EXHIBIT 10.44
iBASIS, INC.
AND
U.S. BANK NATIONAL ASSOCIATION,
AS
WARRANT AGENT
------------------------
AMENDED AND RESTATED WARRANT AND REGISTRATION RIGHTS
AGREEMENT
DATED AS OF FEBRUARY 21, 2003
TABLE OF CONTENTS
Page
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Section 1. Appointment of Warrant Agent.......................................................................2
Section 2. Warrant Certificates; Warrant Shares...............................................................2
Section 3. Execution of Warrant Certificates and Warrant Share Certificates...................................2
Section 4. Registration and Countersignature..................................................................3
Section 5. Transfer and Exchange of Warrants..................................................................3
Section 6. Registration of Transfers and Exchanges............................................................4
6.1. Transfer and Exchange of Physical Warrants................................................4
6.2. Restrictions on Transfer of Physical Warrants for a Beneficial Interest in a
Global Warrant............................................................................4
6.3. Transfer and Exchange of Global Warrants..................................................5
6.4. Transfer of a Beneficial Interest in a Global Warrant for a Physical Warrant..............5
6.5. Restrictions on Transfer and Exchange of Global Warrants..................................6
6.6. Authentication of Definitive Warrants in Absence of Depositary............................6
6.7. Legends...................................................................................6
6.8. Cancellation and/or Adjustment of a Global Warrant........................................7
Section 7. Issuance of Warrants; Terms of Warrants: Exercise of Warrants......................................7
7.1. Method of Exercise; Payment, Issuance of New Warrant; Transfer and Exchange...............7
7.2. Warrantholder Representations............................................................10
7.3. Stock Fully Paid; Reservation of Shares..................................................11
7.4. Adjustment of Exercise Price and Number of Shares........................................11
7.5. Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc...............17
7.6. Notice of Adjustments....................................................................17
7.7. No Rights or Liabilities as Stockholder..................................................17
Section 8. Registration Rights...............................................................................17
8.1. Demand Registration Rights...............................................................17
8.2. Piggyback Registration Rights............................................................20
8.3. Certain Other Provisions.................................................................21
8.4. Indemnification and Contribution.........................................................24
8.5. Reports Under Exchange Act...............................................................26
Section 9. Definitions.......................................................................................27
Section 10. Payment of Taxes..................................................................................32
Section 11. Mutilated or Missing Warrant Certificates and Warrant Share Certificates..........................32
Section 12. Fractional Interests..............................................................................33
Section 13. Merger, Consolidation or Change of Name of Warrant Agent..........................................33
Section 14. Warrant Agent.....................................................................................34
Section 15. Change of Warrant Agent...........................................................................37
Section 16. Notices to Company and Warrant Agent..............................................................37
Section 17. Supplements and Amendments........................................................................39
Section 18. Successors........................................................................................39
Section 19. Survival of Registration Rights Provisions, Warrant Agent Provisions..............................39
Section 20. Governing Law; Submission to Jurisdiction: Waiver of Jury Trial...................................39
Section 21. Exercise of Rights and Remedies...................................................................40
Section 22. Benefits of This Agreement........................................................................40
Section 23. Counterparts......................................................................................40
AMENDED AND RESTATED
WARRANT AND REGISTRATION RIGHTS AGREEMENT (this
"AGREEMENT"), dated as of February 21, 2003, between iBasis, Inc., a Delaware
(the "COMPANY"), and U.S. Bank National Association, as Warrant Agent (the
"WARRANT AGENT").
WHEREAS, the Company issued Warrants, as hereinafter described (the
"SYMPHONY WARRANTS"), which in the aggregate initially entitle the holders of
the Symphony Warrants to purchase, at an Initial Exercise Price of $0.65 per
share, 3,071,184 shares of Common Stock of the Company (representing 5.58% of
the Common Stock outstanding on a diluted basis, after giving effect to the
exercise of such Warrants) on January 30, 2003 pursuant to that certain
Securities Exchange Agreement (as amended, supplemented and otherwise modified
from time to time, the "SYMPHONY EXCHANGE AGREEMENT") dated as of January 30,
2003, among the Company, iBasis Global, Inc., the guarantors named therein, the
Symphony Funds named therein and U.S. Bank National Association, as Collateral
Agent.
WHEREAS, each holder of the Company's 11.5% Senior Secured Notes due 2005
issued in connection with the execution of the Symphony Exchange Agreement and
the consummation of the transactions thereby received its proportionate share of
Warrants to purchase 3,071,184 Warrant Shares.
WHEREAS, the Company and the Warrant Agent entered into that certain
Warrant and Registration Rights Agreement, dated as of January 30, 2003 granting
holders of the Symphony Warrants certain registration and other rights with
respect to their Warrants (the "ORIGINAL AGREEMENT").
WHEREAS, pursuant to that certain Securities Exchange Agreement (as
amended, supplemented and otherwise modified from time to time, the "NEW
EXCHANGE AGREEMENT") dated as of February 21, 2003, among the Company, iBasis
Global, Inc., the guarantors named therein, JMG Triton Offshore Limited Fund
CITCO and US National Bank Association, as Collateral Agent, the Company
proposes to issue additional Warrants, as hereinafter described (the "NEW
WARRANTS"), which in the aggregate will initially entitle the holders of the New
Warrants to purchase at an Initial Exercise Price of $0.65 per share, 727,627
shares of Common Stock of the Company,.
WHEREAS, the Company and the Warrant Agent desire to amend the Original
Agreement to include the New Warrants and certain other Warrants that may be
issued from time to time to Exchanging Holders in connection with any future
exchange of Convertible Notes by the Company in connection with a Joinder
Agreement entered into pursuant to the New Exchange Agreement.
WHEREAS, upon exercise of any Warrants, the Warrantholder shall own Warrant
Shares, which shall continue to be subject to the terms of this Agreement.
WHEREAS, the Warrant Shares shall have registration rights as provided
herein.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange
and exercise of Warrants, the issue, transfer and exchange of the Warrant
Shares, and the registration rights with respect to such Warrant Shares, and
other matters as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 2. WARRANT CERTIFICATES; WARRANT SHARES. The certificates
evidencing the Warrants (the "WARRANT CERTIFICATES") to be delivered pursuant to
this Agreement shall be in fully registered form only and shall initially be
represented by one or more global warrants (each, a "GLOBAL WARRANT"),
substantially in the form of Exhibit A, registered in the name of The Depositary
Trust Company (the "DEPOSITARY") or its nominee and delivered to the Warrant
Agent, as custodian for the Depository and recorded in the book-entry system
maintained by the Depository. Upon written request, a beneficial owner of an
interest in a Global Warrant will be entitled to receive a physical certificate
representing such interest (a "PHYSICAL WARRANT"), as provided in Section 6.
Each Global Warrant shall represent such of the outstanding Warrants as shall be
specified therein and each shall provide that it shall represent the aggregate
amount of outstanding Warrants from time to time endorsed thereon and that the
aggregate amount of outstanding Warrants represented thereby may from time to
time be reduced or increased, as appropriate. Any endorsement of a Global
Warrant to reflect the amount of any increase or decrease in the amount of
Warrant Shares represented thereby shall be made by the Warrant Agent and the
Depositary in accordance with instructions given by the holder thereof. The
certificates evidencing the Warrant Shares to be delivered upon exercise of a
Warrant (the "WARRANT SHARE CERTIFICATES") shall be substantially in the form of
the specimen certificate attached hereto as Exhibit B.
Section 3. EXECUTION OF WARRANT CERTIFICATES AND WARRANT SHARE
CERTIFICATES. Warrant Certificates shall be signed on behalf of the Company by
its President or a Vice President and by its Secretary or an Assistant
Secretary. Each such signature upon the Warrant Certificates may be in the form
of a facsimile signature of the present or any future President, Vice President,
Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on
the Warrant Certificates and for that purpose the Company may adopt and use the
facsimile signature of any person who shall have been President, Vice President,
Secretary or Assistant Secretary, notwithstanding the fact that at the time the
Warrant Certificates shall be countersigned and delivered or disposed of he or
she shall have ceased to hold such office.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned by the Warrant Agent, or disposed of by the
Company, such Warrant Certificates nevertheless may be countersigned and
delivered or disposed of as though such person had not ceased to be such officer
of the Company; and any Warrant Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of the Company to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement any
such person was not such officer.
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Warrant Certificates shall be dated the date of countersignature by the
Warrant Agent.
The Warrant Share Certificates shall be executed in accordance with the
by-laws of the Company.
Section 4. REGISTRATION AND COUNTERSIGNATURE. The Warrants shall be
numbered and shall be registered on the books of the Company maintained at the
principal office of the Warrant Agent in Boston,
Massachusetts (the "WARRANT
REGISTER") as they are issued.
Warrant Certificates shall be manually countersigned by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. The Warrant
Agent shall, upon written instructions of the President, a Vice President, the
Treasurer or the Chief Financial Officer of the Company, initially countersign,
issue and deliver such number of Warrants as are set forth in such written
instructions, and the Warrant Agent shall be fully protected in conclusively
relying on such written instructions. Such written instructions shall not
instruct the Warrant Agent to countersign Warrants entitling the holders thereof
to purchase more than the number of Warrant Shares referred to above in the
first recital hereof. The Warrant Agent shall also countersign and deliver
Warrants as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates and the Warrant Shares as the absolute
owner(s) thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone), for all purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
Section 5. TRANSFER AND EXCHANGE OF WARRANTS. The Warrant Agent shall from
time to time, subject to the limitations set forth in Section 6, register the
transfer of any outstanding Warrants upon the records to be maintained by it for
that purpose, upon surrender thereof duly endorsed or accompanied (if so
required by it) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered Warrantholder
or Warrantholders thereof or by the duly appointed legal representative thereof
or by a duly authorized attorney. Subject to the terms of this Agreement, each
Warrant Certificate may be exchanged for another certificate or certificates
entitling the Warrantholder thereof to purchase a like aggregate number of
Warrant Shares as the certificate or certificates surrendered then entitle such
Warrantholder to purchase. Any Warrantholder desiring to exchange a Warrant
Certificate or Warrant Certificates shall make such request in writing delivered
to the Warrant Agent, and shall surrender, duly endorsed or accompanied (if so
required by the Warrant Agent) by a written instrument or instruments of
transfer in form satisfactory to the Warrant Agent, the Warrant Certificate or
Warrant Certificates to be so exchanged.
Upon registration of transfer, the Warrant Agent shall countersign and
deliver by certified mail a new Warrant Certificate or Warrant Certificates to
the Persons entitled thereto. The Warrant Certificates may be exchanged at the
option of the Warrantholder thereof, when surrendered at the office or agency of
the Company maintained for such purpose, which initially will be the corporate
trust office of the Warrant Agent in Boston,
Massachusetts for another Warrant
Certificate, or other Warrant Certificates of different denominations, of like
tenor and representing in the aggregate the right to purchase a like number of
Warrant Shares.
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No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any stamp or other tax or other governmental charge that is
imposed in connection with any such exchange or registration of transfer.
Section 6. REGISTRATION OF TRANSFERS AND EXCHANGES.
6.1. TRANSFER AND EXCHANGE OF PHYSICAL WARRANTS. When Physical
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Physical Warrants; or
(ii) to exchange such Physical Warrants for an equal number of
Physical Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Agreement as set forth in this Section 6 for such
transactions are met; PROVIDED, HOWEVER, that the Physical Warrants presented or
surrendered for registration of transfer or exchange:
(1) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Warrant Agent, duly executed by
the Warrantholder thereof or his attorney duly authorized in writing;
and
(2) in the case of Physical Warrants the offer and sale of which have not
been registered under the Securities Act, such Physical Warrants shall
be accompanied, in the sole discretion of the Company, by the
following additional information and documents, as applicable:
(A) if such Physical Warrants are being delivered to the Warrant
Agent by a holder for registration in the name of such holder,
without transfer, a certification from such holder to that effect
(in substantially the form of Exhibit C hereto); or
(B) if such Physical Warrants are being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act (a "QUALIFIED INSTITUTIONAL BUYER")) in accordance
with Rule 144A under the Securities Act., a certification to that
effect (in substantially the form of Exhibit C hereto).
6.2. RESTRICTIONS ON TRANSFER OF PHYSICAL WARRANTS FOR A BENEFICIAL
INTEREST IN A GLOBAL WARRANT. A Physical Warrant may not be exchanged for a
beneficial interest in a Global Warrant except upon satisfaction of the
requirements set forth below. Upon receipt by the Warrant Agent of a
Physical Warrant, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Warrant Agent, together with:
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(A) a certification, in substantially the form of Exhibit C hereto,
that such Physical Warrant is being transferred to a Qualified
Institutional Buyer; and
(B) written instructions directing the Warrant Agent to make, or to
direct the 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 Physical 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 shall upon written instructions from the Company authenticate a new Global
Warrant in the appropriate amount.
6.3. TRANSFER AND EXCHANGE OF GLOBAL WARRANTS. The transfer and
exchange of Global Warrants or beneficial interests therein shall be
effected through the Depositary, in accordance with this Agreement
(including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefore.
6.4. TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT FOR A
PHYSICAL WARRANT.
6.4.1. Any Person having a beneficial interest in a Global
Warrant may upon request exchange such beneficial interest for a
Physical Warrant. Upon receipt by the Warrant Agent of written
instructions or such other form of instructions as is customary for
the Depositary from the Depositary or its nominee on behalf of any
person having a beneficial interest in a Global Warrant and upon
receipt by the Warrant Agent of a written order or such other form of
instructions as is customary for the Depositary or the person
designated by the Depositary as having such a beneficial interest
containing registration instructions and, in the case of any such
transfer or exchange of a beneficial interest in a Global Warrant the
offer and sale of which have not been registered under the Securities
Act, the following additional information and documents:
(A) if such beneficial interest is being transferred to the Person
designated by the 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 Qualified
Institutional Buyer in accordance with Rule 144A under the
Securities Act, a certification to that effect (in substantially
the form of Exhibit C hereto),
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
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in the form of an officers' certificate, the Warrant Agent will
authenticate and deliver to the transferee a Physical Warrant.
6.4.2. Physical Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 6.4. shall be
registered in such names and in such authorized denominations as the
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 Physical Warrants to the
Persons in whose names such Physical Warrants are so registered.
6.5. RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Agreement, a Global Warrant
may not be transferred as a whole except by the 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.
6.6. AUTHENTICATION OF DEFINITIVE WARRANTS IN ABSENCE OF DEPOSITARY.
If at any time the Depositary for the Warrants notifies the Company that
the Depositary is unwilling or unable to continue as Depositary for the
Global Warrants and a successor Depositary for the Global Warrants cannot
be appointed by the Company within 90 days after delivery of such notice,
then the Company will execute, and the Warrant Agent, upon written
instructions from the Company requesting the authentication and delivery of
Physical Warrants as a result of the inability to retain a successor
Depositary, will authenticate and deliver Physical Warrants, in an
aggregate number equal to the aggregate number of Warrants represented by
the Global Warrants, in exchange for such holder's beneficial interest in
Global Warrants.
6.7. LEGENDS. For so long as transfer of a Warrant is not permitted
without registration under the Securities Act, each Warrant Certificate
evidencing such Warrant (and all Warrants issued in exchange therefor or
substitution thereof) shall bear a legend substantially to the following
effect:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT),
(2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
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WITH RULE 144A UNDER THE SECURITIES ACT, OR (C)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT
(AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME
OF SUCH TRANSFER) AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND."
6.8. CANCELLATION AND/OR ADJUSTMENT OF A GLOBAL WARRANT. At such time
as all beneficial interests in a Global Warrant have either been exchanged
for Physical Warrants, redeemed, repurchased or cancelled, such Global
Warrant shall be returned to or retained and cancelled by the Warrant
Agent. At any time prior to such cancellation, if any beneficial interest
in a Global Warrant is exchanged for Physical Warrants, redeemed,
repurchased or cancelled, the number of Warrants represented by such Global
Warrant shall be reduced and an endorsement shall be made on such Global
Warrant, by the Warrant Agent to reflect such reduction.
6.8.1. OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
PHYSICAL WARRANTS.
(i) To permit registrations of transfers and exchanges, the Company
shall execute, at the Warrant Agent's request, and the Warrant
Agent shall authenticate Physical Warrants and Global Warrants.
(ii) All Physical Warrants and Global Warrants issued upon any
registration, transfer or exchange of Physical Warrants or
Global Warrants shall be the valid obligations of the Company,
entitled to the same benefits under this Agreement as the
Physical Warrants or Global Warrants surrendered upon the
registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat
the person in whose name any Warrant is registered as the
absolute owner of such Warrant, and neither the Warrant Agent
nor the Company shall be affected by notice to the contrary.
Section 7. ISSUANCE OF WARRANTS; TERMS OF WARRANTS: EXERCISE OF WARRANTS.
7.1. METHOD OF EXERCISE; PAYMENT, ISSUANCE OF NEW WARRANT; TRANSFER
AND EXCHANGE.
7.1.1. METHOD OF EXERCISE.
7.1.1.1. CASH EXERCISE. Subject to the terms of this
Agreement, each Warrant holder shall have the right to exercise
the Warrants
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evidenced by the Warrant Certificates it holds, in whole or in
part, during normal business hours on any Business Day on or
prior to the Expiration Date, by surrender of the Warrant
Certificates held by it to the Company at its principal office,
accompanied by a subscription substantially in the form attached
to the Warrant Certificates duly executed by such holder and
accompanied by (a) wire transfer of immediately available funds
or (b) certified or official bank check payable to the order of
the Company, in each case in the amount obtained by multiplying
(i) the number of shares of Common Stock (without giving effect
to any adjustment thereof pursuant to the provisions of hereof)
for which the Warrant is then being exercised, as designated in
such subscription, by (ii) the Initial Exercise Price. Thereupon,
such holder shall be entitled to receive the number of duly
authorized, validly issued, fully paid and nonassessable Warrant
Shares (or Other Securities) determined as provided in Sections
7.4 and 7.5 hereof.
7.1.1.2. CONVERSION. Subject to the terms of this Agreement,
each Warrant holder shall have the right to convert the Warrants
evidenced by the Warrant Certificates it holds, in whole or in
part, into Warrant Shares (or Other Securities), during normal
business hours on any Business Day on or prior to the Expiration
Date, by surrender of the Warrant Certificates held by it to the
Company at its principal office, accompanied by a conversion
notice substantially in the form attached to the Warrant
Certificates duly executed by such holder. Thereupon, such holder
shall be entitled to receive a number of duly authorized, validly
issued, fully paid and nonassessable Warrant Shares (or Other
Securities) equal to:
(a) the excess of
(i) (x) the number of Warrant Shares (or Other
Securities) determined as provided in Sections 7.4 and 7.5
hereof which such holder would be entitled to receive upon
exercise of such Warrant for the number of Warrant Shares
designated in such conversion notice (without giving effect
to any adjustment thereof pursuant to the provisions hereof)
for which the Warrant is then being exercised, as designated
in such conversion notice, MULTIPLIED BY (y) the Current
Market Price of each such Warrant Share (or such Other
Securities) so receivable upon such exercise
OVER
(ii) (x) the number of Warrant Shares (without giving
effect to any adjustment thereof pursuant to the provisions
hereof) which such holder would be entitled to receive upon
exercise of such Warrant for the number of Warrant Shares
designated in such conversion notice (without giving effect
to any adjustment thereof
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pursuant to the provisions hereof), MULTIPLIED BY (y) the
Initial Exercise Price
DIVIDED BY
(b) such Current Market Price of each such Warrant Share
(or Other Securities).
7.1.1.3. NOTE TENDER. Subject to the terms of this
Agreement, each Warrant holder shall have the right to exercise
the Warrants evidenced by the Warrant Certificates it holds, in
whole or in part, during normal business hours on any Business
Day on or prior to the Expiration Date, by surrender of the
Warrant Certificates held by it to the Company at its principal
office, accompanied by a note tender notice substantially in the
form attached to the Warrant Certificates duly executed by such
holder and accompanied by a Note. Thereupon, such holder shall be
deemed to have exercised the Warrants represented by such Warrant
Certificates for the number of Warrant Shares (up to the maximum
number of Warrant Shares set forth on the face of such Warrant
Certificates and without giving effect to any adjustment thereof
pursuant to the provisions hereof) obtained by dividing (i) the
sum of the outstanding face amount of such Note (or such lesser
amount indicated on the note tender notice) PLUS any cash or
payment-in-kind interest accrued on such Note, PLUS any accrued
prepayment penalty or premium by (ii) the Initial Exercise Price.
Thereupon, such holder shall be entitled to receive the number of
duly authorized, validly issued, fully paid and nonassessable
Warrant Shares (or Other Securities) determined as provided in
Sections 7.4 and 7.5.
7.1.2. WHEN EXERCISE EFFECTIVE. Each exercise of a Warrant
shall be deemed to have been effected immediately prior to the close
of business on the Business Day on which such Warrant shall have been
surrendered to the Company at the office of the Warrant Agent and
payment made as provided in Section 7.1.1 hereof, and at such time the
Person or Persons in whose name or names any certificate or
certificates for Warrant Shares (or Other Securities) shall be
issuable upon such exercise as provided in Section 7.1.3 hereof shall
be deemed to have become the holder or holders of record thereof.
7.1.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as
practicable, but no later than five Business Days after each exercise
of a Warrant, in whole or in part, except as otherwise provided in
Section 7.1.4, the Company at its expense (including the payment by it
of any applicable issue taxes) will cause to be issued in the name of
and delivered to the holder thereof or, subject to the provisions of
the Exchange Agreement, as such holder (upon payment by such holder of
any applicable transfer taxes and subject to Section 6 above) may
direct:
(a) a certificate or certificates for the number of
duly authorized, validly issued, fully paid and nonassessable
Warrant Shares
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(or Other Securities) to which such holder shall be entitled
upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an
amount equal to the same fraction of the Current Market Price
per share on the Business Day immediately preceding the date of
such exercise; and
(b) in case such exercise is in part only, a new Warrant
or Warrants of like tenor, dated the date hereof and calling in
the aggregate on the face or faces thereof for the number of
Warrant Shares equal (without giving effect to any adjustment
thereof pursuant to the terms hereof) to the number of such
shares called for on the face of such Warrant minus the number
of such shares designated by the holder upon such exercise as
provided in Section 7.1.1 hereof; and
(c) in case such exercise is by a partial tender of
Notes, replacement Notes in the amount of the outstanding
principal balance thereof, dated the date as of which all
accrued interest thereon shall then most recently have been
paid (including any payment effected in connection with a Note
tender by including such accrued interest in the calculation
provided by Section 7.1.3(i)).
7.1.4. CASH CLOSE OUT. Upon the exercise of the Warrants as
provided in Section 7.1.1, the Company may elect either (i) to comply
with the requirements of Section 7.1.3(a) with respect to the issuance
of Warrant Shares in connection with such exercise or (ii) upon
written notice to the holder not more than two Business Days following
the date of exercise, to pay to the holder an amount equal to the
Market Price for each Warrant Share issuable upon such exercise (the
"CASH CLOSE OUT") in lieu of issuing such Warrant Shares. Any Cash
Close Out made under this Section 7.1.4 shall be paid within two
Business Days of the exercise of such Warrant by (a) wire transfer of
immediately available funds or (b) certified or official bank check
payable to the order of the holder.
7.1.5. COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at
the time of or at any time after each exercise of a Warrant, upon the
request of the holder hereof, acknowledge in writing its continuing
obligation to afford to such holder all rights to which such holder
shall continue to be entitled after such exercise in accordance with
the terms of this Warrant Agreement and the Warrants; provided that if
any such holder shall fail to make any such request, the failure shall
not affect the continuing obligation of the Company to afford such
rights to such holder.
7.2. WARRANTHOLDER REPRESENTATIONS. Prior to the exercise of any
Warrant, the Warrantholder must represent and warrant to the Company, in
writing, as follows:
(i) it is acquiring the Warrant Shares for its own account for
investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention
of distributing or selling the same; and the
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Warrantholder has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment
providing for the disposition thereof;
(ii) the Warrantholder is an "accredited investor" as defined in Rule
501(a) under the Securities Act; and
(iii) the Warrantholder has made such inquiry concerning the Company
and its business and personnel as it has deemed appropriate; and
the Warrantholder has sufficient knowledge and experience in
finance and business that is capable of evaluating the risks and
merits of investment in the Company.
7.3. STOCK FULLY PAID; RESERVATION OF SHARES. The Company represents,
warrants, covenants and agrees that all Warrant Shares which may be issued
upon the exercise of the rights represented by the Warrants will, upon
issuance and payment therefor in accordance with the terms of the Warrant,
be duly authorized, validly issued, fully paid and non-assessable. The
Company further covenants and agrees that during the period within which
the rights represented by the Warrants may be exercised, the Company will
at all times have authorized and reserved solely for the purpose of the
issuance upon exercise of the Warrants a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by the
Warrants.
The Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of any Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
non-assessable Warrant Shares upon the exercise of each Warrant, and (c)
use its reasonable efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Agreement and each Warrant. Without limiting the generality of the
foregoing, the Company will from time to time take all such action as may
be required to assure that the par value per share, if any, of the Common
Stock is at all times equal to or less than the lowest quotient obtained by
dividing the then current exercise price of each Warrant by the number of
Warrant Shares into which such Warrant can from time to time be exercised.
7.4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES.
7.4.1. GENERAL; NUMBER OF SHARES; EXERCISE PRICE. The number of
Warrant Shares which the holder of a Warrant shall be entitled to
receive upon each exercise thereof shall be determined by multiplying
the number of shares of Common Stock which would otherwise (but for
the provisions of this Section 7.4) be issuable upon such exercise, as
designated by the holder hereof pursuant to Section 7.1.1 hereof, by a
fraction of which (a) the numerator is the Initial Exercise Price of
such Warrant and (b) the denominator is the Exercise Price of such
Warrant in effect on the date of such exercise. The "Exercise Price"
shall
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initially be the Initial Exercise Price, and shall be adjusted and
readjusted from time to time as provided in this Section 7.4 and, as
so adjusted or readjusted, shall remain in effect until a further
adjustment or readjustment thereof is required by this Section 7.4.
7.4.2. ISSUANCE OF ADDITIONAL WARRANTS DUE TO ISSUANCE OF
ADDITIONAL COMMON SHARES. In case the Company at any time or from time
to time after the date hereof shall issue or sell Additional Common
Shares (including Additional Common Shares deemed to be issued
pursuant to Section 7.4.4 or 7.4.5), other than an Excluded Issuance,
without consideration or for a consideration per share less than the
Fair Market Value, then in each such case such Exercise Price shall be
reduced (but not increased), concurrently with such issue or sale, to
a price (calculated to the nearest 0.000001 of a cent) determined by
multiplying the Exercise Price in effect immediately prior to such
issue or sale (the "ANTIDILUTION PRICE") by a fraction:
(a) the numerator of which shall be the sum of (i) the
number of shares of Common Stock outstanding immediately prior
to such issue or sale MULTIPLIED BY the Antidilution Price PLUS
(ii) the consideration, if any, deemed received by the Company
upon such issue or sale; and
(b) the denominator of which shall be the product of (i)
the total number of shares of Common Stock deemed to be
outstanding immediately after such issue or sale MULTIPLIED BY
(ii) the Antidilution Price.
In each case, the number of shares of Common Stock shall be calculated
in accordance with Section 7.4.8.
7.4.3. DIVIDENDS AND DISTRIBUTIONS. In case the Company at any
time or from time to time after the date hereof shall declare, order,
pay or make a dividend or other distribution (including without
limitation any distribution of additional stock or other securities or
property or Options, by way of dividend or spin-off, distribution,
reclassification, recapitalization or similar corporate rearrangement
or otherwise) on the shares of Common Stock, other than a dividend
payable in (or otherwise deemed to be an issuance of) Additional
Common Shares or periodic cash dividends declared and paid in the
ordinary course of business, then, and in each such case, the holder
of a Warrant shall receive, upon the exercise of such Warrant at any
time on or after such record date, the number of Warrant Shares to be
received upon exercise of such Warrant determined as provided herein
and, in addition and without further payment, and without any
additional action required on the part of such holder, such dividend
or other distribution to which such holder would have been entitled by
way of such dividend or other distribution and subsequent dividends
and other distributions through the date of exercise as if such holder
(x) had exercised such Warrant immediately prior to such record date
and (y) had retained such dividend or other distribution in respect of
the shares of Common Stock and all subsequent
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dividends and other distributions of any nature whatsoever in respect
of any stock or securities paid as dividends and other distributions
and originating directly or indirectly from such shares of Common
Stock.
7.4.4. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In case
the Company at any time or from time to time after the date hereof
shall issue, sell, grant or assume, or shall fix a record date for the
determination of holders of any class of securities entitled to
receive, any Options or Convertible Securities, then, and in each such
case, the maximum number of Additional Common Shares (as set forth in
the instrument relating thereto, without regard to any provisions
contained therein for a subsequent adjustment of such number the
purpose of which is to protect against dilution) at any time issuable
upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Common Shares
issued as of the time of such issue, sale, grant or assumption or, in
case such a record date shall have been fixed, as of the close of
business on such record date. Notwithstanding the foregoing, this
Section 7.4.4 shall not apply to (i.e., there shall not be a deemed
issuance of Additional Common Shares with respect to) the issuance,
sale, grant or assumption of, or fixing of a record date for
determination of entitlement to receive, an Excluded Issuance. In
addition:
(a) no further adjustment of the Exercise Price shall be
made upon the exercise of any Options or the conversion or
exchange of Convertible Securities and the consequent issue or
sale of Convertible Securities or shares of Common Stock;
(b) if Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any
increase in the consideration payable to the Company, or
decrease in the number of Common Shares issuable, upon the
exercise, conversion or exchange thereof (by change of rate or
otherwise), the Exercise Prices computed upon the original
issue, sale, grant or assumption thereof (or upon the
occurrence of the record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such
Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(c) if the consideration provided for in any Option or
the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Security shall be
reduced, or the ratio at which any Option is exercisable or any
Convertible Security is convertible into or exchangeable for
shares of Common Stock shall be increased, at any time under or
by reason of provisions with respect thereto designed to
protect against dilution, then, effective concurrently with
each such change, the Exercise Price then in effect shall first
be adjusted to eliminate the
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previous effects (if any) of the issuance (or deemed issuance)
of such Option or Convertible Security on the Exercise Price
and then readjusted as if such Option or Convertible Security
had been issued on the date of such change with the terms in
effect after such change; and
(d) upon the expiration (or purchase by the Company and
cancellation or retirement) of any Options which shall not have
been exercised, or the expiration of any rights of conversion
or exchange under any Convertible Securities which (or purchase
by the Company and cancellation or retirement of any
Convertible Securities the rights of conversion or exchange
under which) shall not have been exercised, the Exercise Price
computed upon the original issue, sale, grant or assumption
thereof (or upon the occurrence of the record date with respect
thereto), and any subsequent adjustments based thereon, shall,
upon (and effective as of) such expiration (or such
cancellation or retirement, as the case may be), be recomputed
as if:
(i) in the case of Options or Convertible
Securities, the only Additional Common Shares issued or
sold were the Additional Common Shares, if any, actually
issued or sold upon the exercise of such Options or the
conversion or exchange of such Convertible Securities
and the consideration received therefor was the
consideration actually received by the Company for the
issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the additional
consideration actually received by the Company upon any
exercise thereof, or the consideration actually received
by the Company for the issue or sale of all such
Convertible Securities, whether or not actually
converted or exchanged, plus the additional
consideration actually received by the Company upon any
conversion or exchange thereof, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any,
actually issued or sold upon the exercise of such
Options were issued at the time of the issue, sale,
grant or assumption of such Options, and the
consideration received by the Company for the Additional
Common Shares deemed to have then been issued was the
consideration actually received by the Company for the
issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed
to have been received by the Company (pursuant to
Section 7.4.6 hereof) upon the issue or sale of such
Convertible Securities with respect to which such
Options were actually exercised.
7.4.5. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In case
the Company at any time or from time to time after the date hereof
shall declare or pay any dividend on the shares of Common
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Stock payable in shares of Common Stock or other securities, or shall
effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock),
then, and in each such case, Additional Common Shares shall be deemed
to have been issued (a) in the case of any such dividend, immediately
after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of
business on the day immediately prior to the day upon which such
corporate action becomes effective.
7.4.6. COMPUTATION OF CONSIDERATION. For the purposes of this
Section 7.4:
(a) the consideration for the issue or sale of any
Additional Common Shares shall, irrespective of the accounting
treatment of such consideration, be computed at the fair value
thereof at the time of such issue or sale, as determined in
good faith by the Board, without deduction for any expenses
paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in
connection with such issue or sale. In the event Additional
Common Shares are issued or sold together with other stock or
securities or other assets of the Company for a consideration
which covers both, the consideration for the issue or sale of
Additional Common Shares shall be the portion of such
consideration so received, computed as provided in this Section
7.4.6, allocable to such Additional Common Shares, all as
determined in good faith by the Board. Notwithstanding the
foregoing, if Additional Common Shares are issued (i) to an
Affiliate of the Company or (ii) in connection with any
acquisition by the Company of stock or assets of a third party
or parties, the fair value of such Additional Common Shares at
the time of such issue or sale shall be the value as determined
in good faith by the Board, except that in the case of
issuances to Affiliates of the Company, or in connection with
acquisitions by the Company of stock or assets of a third
party, such fair value shall be the value set forth in an
opinion of independent accountants or investment bankers
selected by the Company, if such engagement is reasonably
requested by the Majority Warrantholders;
(b) Additional Common Shares deemed to have been issued
pursuant to Section 7.4.4 hereof shall be deemed to have been
issued for a consideration per share determined by dividing:
(i) the total amount of consideration, if any,
received and/or receivable by the Company as direct
consideration for the issue, sale, grant or assumption
of the Options or Convertible Securities in question,
plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained
therein for a
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subsequent adjustment of such consideration the purpose
of which is to protect against dilution) payable to the
Company upon the exercise in full of such Options or the
conversion or exchange of such Convertible Securities
or, in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible
Securities, in each case computing such consideration as
provided in the foregoing clause (a), by
(ii) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto,
without regard to any provision contained therein for a
subsequent adjustment of such number the purpose of
which is to protect against dilution) issuable upon the
exercise of such Options or the conversion or exchange
of such Convertible Securities; and
(c) Additional Common Shares deemed to have been issued
pursuant to Section 7.4.5 hereof shall be deemed to have been
issued for no consideration, unless the Company actually
receives consideration for any such issuance.
7.4.7. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the
outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of
Common Stock, the Exercise Price in effect immediately prior to such
combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased.
7.4.8. SHARES DEEMED OUTSTANDING. Unless otherwise specifically
provided herein, for all purposes of the computations to be made
pursuant to this Section 7.4, there shall be deemed to be outstanding
all shares of Common Stock issuable pursuant to the exercise of
Options and conversion of Convertible Securities outstanding at the
time as of which such computation is made. No adjustment shall be made
in the Exercise Price upon the issuance of shares of Common Stock
pursuant to Options and Convertible Securities so deemed to be
outstanding, but this Section 7.4.8 shall not prevent other
adjustments in the Exercise Price arising by virtue of such
outstanding Options or Convertible Securities pursuant to the
provisions of Sections 7.4.2, 7.4.4 and 7.4.5 hereof.
7.4.9. WARRANT AGENT'S DISCLAIMER. The Warrant Agent shall have
no duties or responsibilities under this Section 7.4, including, but
not limited to, determining when an adjustment under this Section 7.4
should be made, how such adjustment should be made or what the
adjustment should be. The Warrant Agent makes no representation as to
the validity or value of any securities or assets issued upon exercise
of Warrants. The Warrant Agent shall not be responsible for the
Company's failure to comply with this Section 7.4.
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7.5. ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or (b)
shall permit any other Person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving Person and the holders
of a majority of the Company's capital stock before such consolidation or
merger shall cease to hold a majority of the Company's capital stock after
such consolidation or merger, or (c) shall effect a capital reorganization
or reclassification of the Common Stock or Other Securities, then in the
case of each such transaction proper provision shall be made so that, upon
the basis and the terms and in the manner provided in this Agreement, the
holders of the Warrants, upon the exercise thereof at any time after the
consummation of such transaction, shall be entitled to receive (at the
aggregate Exercise Price in effect at the time of such consummation for all
Common Stock or Other Securities issuable upon such exercise immediately
prior to such consummation), in lieu of the Common Stock or Other
Securities issuable upon such exercise prior to such consummation, the
greatest amount of securities, cash or other property to which such holder
would actually have been entitled as a shareholder upon such consummation
if such holder had exercised the rights represented by the Warrant
Certificate held by it immediately prior thereto.
7.6. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price is adjusted,
the Company will promptly deliver to the Warrant Agent and to each
registered Warrantholder at the address provided to the Warrant Agent a
certificate setting forth, in reasonable detail, the event that triggered
the adjustment or issuance, the amount of the adjustment or issuance, the
method by which such adjustment or issuance was calculated (including a
description of the basis on which the Board made any determination
hereunder), and the Exercise Price after giving effect to such adjustment.
Unless and until the Warrant Agent receives such a certificate, it may
assume without inquiry that the Exercise Price of any outstanding Warrants
has not been adjusted.
7.7. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in
this Agreement or in any Warrant shall be construed as conferring upon any
Warrantholder who has not exercised a Warrant any rights as a stockholder
of the Company prior to exercise of any Warrant or as imposing any
obligation on such Warrantholder to purchase any Securities or as imposing
any liabilities on such holder as a stockholder of the Company, whether
such obligation or liabilities are asserted by the Company or by creditors
of the Company.
Section 8. REGISTRATION RIGHTS. The Company will perform and comply, and
cause each of its Subsidiaries to perform and comply, with each of the following
provisions as are applicable to it. Each holder of Warrant Shares will perform
and comply with each of the following provisions as are applicable to such
holder.
8.1. DEMAND REGISTRATION RIGHTS.
8.1.1. GENERAL. One or more holders of Warrants or Warrant
Shares who at such time hold greater than 20% of the Warrant Shares
that have been or may
- 17 -
be issued upon exercise, conversion or exchange of the Warrants
("INITIATING HOLDERS") may request, by written notice to the Company,
that the Company effect the registration under the Securities Act for
a Public Offering of all or a specified part of the Registrable
Securities held by such Initiating Holders, without exercising,
converting or exchanging the Warrants held by such Initiating Holders
prior to making such request. Such notice shall specify the intended
method or methods of distribution. Promptly after receipt of such
notice from the Initiating Holders, the Company shall give notice of
such requested registration to all other holders of Registrable
Securities and Warrantholders in accordance with Section 8.2. The
Company will then use its reasonable best efforts to effect the
registration under the Securities Act of the Registrable Securities
which the Company has been requested to register by such Initiating
Holders, together with all other Registrable Securities which the
Company has been requested to register pursuant to Section 8.2 or
otherwise by notice delivered to the Company within 20 days after the
Company has given the required notice of such requested registration
(which request shall specify the intended method of disposition of
such Registrable Securities), all to the extent requisite to permit
the disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities which the Company has been so
requested to register; PROVIDED, HOWEVER, that the Company shall not
be obligated to take any action to effect any such registration
pursuant to this Section 8.1.1 within 180 days immediately following
the effective date of any registration statement pertaining to an
underwritten public offering of securities of the Company for its own
account (other than a Rule 145 Transaction, or a registration relating
solely to employee benefit plans).
8.1.2. FORM; LIMITATIONS. Except as otherwise provided above,
each registration requested pursuant to Section 8.1.1 shall be
effected by the filing of a registration statement on Form S-1 (or any
other form which includes substantially the same information as would
be required to be included in a registration statement on such form as
currently constituted), unless the use of a different form has been
agreed to in writing by holders of at least a majority of the
Registrable Securities to be included in the proposed registration
statement in question (the "MAJORITY PARTICIPATING HOLDERS") or the
Company is then eligible to use Form S-3 for a Public Offering by the
Majority Participating Holders of their Warrant Shares; PROVIDED,
HOWEVER, that the Company shall not be required to effect any
registration requested pursuant to Section 8.1.1 on any form other
than Form S-3 (or any successor form) if the Company has previously
effected three or more registrations of Registrable Securities under
Section 8.1.1 on any form other than Form S-3 (or any successor form).
No registration of Registrable Securities which shall not have become
and remained effective in accordance with this Section 8.1 shall be
included in the calculation of the number of registrations
contemplated by this Section 8.1.2 (unless the Initiating Holders
withdraw their request for such registration, other than (i) if such
withdrawal is a result of information concerning the business or
financial condition of the Company which is made known after the date
on which such registration was requested or (ii) if the Initiating
Holders pay all the expenses of such registration otherwise payable
- 18 -
by the Company pursuant to Section 8.1.3). If at the time of any
request to register Registrable Securities pursuant to this Section
8.1.1, the Company is engaged or has plans to engage in a registered
public offering or is engaged in any other activity which, in the good
faith determination of the Board, would be adversely affected by the
requested registration, then the Company may at its option direct that
such request be delayed for a period not in excess of 30 days from the
date of such request, such right to delay a request to be exercised by
the Company not more than once in any 12-month period. In the event
that, in the judgment of the Company, it is advisable to suspend use
of a prospectus included in a registration statement due to pending
material developments or other events that have not yet been publicly
disclosed and as to which the Company believes public disclosure would
be detrimental to the Company, the Company shall notify all selling
stockholders to such effect, and, upon receipt of such notice, each
such selling stockholder shall immediately discontinue any sales of
Registrable Securities pursuant to such registration statement until
such selling stockholder has received copies of a supplemented or
amended prospectus or until such selling stockholder is advised in
writing by the Company that the then current prospectus may be used
and has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such
prospectus. Notwithstanding anything to the contrary herein, the
Company shall not exercise its rights under the foregoing sentence to
suspend sales of Registrable Securities for a period in excess of 30
days consecutively or 60 days in any 365-day period.
8.1.3. PAYMENT OF EXPENSES. The Company shall pay all
reasonable expenses of holders of Warrant Shares incurred in
connection with the first three registrations of Registrable
Securities requested pursuant to this Section 8.1 (including the
reasonable fees and expenses of a single legal counsel representing
all selling stockholders), other than underwriting discounts and
commissions, if any, and applicable transfer taxes, if any.
8.1.4. ADDITIONAL PROCEDURES. In the case of a registration
pursuant to this Section 8.1.2, whenever the Initiating Holders shall
request that such registration shall be effected pursuant to an
underwritten offering, the Company shall include such information in
the written notices to holders of Registrable Securities referred to
in Section 8.1.2. In such event, the right of any holder of
Registrable Securities to have securities owned by such holder
included in such registration pursuant to this Section 8.1.1 shall be
conditioned upon such holder's participation in such underwriting and
the inclusion of such holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed upon by the Majority
Participating Holders and such holder). If requested by the
underwriters of such registration, the Company, together with the
holders of Registrable Securities proposing to distribute their
securities through such underwriting, will enter into an underwriting
agreement with such underwriters for such offering containing such
representations and warranties by the Company and such holders and
such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions,
including, without limitation,
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customary indemnity and contribution provisions (subject, in each
case, to the limitations on such liabilities set forth in this
Agreement).
8.2. PIGGYBACK REGISTRATION RIGHTS.
8.2.1. GENERAL. Each time the Company proposes to register any
shares of Common Stock under the Securities Act on a form which would
permit registration of Registrable Securities for sale to the public,
for its own account and/or for the account of any holders of
Registrable Securities or Affiliate of a holder of Registrable
Securities (pursuant to Section 8.1 or otherwise), for sale in a
Public Offering, the Company will give notice to all holders of
Registrable Securities of its intention to do so. Any such holder may,
by written response delivered to the Company within 20 days after the
effectiveness of such notice, request that all or a specified part of
the Registrable Securities held by such holder be included in such
registration. The Company thereupon will use its reasonable efforts to
cause to be included in such registration under the Securities Act all
shares of Common Stock which the Company has been so requested to
register by such holders, to the extent required to permit the
disposition (in accordance with the methods to be used by the Company
or other holders of shares of Common Stock in such Public Offering) of
the Registrable Securities to be so registered. No registration of
Registrable Securities effected under this Section 8.2 shall relieve
the Company of any of its obligations to effect registrations of
Registrable Securities pursuant to Section 8.1. The Company may
withdraw or suspend any registration covered by this Section 8.2 at
any time (subject, in the case of any registration also covered by
Section 8.1, to any limitations set forth therein).
8.2.2. EXCLUDED TRANSACTIONS. The Company shall not be
obligated to effect any registration of Registrable Securities under
this Section 8.2 incidental to the registration of any of its
securities in connection with:
(a) Any Public Offering relating to employee benefit
plans or dividend reinvestment plans; or
(b) Any Public Offering relating to the acquisition or
merger after the date hereof by the Company or any of its
Subsidiaries of or with any other businesses.
8.2.3. PAYMENT OF EXPENSES. The Company shall pay all
reasonable fees and expenses of a single legal counsel representing
any and all holders of Registrable Securities incurred in connection
with the first three registrations of Registrable Securities requested
pursuant to this Section 8.2.
8.2.4. ADDITIONAL PROCEDURES. Holders of Warrant Shares
participating in any Public Offering pursuant to this Section 8.2
shall take all such actions and execute all such documents and
instruments that are reasonably requested by the Company to effect the
sale of their Warrant Shares in such Public Offering, including,
without limitation, being parties to the underwriting agreement
entered
- 20 -
into by the Company and any other selling stockholders in connection
therewith and being liable in respect of the representations and
warranties by, and the other agreements (including without limitation
customary selling stockholder representations, warranties,
indemnifications and "lock-up" agreements) for the benefit of the
underwriters; PROVIDED, HOWEVER, that (a) with respect to individual
representations, warranties, indemnities and agreements of selling
holders of Warrant Shares in such Public Offering, the aggregate
amount of such liability shall not exceed such holder's net proceeds
from such offering and (b) to the extent selling holders of Warrant
Shares give further representations, warranties and indemnities, then
with respect to all other representations, warranties and indemnities
of sellers of shares in such Public Offering, the aggregate amount of
such liability shall not exceed the lesser of (i) such holder's pro
rata portion of any such liability, in accordance with such holder's
portion of the total number of Warrant Shares included in the offering
or (ii) such holder's net proceeds from such offering.
8.3. CERTAIN OTHER PROVISIONS.
8.3.1. UNDERWRITER'S CUTBACK. In connection with any
registration of Warrant Shares, the underwriter may determine that
marketing factors (including, without limitation, an adverse effect on
the per share offering price) require a limitation of the number of
Warrant Shares to be underwritten. Notwithstanding any contrary
provision of Section 8.1 or Section 8.2, and subject to the terms of
this Section 8.3.1, the underwriter may limit the number of shares
which would otherwise be included in such registration by excluding
any or all Registrable Securities from such registration (it being
understood that the number of shares which the Company seeks to have
registered in such registration shall not be subject to exclusion, in
whole or in part, under this Section 8.3.1). Upon receipt of notice
from the underwriter of the need to reduce the number of shares to be
included in the registration, the Company shall advise all holders of
the Company's securities that would otherwise be registered and
underwritten pursuant hereto, and the number of shares of such
securities, including Registrable Securities, that may be included in
the registration shall be allocated in the following manner, unless
the underwriter shall determine that marketing factors require a
different allocation: (i) shares, other than Registrable Securities,
requested to be included in such registration by stockholders shall be
excluded unless (x) the Company has, prior to the date hereof, or
after the date hereof with the consent of the Majority Holders,
granted registration rights which are to be treated on an equal basis
with Registrable Securities for the purpose of the exercise of the
underwriter cutback (with it being specifically agreed and
acknowledged that the registration rights granted to Silicon Valley
Bank pursuant to the Registration Rights Agreement, dated on or around
December 30, 2002, between the Company and Silicon Valley Bank are to
be treated on an equal basis with Registrable Securities for the
purposes of this underwriting cutback), or (y) such shares are issued
upon the exercise of warrants to purchase Common Stock that are issued
in connection with a Permitted Exchange (as defined in the Exchange
Agreement), with it being specifically acknowledged that the
- 21 -
registration rights granted to the holders of any such shares of
Common Stock are to be treated on an equal basis with Registrable
Securities for purposes of this underwriting cutback; and (ii) if
further limitation on the number of shares to be included in the
offering is required, the number of Registrable Securities and other
shares of Common Stock that may be included in such registration shall
be allocated among holders thereof in proportion, as nearly as
practicable, to the respective amounts of Common Stock which each
stockholder requested be registered in such registration. No
securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such
registration. Upon delivery of a written request that Registrable
Securities be included in an underwritten offering pursuant to Section
8.1.1 or Section 8.2.1, the holder thereof may not thereafter elect to
withdraw therefrom without the written consent the Company and the
Majority Participating Holders.
8.3.2. REGISTRATION PROCEDURES. If and in each case when the
Company is required to use its reasonable best efforts to effect a
registration of any Registrable Securities as provided in Section 8.1
or Section 8.2, the Company shall take appropriate and customary
actions in furtherance thereof, including, without limitation:
(a) promptly filing with the Commission a registration
statement and using best efforts to cause such registration
statement to become effective;
(b) preparing and filing with the Commission such
amendments and supplements to such registration statements as
may be required to comply with the Securities Act and to keep
such registration statement effective for a period not to
exceed 270 days from the date of effectiveness or such earlier
time as the Registrable Securities covered by such registration
statement shall have been disposed of in accordance with the
intended method of distribution therefor or the expiration of
the time when a prospectus relating to such registration is
required to be delivered under the Securities Act; PROVIDED,
HOWEVER, that if the registration is effected by the filing of
a registration statement on Form S-3, then the Company shall
keep such registration statement effective for a period not to
exceed 3 years from the date of effectiveness or such earlier
time as the Registrable Securities covered by such registration
statement have been disposed of in accordance with the intended
method of distribution therefore, the expiration of the time
when a prospectus relating to such registration is required to
be delivered under the Securities Act, or such registration
statement no longer covers Registrable Securities;
(c) using its best efforts to register or qualify such
Registrable Securities under the state securities or "blue sky"
laws of such jurisdictions as the sellers shall reasonably
request; PROVIDED, HOWEVER, that the Company shall not be
obligated to file any general consent to service of process or
to qualify as a foreign corporation in any jurisdiction
- 22 -
in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in
which it would not otherwise be so subject; and
(d) otherwise cooperating reasonably with, and taking
such customary actions as may reasonably be requested by the
holders of Registrable Securities in connection with, such
registration.
8.3.3. SELECTION OF UNDERWRITERS AND COUNSEL. The underwriters
and legal counsel to be retained in connection with any Public
Offering shall be selected by the Board or, in the case of an offering
following a request therefor under Section 8.1.1, the Initiating
Holders with the consent of the Company (which consent shall not be
unreasonably withheld).
8.3.4. LOCK-UP. Without the prior written consent of the
underwriters managing any Public Offering, for a period beginning
seven days immediately preceding and ending on the 90th day following
the effective date of the registration statement used in connection
with such offering, no holder of Warrant Shares (whether or not a
selling stockholder pursuant to such registration statement)
representing at least 1% of the outstanding Common Stock shall (a)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer, directly or
indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for such Common Stock or (b) enter
into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of Common
Stock, whether any such transaction described in clause (a) or (b)
above is to be settled by delivery of such Common Stock or such other
securities, in cash or otherwise; PROVIDED, HOWEVER, that the
foregoing restrictions shall not apply to (i) the sale of Common Stock
pursuant to any such registration statement filed in accordance with
Section 8.1 or Section 8.2; (ii) transactions relating to shares of
Common Stock or other securities acquired in open market transactions;
or (iii) the exercise, conversion or exchange of Warrants or
conversions of shares of Common Stock into other classes of Common
Stock without change of holder.
8.3.5. FUTURE REGISTRATION RIGHTS. If, after the date hereof,
the Company enters into an agreement or other commitment with any
other Person that has the effect of establishing registration rights
with respect to the Company's capital stock the terms of which are
more favorable, taken as a whole, to such Person than the registration
rights established in favor of the holders of Registrable Securities
and Warrantholders pursuant to Section 8.1 or Section 8.2, then the
Company will promptly so notify the such holders in writing, and the
Company shall, without the necessity of any action on the part of such
holders, extend the benefits of such more favorable terms to such
holders as if such terms were contained in this Agreement, or permit
such holders to enter into such other agreement establishing such
rights in lieu of this agreement.
- 23 -
8.4. INDEMNIFICATION AND CONTRIBUTION.
8.4.1. INDEMNITIES OF THE COMPANY. In the event of any
registration of any Registrable Securities or other debt or equity
securities of the Company or any of its Subsidiaries under the
Securities Act pursuant to Section 8.1, Section 8.2 or otherwise, and
in connection with any registration statement or any other disclosure
document produced by or on behalf of the Company or any of its
Subsidiaries including, without limitation, reports required and other
documents filed under the Exchange Act, and other documents pursuant
to which any debt or equity securities of the Company or any of its
Subsidiaries are sold (whether or not for the account of the Company
or its Subsidiaries), the Company will, and hereby does, and will
cause each of its Subsidiaries, jointly and severally, to indemnify
and hold harmless each seller of Registrable Securities, any Person
who is or might be deemed to be a controlling Person of the Company or
any of its Subsidiaries within the meaning of section 15 of the
Securities Act or section 20 of the Exchange Act, their respective
direct and indirect partners, advisory board members, directors,
officers, trustees, members and stockholders, and each other Person,
if any, who controls any such seller or any such controlling Person
within the meaning of section 15 of the Securities Act or section 20
of the Exchange Act (each such person being referred to herein as a
"COVERED PERSON"), against any losses, claims, damages or liabilities
(or actions or proceedings in respect thereof), joint or several, to
which such Covered Person may be or become subject under the
Securities Act, the Exchange Act, any other securities or other law of
any jurisdiction, the common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained or
incorporated by reference in any registration statement under the
Securities Act, any preliminary prospectus or final prospectus
included therein, or any related summary prospectus, or any amendment
or supplement thereto, or any document incorporated by reference
therein, or any other such disclosure document (including without
limitation reports and other documents filed under the Exchange Act
and any document incorporated by reference therein) or other document
or report, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any violation or alleged
violation by the Company or any of its subsidiaries of any federal,
state, foreign or common law rule or regulation applicable to the
Company or any of its Subsidiaries and relating to action or inaction
in connection with any such registration, disclosure document or other
document or report, and will reimburse such Covered Person for any
legal or any other reasonable expenses incurred by it in connection
with investigating or defending any such loss, claim, damage,
liability, action or proceeding; PROVIDED, HOWEVER, that neither the
Company nor any of its Subsidiaries shall be liable to any Covered
Person in any such case to the extent that any such loss, claim,
damage, liability, action or proceeding arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement,
- 24 -
incorporated document or other such disclosure document or other
document or report, in reliance upon and in conformity with written
information furnished to the Company or to any of its Subsidiaries
through an instrument duly executed by such Covered Person
specifically stating that it is for use in the preparation thereof.
The indemnities of the Company and of its subsidiaries contained in
this Section 8.4.1 shall remain in full force and effect regardless of
any investigation made by or on behalf of such Covered Person and
shall survive any transfer of securities.
8.4.2. INDEMNITIES TO THE COMPANY. The Company and any of its
Subsidiaries may require, as a condition to including any securities
in any registration statement filed pursuant to this Agreement, that
the Company and any of its Subsidiaries shall have received an
undertaking satisfactory to it from the prospective seller of such
securities, to indemnify and hold harmless the Company and any of its
Subsidiaries, each director of the Company or any of its Subsidiaries,
each officer of the Company or any of its Subsidiaries who shall sign
such registration statement and each other Person (other than such
seller), if any, who controls the Company and any of its Subsidiaries
within the meaning of section 15 of the Securities Act or section 20
of the Exchange Act and each other prospective seller of such
securities with respect to any statement in or omission from such
registration statement, any preliminary prospectus, final prospectus
or summary prospectus included therein, or any amendment or supplement
thereto, or any other disclosure document (including, without
limitation, reports and other documents filed under the Exchange Act
or any document incorporated therein) or other document or report, if
such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company or any of its
Subsidiaries through an instrument executed by such seller
specifically stating that it is for use in the preparation thereof.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company, any of its
Subsidiaries or any such director, officer or controlling Person and
shall survive any transfer of securities.
8.4.3. CONTRIBUTION. If the indemnification provided for in
Section 8.4.1 or Section 8.4.2 hereof is unavailable to a party that
would have been entitled to indemnification pursuant to the foregoing
provisions of this Section 8.4 (an "INDEMNITEE") in respect of any
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to therein, then each party that would have
been an indemnifying party thereunder shall, in lieu of indemnifying
such Indemnitee, contribute to the amount paid or payable by such
Indemnitee as a result of such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative fault of such indemnifying
party on the one hand and such Indemnitee on the other in connection
with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof). The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such indemnifying
party
- 25 -
or such Indemnitee and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The parties agree that it would not be just or equitable if
contribution pursuant to this Section 8.4.3 were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the
preceding sentence. The amount paid or payable by a contributing party
as a result of the losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to above in this Section
8.4.3 shall include any legal or other expenses reasonably incurred by
such Indemnitee in connection with investigating or defending any such
action or claim. No Person guilty of fraudulent misrepresentation
(within the meaning of section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
8.4.4. LIMITATION ON LIABILITY OF HOLDERS OF REGISTRABLE
SECURITIES. The liability of each holder of Registrable Securities in
respect of any indemnification or contribution obligation of such
holder arising under this Section 8.4 shall not in any event exceed an
amount equal to the net proceeds to such holder (after deduction of
all underwriters' discounts and commissions) from the disposition of
the Registrable Securities disposed of by such holder pursuant to such
registration.
8.5. REPORTS UNDER EXCHANGE ACT. In order to provide to the holders of
Warrant Shares the benefits of Rule 144 and any other rule or regulation of
the Commission that may at any time permit any such holder to sell
securities of the Company to the public without registration, and in order
to make it possible for the holders of Warrant Shares to register the sale
of the Registrable Securities pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) take such action, including the registration of its
Common Stock under section 12 of the Exchange Act, as is
necessary to enable the holders of Warrant Shares to utilize
Form S-3 for the sale of their Registrable Securities
(ignoring, for this purpose, the provisions of Items I.A.5 and
I.B.3 of the General Instructions thereto);
(c) file with the Commission in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(d) furnish to any holder of Warrant Shares, so long as
the holder owns any Registrable Securities, forthwith upon
request (i) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, or that it qualifies as a
registrant whose securities may be resold in a secondary
- 26 -
offering pursuant to Form S-3; (ii) a copy of the most recent
annual or quarterly report of the Company filed with the
Commission and such other reports and documents so filed by the
Company; and (iii) such other information as may be reasonably
requested in availing any holder of Shares any rule or
regulation of the Commission which permits the selling of any
such securities without registration or pursuant to such form.
Section 9. DEFINITIONS. For the purposes of this Agreement, the following
terms have the meanings below:
"ADDITIONAL COMMON SHARES" shall mean, subject to Section 7.4.8, all
shares of Common Stock (including treasury shares) issued or sold (or,
pursuant to Section 7.4.4 or 7.4.5 hereof, deemed to be issued) by the
Company after the date hereof, whether or not subsequently reacquired or
retired by the Company, other than (i) shares of Common Stock issued or
issuable upon conversion, exercise or exchange of the Warrants; and (ii)
Excluded Issuances.
"ADDITIONAL WARRANT NOTICE" shall mean a written notice from the
Company to the Warrant Agent which states that it is an Additional Warrant
Notice pursuant to this Agreement and which is signed by the Company, and
in which (i) the Company notifies the Warrant Agent of additional Warrants
to be issued by the Company in an exchange of Convertible Notes in
connection with a Joinder Agreement entered into pursuant to the New
Exchange Agreement and which the Company proposes to be governed by this
Agreement, (ii) the Company sets forth the aggregate amount of such
Additional Warrants to be issued (and the aggregate amount of Warrant
Shares to be issued upon exercise thereof), the Initial Exercise Price for
such Warrants, appropriate registration, countersignature and delivery
instructions to the Warrant Agent with respect to the applicable Warrant
Certificates being issued, and setting forth any applicable notice address
for the Warrantholders pursuant to Section 16 hereof, (iii) the Company
certifies that such additional Warrants, together with all other Warrants
previously issued under this Agreement pursuant to any Joinder Agreement
(which, for avoidance of doubt, does not include the Symphony Warrants and
the New Warrants, as defined in this Agreement) in the aggregate, when
issued, do not entitle the applicable Warrantholders to purchase more than
1,967,798 Warrant Shares, (iv) the Company certifies that the issuance of
such additional Warrants is pursuant to a Permitted Exchange (as defined in
Section 8.3 of the Symphony Exchange Agreement and Section 9.3 of the new
Exchange Agreement) and is not otherwise prohibited by the terms of the
Symphony Exchange Agreement or the New Exchange Agreement, and (v) the
Company agrees that the Warrants issued thereunder shall be governed by
this Agreement; and which is countersigned by the Warrant Agent agreeing
that the Warrants described therein and to be issued thereunder shall be
governed by this Agreement. The Warrant Agent shall be authorized to rely
conclusively on any Additional Warrant Notice for all purposes hereunder,
without liability on its part.
"AFFILIATE" shall mean, with respect to the Company or any of its
Subsidiaries (or any other specified Person), any other Person which,
directly or indirectly controls or is controlled by or is under direct or
indirect common control with the Company or such Subsidiary (or such
specified Person), and, without limiting the generality of the
- 27 -
foregoing, shall include (a) any other Person which beneficially owns or
holds 10% of more of any class of voting securities of such Person or 10%
or more of the equity interest in such Person, (b) any other Person of
which such Person beneficially owns or holds 10% or more of any class of
voting securities or in which such Person beneficially owns or holds 10% or
more of the equity interest in such Person and (c) any director or
executive officer of such Person. For the purposes of this definition, the
term "control" (including, with correlative meanings, the terms "controlled
by" and "under common control with"), as used with respect to any Person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"AGREEMENT" shall have the meaning set forth in the first paragraph of
this Agreement.
"ANTIDILUTION PRICE" has the meaning set forth in Section 7.4.2.
"BOARD" shall mean the Board of Directors of the Company.
"BUSINESS DAY" shall mean any day, excluding Saturday, Sunday and any
day which shall be in New York, New York or Boston,
Massachusetts a legal
holiday or a day on which banking institutions are authorized by law or
other governmental actions to close.
"CASH CLOSE OUT" has the meaning set forth in Section 7.1.4.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMMON STOCK" shall mean the Company's common stock, par value $0.001
per share.
"COMPANY" has the meaning set forth in the first paragraph of this
Agreement.
"COVERED PERSON" shall have the meaning set forth in Section 8.4.1.
"CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness,
shares of stock (other than shares of Common Stock) or other securities,
including warrants, directly or indirectly convertible into or exchangeable
for shares of Common Stock.
"CURRENT MARKET PRICE" shall mean on any date specified herein, the
average daily Market Price during the period of the most recent 10 days,
ending two trading days immediately preceding such date, on which the
national securities exchanges were open for trading, except that if no
Common Stock is then listed or admitted to trading on any national
securities exchange or quoted in the over-the-counter market, the Current
Market Price shall be the Market Price on such date.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as in
effect from time to time.
- 28 -
"EXCLUDED ISSUANCE" shall mean the issuance of shares of Common Stock
(or options exercisable therefor) to officers, directors, and employees of
the Company, which shares are either (a) currently subject to the Company's
stock option plan or (b) 2,250,000 shares that are not currently subject to
the Company's stock option plan.
"EXERCISE PRICE" shall have the meaning set forth in Section 7.4.1.
"EXPIRATION DATE" shall mean 5:00 P.M. Boston time on January 15,
2008.
"FAIR MARKET VALUE" shall mean, as of any date, as to any share of
Common Stock, the Board's good faith determination of the fair value of
such shares as of the applicable reference date.
"INDEMNITEE" shall have the meaning set forth in Section 8.4.3.
"INITIAL EXERCISE PRICE" shall mean for (i) the Symphony Warrants and
the New Warrants $0.65 per share of Common Stock; or (ii) with respect to
any other Warrant, the initial exercise price therefore as may be
determined by the Company and set forth in the related Additional Warrant
Notice for such Warrants and any applicable Warrant Certificate.
"INITIATING HOLDER" shall have the meaning set forth in Section 8.1.1.
"MAJORITY HOLDERS" shall mean, as of any date, the holders of a
majority of the Warrant Shares outstanding on such date.
"MAJORITY PARTICIPATING HOLDERS" shall have the same meaning set forth
in Section 8.1.2.
"MAJORITY WARRANTHOLDERS" shall mean, at any time, holders of Warrants
and/or Warrant Shares that (in any combination) represent more than 50% of
the Warrant Shares that (i) are issuable under any outstanding Warrants
(upon proper exercise thereof by the Warrantholder) and, (ii) in the case
of Warrants have been exercised, have been issued and are outstanding at
such time.
"MARKET PRICE" shall mean on any date specified herein, the amount per
share of Common Stock equal to (a) the last sale price of Common Stock,
regular way, on such date or, if no such sale takes place on such date, the
average of the closing bid and asked prices thereof on such date, in each
case as officially reported on the principal national securities exchange
on which Common Stock is then listed or admitted to trading, or (b) if
Common Stock is not then listed or admitted to trading on any national
securities exchange but is designated as a national market system security
by the NASD, the last trading price of Common Stock on such date, or (c) if
there shall have been no trading on such date or if Common Stock is not so
designated, the average of the closing bid and asked prices of Common Stock
on such date as shown by the NASD automated quotation system, or if
applicable, the OTCBB, or (d) if the Common Stock is not then listed or
admitted to trading on any national exchange or quoted in the
over-the-counter market, the Market Price thereof determined by good faith
mutual agreement of the Company and
- 29 -
the Majority Warrantholders. If, in the case of subsection (d), the Company
and the Majority Warrantholders are unable to agree on the value of such
Common Stock within 10 business days, the Market Price shall be determined
in accordance with the following appraisal process:
Within the following five business days, each of the Company and the
Majority Warrantholders shall select and retain a firm of recognized
expertise in the valuation of business to perform a valuation of the Market
Price. Such firms shall then value the shares of the Common Stock, on a
going concern basis, without regard to any minority, marketability or other
discount resulting from consideration of a minority interest, the Company's
status as a closely held corporation or the existence of any put or call
rights. The Company shall provide to both valuation firms any information
reasonably requested by either such firm in connection with its valuation.
Each such firm shall deliver its valuation report to the Company and the
holder within 20 days after receiving all requested information from the
Company. If the greater of the valuations of a share of the Common Stock is
no more than 110% of the lesser of such valuations, the Market Price shall
be deemed to be the average of the two valuations. If the greater of such
valuations exceeds 110% of the lesser of such valuations, the two valuation
firms shall select a third mutually acceptable valuation firm within five
business days of such determination. Such third valuation firm shall be
directed to provide, within 15 business days, its valuation report, and the
valuation determined by the first two valuation firms that is closest to
the valuation determined by the third valuation firm shall be the Market
Price as of the reference date. The Company shall bear all costs and
expenses of this appraisal process.
"NEW EXCHANGE AGREEMENT" shall have the meaning set forth in the fifth
paragraph of this Agreement.
"NEW WARRANTS" shall have the meaning set forth in the fifth paragraph
of this Agreement.
"NOTES" shall mean up to $28,750,000 aggregate principal amount of
the Company's 11.5% Senior Secured Notes due 2005.
"OPTIONS" shall mean options, warrants or other rights to subscribe
for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
"ORIGINAL AGREEMENT" shall have the meaning set forth in the fourth
paragraph of this Agreement.
"OTHER SECURITIES" shall mean any stock (other than Common Stock) and
other securities of the Company or any other Person which the holders of
the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 6 hereof or otherwise.
- 30 -
"PERSON" shall mean an individual, a corporation, a partnership, a
limited liability company, a trust, an unincorporated organization or a
government organization or an agency or political subdivision thereof.
"PUBLIC OFFERING" shall mean a public offering and sale of Common
Stock for cash pursuant to an effective registration statement under the
Securities Act.
"REGISTRABLE SECURITIES" shall mean the Warrant Shares and all shares
of Common Stock directly or indirectly issued or issuable with respect to
the Warrant Shares by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or
other reorganization; PROVIDED, HOWEVER, that shares of Common Stock which
are Registrable Shares shall cease to be Registrable Shares (i) upon any
sale pursuant to a registration statement or Rule 144 under the Securities
Act or (ii) at such time as they become eligible for sale pursuant to Rule
144(k) under the Securities Act.
"RULE 144" shall mean Rule 144 under the Securities Act (or any
successor Rule).
"RULE 145 TRANSACTION" shall mean a registration on Form S-4 pursuant
to Rule 145 of the Securities Act (or any successor Form or provision, as
applicable).
"SECURITIES" shall mean any debt or equity securities of the Company,
whether now or hereafter authorized, and any instrument convertible into or
exchangeable for Securities or a Security. "SECURITY" shall mean one of the
Securities.
"SECURITIES ACT" shall mean the Securities Act of 1933, as in effect
from time to time.
"STOCK" shall include any and all shares, interests or other
equivalents (however designated) of, or participants in, the capital stock
of a corporation of any class.
"SUBSIDIARY" shall mean, for any Person, (i) a corporation a majority
of whose voting stock is at the time, directly or indirectly, owned by such
Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person, (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if such Person or
its Subsidiary is entitled to receive more than 50% of the assets of such
partnership upon its dissolution, (iii) a limited liability company, a
majority of whose membership interests is, at the time, directly or
indirectly owned by such Person or with respect to which such Person has a
right, under any scenario, to receive 50% or more of the distributions of
the assets of such limited liability company upon its dissolution, or (iv)
any other Person (other than a corporation or partnership) in which such
Person, a Subsidiary of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (a) at least a majority ownership interest or
(b) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
- 31 -
"SYMPHONY EXCHANGE AGREEMENT" shall have the meaning set forth in the
first paragraph of this Agreement.
"SYMPHONY WARRANTS" shall have the meaning set forth in the second
paragraph of this Agreement.
"WARRANT AGENT" shall have the meaning set forth in the first
paragraph of this Agreement.
"WARRANT CERTIFICATES" has the meaning set forth in Section 2 of this
Agreement.
"WARRANTS" shall mean the Symphony Warrants, the New Warrants and any
other Warrant issued by the Company in connection with a Joinder Agreement
entered into pursuant to the New Exchange Agreement and in accordance with
an Additional Warrant Notice in which the Company and the Warrant Agent
mutually agree that such Warrants shall be governed by this Agreement (in
each case including any Warrant Certificates subsequently issued upon
transfer thereof or an exchange therefore from time to time pursuant to the
terms of this Agreement).
"WARRANTHOLDERS" shall mean the holders of the Warrants from time to
time, together with any permitted transferees of such holders which
subsequently acquire Warrants.
"WARRANT SHARES" shall mean the shares received or to be received upon
exercise, conversion or exchange of the Warrants.
Section 10. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; provided, however, that the Company shall not be required to pay
any tax or governmental charge which may be payable in respect of any transfer
involved in the issue of any Warrant Certificates or any Warrant Share
Certificates in a name other than that of the registered holder of a Warrant
Share Certificate or a Warrant Certificate surrendered upon the exercise of a
Warrant, and the Company shall not be required to issue or deliver such Warrant
Certificates or Warrant Share Certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or charge or shall have established to the satisfaction of the Company
that such tax or charge has been paid. The Warrant Agent shall have no duty or
obligation to take any action under any Section of this Agreement which requires
the payment by a Warrantholder of applicable taxes and governmental charges
unless and until the Warrant Agent is satisfied that all such taxes and/or
charges have been paid.
Section 11. MUTILATED OR MISSING WARRANT CERTIFICATES AND WARRANT SHARE
CERTIFICATES. In case any of the Warrant Certificates shall be mutilated, lost,
stolen or destroyed, the Company, at its expense, shall issue and the Warrant
Agent shall countersign, in exchange and substitution for and upon cancellation
of the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon receipt
of evidence reasonably satisfactory to the Company and the Warrant Agent of such
loss, theft or destruction of such
- 32 -
Warrant Certificate and indemnity, if requested, satisfactory to the Company and
the Warrant Agent.
Section 12. FRACTIONAL INTERESTS.
(a) The Company shall not be required to issue fractional Warrant Shares on
the exercise of Warrants or otherwise. If more than one Warrant shall be
presented for exercise in full at the same time by the same holder, the number
of full Warrant Shares which shall be issuable upon the exercise thereof shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
on exercise of the Warrants so presented. If any fraction of a Warrant Share
would, except for the provisions of this Section 12, be issuable on the exercise
of any Warrants (or specified portion thereof), the Company shall pay an amount
in cash equal to the Current Market Price of such fractional Warrant Share as of
the day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction.
(b) Warrants may be issued in fractional interests. Holders of fractional
interests in Warrants will be entitled to purchase a number of Warrant Shares
equal to the product obtained by multiplying the number of Warrant Shares
issuable with respect to a full Warrant multiplied by the fractional interest
owned by such holder in the Warrant.
(c) Whenever a payment for fractional Warrant Shares is to be made by the
Warrant Agent, the Company shall (i) promptly prepare and deliver to the Warrant
Agent a certificate setting forth in reasonable detail the facts related to such
payment and the prices and/or formulas utilized in calculating such payments,
and (ii) provide sufficient monies to the Warrant Agent in the form of fully
collected funds to make such payments. The Warrant Agent shall be fully
protected in relying upon such a certificate and shall have no duty with respect
to, and shall not be deemed to have knowledge of any payment for fractional
Warrant Shares under any Section of this Agreement relating to the payment of
fractional Warrant Shares unless and until the Warrant Agent shall have received
such a certificate and sufficient monies.
Section 13. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT. Any
person into which the Warrant Agent may be merged or with which it may be
consolidated, or any person resulting from any merger or consolidation to which
the Warrant Agent shall be a party, or any person succeeding to substantially
all of the business of the Warrant Agent (including the administration of this
Agreement), shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such person would be eligible for appointment as a
successor warrant agent under the provisions of Section 15. In case at the time
such successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent; and in case at
that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such cases such Warrant Certificates shall have
the full force and effect provided in the Warrant Certificates and in this
Agreement.
- 33 -
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
Section 14. WARRANT AGENT. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement (and no implied duties or obligations
shall be read into this Agreement against the Warrant Agent) upon the following
terms and conditions, by all of which the Company and the Warrantholders, by
their acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates shall
be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates and the Warrant Share Certificates except as herein otherwise
provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel of its own
selection (who may be counsel for the Company) and the Warrant Agent shall incur
no liability or responsibility to the Company or to any Warrantholder in respect
of any action taken, suffered or omitted to be taken by it hereunder in
accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any Warrantholder for any action taken in reliance on any Warrant
Certificate, certificate of shares, notice, resolution, waiver, consent, order,
certificate, or other paper, document or instrument (whether in its original or
facsimile form) believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(e) The Company agrees (i) to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent (including fees and
expenses of its counsel) and to reimburse the Warrant Agent for all expenses,
taxes and governmental charges and other charges and disbursements of any kind
and nature incurred by the Warrant Agent in the preparation, delivery,
execution, administration and amendment of this Agreement and the exercise and
performance of its duties hereunder and (ii) to indemnify the Warrant Agent (and
any predecessor Warrant Agent) and save it harmless against any and all claims
(whether asserted by the Company, a holder or any other person), damages,
losses, fines, penalties, settlements, expenses (including taxes other than
taxes based on the income of the Warrant Agent), liabilities, including
judgments, costs and counsel fees and expenses, for any action taken, suffered
or omitted to be taken by the Warrant Agent in connection with the execution of
this Agreement and the acceptance and administration of this Agreement, except
as a result of its gross negligence or willful misconduct (each as finally
determined by a court of competent
- 34 -
jurisdiction). The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company. The provisions of this Section 14
shall survive the expiration of the Warrants, the termination of this Agreement
and the resignation or removal of the Warrant Agent.
(f) The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve expense
unless the Company or one or more registered Warrantholders shall furnish the
Warrant Agent with reasonable security and indemnity satisfactory to it for any
costs and expenses which may be incurred, but this provision shall not limit the
power of the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrant Certificates or Warrant Share
Certificates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent and any recovery of judgment shall
be for the ratable benefit of the registered holders of the Warrants, as their
respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, affiliate, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the Company,
and its duties shall be determined solely by the provisions hereof. The Warrant
Agent shall not be liable for any action taken, suffered or omitted to be taken
by it in connection with this Agreement except for its own gross negligence or
willful misconduct, each as finally determined by a court of competent
jurisdiction. Anything to the contrary notwithstanding, in no event shall the
Warrant Agent be liable for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Warrant Agent has been advised of the likelihood of
such loss or damage.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any Warrantholder to make or cause to be made any adjustment
of the Exercise Price or number of the Warrant Shares or other securities or
property deliverable as provided in this Agreement, or to determine whether any
facts exist which may require any of such adjustments, or with respect to the
nature or extent of any such adjustments, when made, or with respect to the
method employed in making the same. The Warrant Agent shall not be accountable
with respect to the validity or value or the kind or amount of any Warrant
Shares or of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant or with respect to whether any such
Warrant Shares or other securities will when issued be validly issued and fully
paid and nonassessable, and makes no representation with respect thereto.
(j) Notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Warrant Agent shall have any liability to any Warrantholder or
other person as a result of
- 35 -
its inability to perform any of its obligations under this Agreement by reason
of any preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority prohibiting
or otherwise restraining performance of such obligation; provided that the
Company must use its reasonable best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
(k) With respect to the exercise by a Warrantholder of any Warrants in
accordance with the terms of this Agreement and with respect to any other
actions or omissions that may arise as a result of or under this Agreement, to
the extent the Warrant Agent has any questions or uncertainties as to what
actions it should take with respect thereto, the Warrant Agent may seek written
direction from the Company as to what course of action the Warrant Agent should
take and the Warrant Agent shall be fully protected and incur no liability in
refraining from taking any action thereunder unless and until the Warrant Agent
has received such written direction from the Company. Any application by the
Warrant Agent for such written instructions from the Company may, at the option
of the Warrant Agent, set forth in writing any action proposed to be taken or
omitted by the Warrant Agent under this Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective. The
Warrant Agent shall not be liable for any action taken by, or omission of, the
Warrant Agent in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Warrant Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(l) No provision of this Agreement shall require the Warrant Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(m) Whenever in the performance of its duties under this Agreement the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting to
take any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the President, a
Vice President, the Treasurer or the Secretary of the Company and delivered to
the Warrant Agent; and such certificate shall be full authorization and
protection to the Warrant Agent for any action taken or suffered by it under the
provisions of this Agreement in reliance upon such certificate.
(n) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the President, a Vice President, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and such instructions shall be full authorization and
- 36 -
protection to the Warrant Agent, and the Warrant Agent shall not be liable for
any action taken, suffered or omitted to be taken by it in accordance with
instructions of any such officer.
(o) The Warrant Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Warrant Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence or willful misconduct (each as
finally determined by a court of competent jurisdiction) in the selection and
continued employment thereof.
Section 15. CHANGE OF WARRANT AGENT. The Warrant Agent or any successor
Warrant Agent may resign and be discharged from its duties under this Agreement
upon 60 days' notice in writing mailed to the Company. Upon such resignation or
if the Warrant Agent shall become incapable of acting as Warrant Agent, the
Company shall appoint a successor to such Warrant Agent. If the Company shall
fail to make such appointment within a period of 60 days after it has been
notified in writing of such resignation or incapacity by the Warrant Agent or by
the registered holder of a Warrant Certificate or a Warrant Share Certificate,
then the registered holder of any Warrant Certificate or Warrant Share
Certificate may apply to any court of competent jurisdiction for the appointment
of a successor to the Warrant Agent. Pending appointment of a successor to such
Warrant Agent, either by the Company or by such a court, the duties of the
Warrant Agent shall be carried out by the Company. The Majority Warrantholders
shall be entitled at any time to remove the Warrant Agent and appoint a
successor to such Warrant Agent. Such successor to the Warrant Agent must be
approved by the Company, which shall not unreasonably withhold such approval.
After appointment the successor to the Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Warrant Agent without further act or deed; but the former Warrant Agent
upon payment of all fees and expenses due it and its agents and counsel shall
deliver and transfer to the successor to the Warrant Agent any property at the
time held by it hereunder and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to give any notice
provided for in this Section 15, however, or any defect therein, shall not
affect the legality or validity of the appointment of a successor to the Warrant
Agent.
Section 16. NOTICES TO COMPANY AND WARRANT AGENT. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if delivered by facsimile transmission
(provided confirmation of receipt is received immediately thereafter) or when
received, if deposited in the mail, first class or registered, postage prepaid,
addressed (until another address is filed in writing by the Company with the
Warrant Agent), as follows:
iBasis, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
- 37 -
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: 650-849-4800
In case the Company shall fail to maintain such office or agency or shall
fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
office of the Warrant Agent designated for such purpose.
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if delivered by facsimile transmission (provided
confirmation of receipt is received immediately thereafter) or deposited in the
mail, first-class or registered, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) to the
Warrant Agent as follows:
U.S. Bank National Association
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and
JMG Capital Partners
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
- 38 -
and with copies to any additional Warrantholder the notice address for which is
set forth in an Additional Warrant Notice in which the Company and the Warrant
Agent mutually agree that such Warrantholder's Warrants shall be governed by
this Agreement. Upon written request by any Warrantholder or holder of Warrant
Shares, the Company shall, and the Warrant Agent shall be authorized and
permitted to, provide copies of any Additional Warrant Notices that have been
delivered to and countersigned by the Warrant Agent.
Section 17. SUPERCESSION OF ORIGINAL AGREEMENT SUPPLEMENTS AND AMENDMENTS.
This Agreement shall be deemed to amend and restate the Original Agreement in
its entirety. From and after execution of this Agreement the Original Agreement
shall be deemed to be superceded and none of the parties thereto (and no
Warrantholders or holders of Warrant Shares existing on the date hereof) shall
have any continuing rights or obligations thereunder (except with respect to
breaches of such Original Agreement occurring on or prior to the amendment and
restatement contemplated hereby). The Company and the Warrant Agent may from
time to time supplement or amend this Agreement or the Warrant Certificates
without the approval of any Warrantholders or any holders of Warrant Shares in
order to cure any ambiguity or to correct or supplement any provision contained
herein or therein which may be defective or inconsistent with any other
provision herein, to make any other revisions in regard to matters or questions
arising hereunder which the Company and the Warrant Agent may deem necessary or
desirable and which shall not in any way adversely affect the interests of the
Warrantholders or in connection with the issuance of additional Warrants
pursuant to an Additional Warrant Notice (as defined above). Any supplement or
amendment not covered by the preceding sentence shall require the consent of the
Majority Warrantholders, the Company and the Warrant Agent. Prior to executing
any supplement or amendment, the Warrant Agent shall be entitled to receive and
shall be entitled to rely conclusively upon an officer's certificate of the
Company to the effect that such amendment or supplement complies with the terms
of this Section 17. Notwithstanding anything in this Agreement to the contrary,
the prior written consent of the Warrant Agent must be obtained in connection
with any supplement or amendment which alters the rights, immunities or duties
of the Warrant Agent.
Section 18. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
Section 19. SURVIVAL OF REGISTRATION RIGHTS PROVISIONS, WARRANT AGENT
PROVISIONS. The provisions of Sections 8 and 14 shall survive the exercise or
expiration of the Warrants.
Section 20. GOVERNING LAW; SUBMISSION TO JURISDICTION: WAIVER OF JURY
TRIAL. This Agreement and each Warrant Certificates issued hereunder shall be
deemed to be a contract made under the laws of The Commonwealth of
Massachusetts
and for all purposes shall be governed by and construed in accordance with the
internal laws of said State, without regard to principles of conflicts of laws.
Each party hereto hereby submits to the nonexclusive jurisdiction of the United
States District Court for the District of
Massachusetts and of any
Massachusetts
state court sitting in Boston for purposes of all legal proceedings arising out
of or relating to this agreement or the transactions contemplated hereby. Each
party hereto irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of
- 39 -
the venue of any such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH
PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT,
TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED
UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT
IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 20
CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN
ENTERING INTO THIS AGREEMENT. Any party hereto may file an original counterpart
or a copy of this Section 20 with any court as written evidence of the consent
of each party hereto to the waiver of its right to trial by jury.
Section 21. EXERCISE OF RIGHTS AND REMEDIES. No delay of or omission in the
exercise of any right, power or remedy accruing to any party as a result of any
breach or default by any other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed as a waiver of or acquiescence
in any such breach or default, or of any similar breach or default occurring
later; nor shall any such delay, omission or waiver of any single breach or
default be deemed a waiver of any other breach or default occurring before or
after that waiver.
Section 22. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person or corporation other than the Company, the
Warrant Agent and the Warrantholders (including any holder of a beneficial
interest in any Warrant) any legal or equitable right, remedy or claim under
this Agreement, and this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrant Agent and the Warrantholders (including any holder
of a beneficial interest in any Warrant).
Section 23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[SIGNATURE PAGE FOLLOWS]
- 40 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
iBASIS, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
U.S. BANK NATIONAL ASSOCIATION,
as Warrant Agent
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trust Officer
[Warrant Agreement]
EXHIBIT A
FORM OF WARRANT CERTIFICATE
[Warrant Agreement]
EXHIBIT B
FORM OF COMMON STOCK CERTIFICATE
[Attached]
- 2 -
[Warrant Agreement]
EXHIBIT C
FORM OF QIB CERTIFICATION