimile seal of the Company and facsimile
signatures of its duly authorized officers.
PATHNET TELECOMMUNICATIONS, INC.
By:_________________________________
Name:
Title:
Attest:
By:_________________________________
Name:
Title:
Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Supplemental Warrant Agreement:
Dated:
THE BANK OF NEW YORK,
Warrant Agent
By:__________________________________
Authorized Signatory
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
PATHNET TELECOMMUNICATIONS, INC.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring at 5:00 p.m., New York City time,
on April 15, 2008 (the "EXPIRATION DATE"), each of which represents the right to
purchase at any time on or after the Exercisability Date (as defined in the
Supplemental Warrant Agreement) and on or prior to the Expiration Date 3.19
Shares, subject to adjustment as set forth in the Supplemental Warrant
Agreement. The Warrants are issued pursuant to a Supplemental Warrant Agreement
dated as of March 30, 2000 (the "SUPPLEMENTAL WARRANT AGREEMENT"), duly executed
and delivered by the Company to The Bank of New York, Warrant Agent (the
"WARRANT AGENT"), which Supplemental Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "HOLDERS" or "HOLDER" meaning the registered holders or registered holder)
of the Warrants.
Warrants may be exercised by (i) surrendering at any Warrant
Agent Office this Warrant Certificate with the form of Election to Exercise set
forth hereon duly completed and executed and (ii) to the extent such exercise is
not being effected through a Cashless Exercise by paying in full the Warrant
Exercise Price for each such Warrant exercised and any other amounts required to
be paid pursuant to the Supplemental Warrant Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to 11:00 a.m.,
New York City time, on a Business Day, the exercise of the Warrant to which such
items relate will be effective on such Business Day. If any items referred to in
the last sentence of the preceding paragraph are received after 11:00 a.m., New
York City time, on a Business Day, the exercise of the Warrants to which such
item relates will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Warrants on April
15, 2008, if all of the items referred to in the last sentence of the preceding
paragraph are received by the Warrant Agent at or prior to 5:00 p.m., New York
City time, on such Expiration Date, the exercise of the Warrants to which such
items relate will be effective on the Expiration Date.
As soon as practicable after the exercise of any Warrant or
Warrants, the Company shall issue or cause to be issued to or upon the written
order of the registered holder of this Warrant Certificate, a certificate or
certificates evidencing the Warrant Share or Warrant Shares to which such holder
is entitled, in fully registered form, registered in such name or names as may
be directed by such holder pursuant to the Election to Exercise, as set forth on
the face of this Warrant Certificate. Such certificate or certificates
evidencing the Warrant Share or Warrant Shares shall be deemed to have been
issued and any persons who are designated to be named therein shall be deemed to
have become the holder of record of such Warrant Share or Warrant Shares as of
the close of business on the date upon which the exercise of this Warrant was
deemed to be effective as provided in the preceding paragraph.
The Company will not be required to issue fractional Shares
upon exercise of the Warrants or distribute Warrant Certificates that evidence
fractional Warrant Shares. In lieu of fractional Warrant Shares, there shall be
paid to the registered Holder of this Warrant Certificate at the time such
Warrant Certificate is exercised an amount in cash equal to the same fraction of
the Current Market Value per share of Common Stock on the Business Day preceding
the date this Warrant Certificate is surrendered for exercise.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder thereof in
person or by legal representative or attorney duly authorized in writing, may be
exchanged for a new Warrant Certificate or new Warrant Certificates evidencing
in the aggregate a like number of Warrants, in the manner and subject to the
limitations provided in the Supplemental Warrant Agreement, without charge
except for any tax or other governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this
Warrant Certificate at any office or agency maintained by the Company for that
purpose, a new Warrant Certificate evidencing in the aggregate a like number of
Warrants shall be issued to the transferee in exchange for this Warrant
Certificate, subject to the limitations provided in the Supplemental Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder hereof as the absolute owner of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone) for the purpose of any exercise hereof and for all other purposes, and
neither the Company nor the Warrant Agent shall be affected by any notice to the
contrary.
The term "BUSINESS DAY" shall mean any day on which (i) banks
in The City of New York, (ii) the principal U.S. securities exchange or market,
if any, on which the Common Stock is listed or admitted to trading and (iii) the
principal U.S. securities exchange or market, if any, on which the Warrants are
listed or admitted to trading are open for business.
The Warrants, Warrant Shares and Registrable Securities (as
defined in the Warrant Registration Rights Agreement) are entitled to the
benefits of a registration rights agreement relating to the Warrants and the
Warrant Shares (the "WARRANT REGISTRATION RIGHTS AGREEMENT"), pursuant to which
the holders representing not less than 50% of Warrant Shares and Registrable
Securities have, at any time and from time to time after (A) the occurrence of
the earliest of (i) the time immediately prior to a Change of Control (as such
term is defined in the Indenture); (ii)(a) the180th day (or such earlier date as
determined by the Company in its sole discretion) following the consummation of
an Initial Public Equity Offering (as defined herein) or (b) upon the
consummation of an Initial Public Equity Offering, but only in respect of
Warrants, if any, required to be exercised to permit the holders thereof to sell
Warrant Shares pursuant to their respective registration rights, (iii) the time
when a class of equity securities of the Company is listed on a national
securities exchange or authorized for quotation on the Nasdaq National Market or
is otherwise subject to registration under the Exchange Act, or (iv) April 30,
2001, and (B) the completion of an Initial Public Equity Offering, the right to
require the Company to effect one demand registration of the Warrant Shares and
Registrable Securities. The Warrant Registration Rights Agreement also provides
the holders of Registrable Securities with the right, subject to the conditions
and limitations contained therein, to include the Registrable Securities in
certain registration statements filed by the Company for its account or for the
account of any of its securityholders.
[FORM OF ELECTION TO EXERCISE]
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise [ ] of
the Warrants represented by this Warrant Certificate and purchase the whole
number of Shares issuable upon the exercise of such Warrants and herewith
tenders payment for such Shares as follows:
$[ ] in cash or by certified or official bank check; or by
surrender of Warrants pursuant to a Cashless Exercise (as defined in the
Supplemental Warrant Agreement) for [ ] shares of Stock at the current Cashless
Exercise Ratio.
The undersigned requests that a certificate representing such
Shares be registered in the name of _______________ whose address is
________________ and that such shares be delivered to _____________________
whose address is ________________. Any cash payments to be paid in lieu of a
fractional Share should be delivered to _________ whose address is
________________ and the check representing payment thereof should be delivered
to _____________ whose address is _____________________.
Dated ___________, ____
Name of holder of
Warrant Certificate:_______________________________________________
(Please Print)
Tax Identification or
Social Security Number:_____________________________________________
Address: _________________________________________________________
---------------------------------------------------------
Signature:_________________________________________________________
Note: The above signature must correspond with the name as
written upon the face of this Warrant Certificate in
every particular, without alteration or enlargement
or any change whatever and if the certificate
representing the Shares or any Warrant Certificate
representing Warrants not exercised is to be
registered in a name other than that in which this
Warrant Certificate is registered, or if any cash
payment to be paid in lieu of a fractional share is
to be made to a person other than the registered
holder of this Warrant Certificate, the signature of
the holder hereof must be guaranteed as provided in
the Supplemental Warrant Agreement.
Dated ______________, ____
Signature:_________________________________________________________
Note: The above signature must correspond with the
name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever.
Signature Guaranteed:________________________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
[FORM OF ASSIGNMENT]
For value received __________________________ hereby sells,
assigns and transfers unto _____________________________ the within Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ___________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company, with full power of
substitution in the premises.
Dated ________________, ____
Signature:_________________________________________________________
Note: The above signature must correspond with the
name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever.
Signature Guaranteed:________________________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS*
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
Number of Warrants
Amount of decrease Amount of increase in of this Global
in Number of Number of Warrants of Warrant following Signature of
Warrants of this this GLOBAL WARRANT such decrease (or authorized officer
Date of EXCHANGE GLOBAL WARRANT INCREASE) of WARRANT AGENT
-------- -------------- ------------------- ---------------------- -------------
B-1
B-1
EXHIBIT B
FORM OF LEGEND FOR GLOBAL WARRANT
Any Global Warrant authenticated and delivered hereunder shall
bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL WARRANT WITHIN THE MEANING OF THE
SUPPLEMENTAL WARRANT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
SUPPLEMENTAL WARRANT AGREEMENT, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE SUPPLEMENTAL WARRANT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
C-1
C-1
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of PATHNET
TELECOMMUNICATIONS, INC.
This Certificate relates to ____ Warrants held in* ___
book-entry or* _______ certificated 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 Warrant held by the
Depositary a Warrant or Warrants in definitive, registered form of
authorized denominations and an aggregate number 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 Supplemental Warrant Agreement, dated as of March 30, 2000, relating to the
above captioned Warrants and the restrictions on transfers thereof as provided
in Section 1.08 of such Supplemental Warrant Agreement, and that the transfer of
this Warrant does not require registration under the Securities Act of 1933, as
amended (the "Act") because:
_____ Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 1.08 (a)(y)(A) or Section
1.08 (d)(i)(A) of the Supplemental Warrant Agreement).
____ Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Act), in reliance on Rule 144A.
____ Such Warrant is being transferred in reliance on Regulation S under the
Act.
____ Such Warrant is being transferred in accordance with Rule 144 under the
Act.
____ Such Warrant is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Act.
------------------------------------------
[INSERT NAME OF TRANSFEROR]
By: ______________________________________
Date:__________________
*Check applicable box.
Signature
Guaranteed:__________________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
▇-▇
▇-▇
EXHIBIT D
Form of Certificate to be
Delivered in Connection
WITH REGULATION S TRANSFERS
------------, ----
================
----------------
Attention: __________________
Ladies and Gentlemen:
In connection with our proposed sale of Warrants of Pathnet
Telecommunications, Inc (the "Company"), we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent
that:
(1) the offer of the Warrants was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act;
(5) if the circumstances set forth in Rule 904(c) under the
Securities Act are applicable, we have complied with the additional conditions
therein, including (if applicable) sending a confirmation or other notice
stating that the Warrants may be offered and sold during the restricted period
specified in Rule 903(c)(2) or (3), as applicable, in accordance with the
provisions of Regulation S; pursuant to registration of the Warrants under the
Securities Act; or pursuant to an available exemption from the registration
requirements under the Act.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S under the
Securities Act.
Very truly yours,
[Name of Transferor]
By:______________________________
Authorized Signature]
Upon transfer the Warrants would be registered in the name of
the new beneficial owner as
follows:
Name:_____________________________
Address:____________________________
Taxpayer ID Number:__________________
--------
* This is to be included only if the Warrant is in global form.
