DATA TRANSMISSION NETWORK CORPORATION
COMMON STOCK PURCHASE WARRANT
Expiring December 11, 2005
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TABLE OF CONTENTS
1. Exercise of Warrant ................................................ 1
1.1. Manner of Exercise ........................................ 1
1.2. When Exercise Deemed Effected ............................. 2
1.3. Delivery of Stock Certificates, Etc. ...................... 2
1.4. Company to Reaffirm Obligations ........................... 3
2. Adjustments ........................................................ 3
2.1. Number of Shares; Warrant Price ........................... 3
2.2. Adjustment of Warrant Price ............................... 3
2.2.1. Issuance of Additional Shares of Common Stock..... 3
2.2.2. Extraordinary Dividends and Distributions ........ 4
2.3. Treatment of Options and Convertible Securities ........... 4
2.4. Treatment of Stock Dividends, Stock Splits, Etc. .......... 7
2.5. Computation of Consideration .............................. 7
2.6. Adjustments for Combinations. Etc. ........................ 8
2.7. Dilution in Case of Other Securities ...................... 8
2.8. Minimum Adjustment of Warrant Price ....................... 9
3. Consolidation, Merger, Sale of Assets, Reorganization, Etc. ........ 9
3.1. General Provisions......................................... 9
3.2. Assumption of Obligations .................................11
4. Other Dilutive Events ..............................................11
5. No Dilution or Impairment ..........................................11
6. Accountants' Report as to Adjustments...............................12
7. Notices of Corporate Action ........................................12
8. Restrictions on Transfer ...........................................13
8.1. Restrictive Legends........................................13
8.2. Notice of Proposed Transfer; Opinions of Counsel ..........13
8.3. Termination of Restrictions................................14
8.4 Holder's Representations and Warranties....................14
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9. Registration Under Securities Act, Etc. ............................15
9.1. Incidental Registration ...................................15
9.2. Registration Procedures ...................................17
9.3. Underwritten Offerings ....................................21
9.3.1. Incidental Underwritten Offerings ................21
9.3.2. Holdback Agreements ..............................21
9.4. Preparation; Reasonable Investigation .....................22
9.5. Rights of Requesting Holders ..............................22
9.6. Indemnification ...........................................22
9.7. Adjustments Affecting Registrable Securities ..............25
9.8. Other Registration of Common Stock ........................25
9.9. Nominees for Beneficial Owners ............................25
9.10. Rule 144 and Rule 144A ....................................26
10. Availability of Information ........................................26
11. Reservation of Stock. Etc. .........................................26
12. Listing on Securities Exchange .....................................26
13. Ownership, Transfer and Substitution of Warrants ...................26
13.1. Ownership of Warrants .....................................26
13.2. Transfer and Exchange of Warrants .........................27
13.3. Replacement of Warrants ...................................27
14. Definitions ........................................................27
15. Remedies ...........................................................32
16. No Rights or Liabilities as Stockholder ............................32
17. Notices ...........................................................33
18. Expiration; Notice .................................................33
19. Miscellaneous ......................................................33
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THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED
EXCEPT IN COMPLIANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT AND SUCH SHARES ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFERABILITY SET FORTH IN THIS WARRANT.
Common Stock Purchase Warrant
Expiring December 11, 2005
Omaha, Nebraska
December 11, 1998
DATA TRANSMISSION NETWORK CORPORATION, a Delaware corporation (the
"Company"), for value received, hereby certifies that Xxxxx X. Xxxxxxx, or
registered assigns, is entitled to purchase from the Company 5,176 duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
par value $.001 per share, of the Company (the "Common Stock") at the purchase
price per share of $34.00, at any time or from time to time prior to 3 P.M., New
York City time, on December 11, 2005, all subject to the terms, conditions and
adjustments set forth below in this Warrant.
This Warrant is one of the Common Stock Purchase Warrants issued in
connection with the Company's acquisition of all of the issued and outstanding
capital stock of Weather Services Corporation, a Massachusetts corporation
("WSC"), pursuant to the Agreement and Plan of Merger (the "Merger Agreement"),
dated as of November 12, 1998 between the Company, Merger Sub, WSC, and ABRY.
Certain capitalized terms used in this Warrant are defined in Section 14. If a
capitalized term used in this Warrant is not defined in Section 14, or elsewhere
in this Warrant, such term shall have the meaning given such term in the Merger
Agreement.
1. Exercise of Warrant.
1.1. Manner of Exercise.
(a) This Warrant may be exercised by the holder hereof, in whole
or in part, during normal business hours on any Business Day prior to
the expiration of this Warrant by surrender of this Warrant, with the
form of subscription at the end hereof (or a reasonable facsimile
thereof) duly executed by such holder, to the Company at its principal
office (or, if such exercise shall be in connection with an
underwritten Public Offering of shares of Common Stock (or Other
Securities) subject to this Warrant, at the location at which the
Company shall have agreed to deliver the shares of Common Stock (or
Other Securities) subject to such offering), accompanied by payment, in
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cash or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying (a) the number of shares
of Common Stock (without giving effect to any adjustment therein)
designated in such form of subscription by (b) the Warrant Price, and
such holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) determined as provided in Sections 2
through 4.
(b) Holder may elect in writing delivered to the Company as
provided above to receive, without payment of additional consideration,
shares of Common Stock equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion to the
Company at its principal office. Thereupon, the Company shall issue to
such holder such number of fully paid and nonassessable shares of
Common Stock as is computed using the following formula:
X = Y (A-B)
A
where X = the number of shares to be issued to such holder pursuant
to this subsection 1.1(b).
Y = the number of shares covered by this Warrant in
respect of which the net issue election is made
pursuant to this subsection 1.1(b).
A = the Market Price of one share of Common Stock as at
the time the net issue election is made pursuant to
this subsection 1.1(b).
B = the Warrant Price in effect under this Warrant at
the time the net issue election is made pursuant to
this subsection 1.1(b).
1.2. When Exercise Deemed Effected. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Warrant shall have been surrendered to the
Company as provided in Section 1.1, and at such time the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in
Section 1.3 shall be deemed to have become the holder or holders of record
thereof.
1.3. Delivery of Stock Certificates, Etc. As soon as practicable
after the exercise of this Warrant, in whole or in part, and in any event within
ten (10) Business Days thereafter (unless such exercise shall be in connection
with an underwritten Public Offering of shares of Common Stock (or Other
Securities) subject to this Warrant, in which event concurrently with such
exercise), the Company at its expense (including the payment by it of any taxes
(other than transfer taxes) applicable to the Company) will cause to be issued
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in the name of and delivered to the holder hereof or, subject to Section 8, as
such holder (upon payment by such holder of any applicable transfer taxes) may
direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the Market Price per share of such Common Stock
(or Other Securities) on the Business Day next preceding the date of
such exercise, and
(b) in case such exercise is in part only, a new Warrant of like
tenor, calling in the aggregate on the face thereof for the number of
shares of Common Stock equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of this
Warrant minus the number of such shares designated by the holder upon
such exercise as provided in Section 1.1.
1.4. Company to Reaffirm Obligations. The Company will, at the
time of or at any time after each exercise of this Warrant, upon the request of
the holder hereof or of any shares of Common Stock (or Other Securities) issued
upon such exercise, acknowledge in writing its continuing obligation to afford
to such holder all rights (including, without limitation, any right of
registration of any shares of Common Stock (or Other Securities) issuable upon
exercise of this Warrant pursuant to Section 9) to which such holder shall
continue to be entitled after such exercise in accordance with the terms of this
Warrant, provided that if any such holder shall fail to make any such request,
the failure shall not affect the continuing obligation of the Company to afford
such rights to such holder.
2. Adjustments.
2.1. Number of Shares; Warrant Price. The number of shares of
Common Stock which the holder of this Warrant shall be entitled to receive upon
each exercise hereof shall be determined by multiplying the number of shares of
Common Stock which would otherwise (but for the provisions of this Section 2) be
issuable upon such exercise, as designated by the holder hereof pursuant to
Section 1.1, by a fraction of which (a) the numerator is $34.00 and (ii) the
denominator is the Warrant Price in effect on the date of such exercise. The
"Warrant Price" shall initially be $34.00 per share, and shall be adjusted and
readjusted from time to time as provided in this Section 2 and, as so adjusted
or readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by this Section 2.
2.2. Adjustment of Warrant Price.
2.2.1. Issuance of Additional Shares of Common Stock. In case the
Company, at any time or from time to time after December 11, 1998 (the "Initial
Date"), shall issue or sell Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section 2.3 or
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2.4) without consideration or for a consideration per share less than the Base
Price in effect, in each case, on the date of and immediately prior to such
issue or sale, then, and in each such case, subject to Section 2.8, such Warrant
Price shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Warrant Price by a fraction,
(a) the numerator of which shall be (i) the number of shares of
Common Stock outstanding immediately prior to such issue or sale plus
(ii) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of such
Additional Shares of Common Stock so issued or sold would purchase at
the Base Price, and
(b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale,
provided that, for the purposes of this Section 2.2.1 (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
Section 2.3 or 2.4, such Additional Shares shall be deemed to be outstanding,
and (y) treasury shares shall not be deemed to be outstanding.
2.2.2. Extraordinary Dividends and Distributions. In case the
Company at any time or from time to time after the Initial Date shall declare,
order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on any Common Stock, other
than (a) a dividend payable in Additional Shares of Common Stock or in Options
for Common Stock or (b) a dividend payable in cash and declared out of the
earned surplus of the Company, then, and in each such case, subject to Section
2.8, the Warrant Price in effect immediately prior to the close of business on
the record date fixed for the determination of holders of any class of
securities entitled to receive such dividend or distribution shall be reduced,
effective as of the close of business on such record date, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Warrant Price by a fraction,
(x) the numerator of which shall be the Current Market Price
in effect on such record date or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of
ex-dividend trading, less the value of such dividend or
distribution (as determined in good faith by the Board of
Directors of the Company) applicable to one share of Common Stock,
and
(y) the denominator of which shall be such Current Market
Price.
2.3. Treatment of Options and Convertible Securities. In case the
Company at any time or from time to time after the Initial Date shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
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Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be issued for purposes of
Section 2.2 as of the time of such issue, sale, grant or assumption or, in case
such a record date shall have been fixed, as of the close of business on such
record date (or, if the Common Stock trades on an ex-dividend basis, on the date
prior to the commencement of ex-dividend trading), provided that such Additional
Shares of Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 2.5) of such shares
would be less than the Base Price in effect, in each case, on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date (or, if the Common Stock trades on
an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), as the case may be, and provided, further, that in any such case in
which Additional Shares of Common Stock are deemed to be issued,
(a) no further adjustment of the Warrant Price shall be made upon
the subsequent issue or sale of Additional Shares of Common Stock or
Convertible Securities upon the exercise of such Options or the
conversion or exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects
such Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(c) upon the expiration of any such Options or of the rights of
conversion or exchange under any such Convertible Securities which
shall not have been exercised (or upon purchase by the Company and
cancellation or retirement of any such Options which shall not have
been exercised or of any such Convertible Securities the rights of
conversion or exchange under which shall not have been exercised), the
Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments based thereon,
shall, upon such expiration (or such cancellation or retirement, as the
case may be), be recomputed as if:
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(x) in the case of options for Common Stock or of Convertible
Securities, the only Additional Shares of Common Stock issued or
sold were the Additional Shares of Common Stock, if any, actually
issued or sold upon the exercise of such Options or the conversion
or exchange of such Convertible Securities and the consideration
received therefor was (i) an amount equal to (A) the consideration
actually received by the Company for the issue, sale, grant or
assumption of all such options, whether or not exercised, plus (B)
the consideration actually received by the Company upon such
exercise, minus (C) the consideration paid by the Company for any
purchase of such Options which were not exercised, or (ii) an
amount equal to (A) the consideration actually received by the
Company for the issue, sale, grant or assumption of all such
Convertible Securities which were actually converted or exchanged,
plus (B) the additional consideration, if any, actually received
by the Company upon such conversion or exchange, minus (C) the
consideration paid by the Company for any purchase of such
Convertible Securities the rights of conversion or exchange under
which were not exercised, and
(y) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued or sold upon
the exercise of such Options were issued at the time of the issue,
sale, grant or assumption of such options, and the consideration
received by the Company for the Additional Shares of Common Stock
deemed to have then been issued was an amount equal to (i) the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such options, whether or not
exercised, plus (ii) the consideration deemed to have been
received by the Company (pursuant to Section 2.4) upon the issue
or sale of the Convertible Securities with respect to which such
options were actually exercised, minus (iii) the consideration
paid by the Company for any purchase of such Options which were
not exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above shall
have the effect of increasing the Warrant Price by an amount in excess
of the amount of the adjustment thereof originally made in respect of
the issue, sale, grant or assumption of such Options or Convertible
Securities; and
(e) in the case of any such Options which expire by their terms
not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Warrant Price shall be made
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the manner provided in subdivision (c)
above.
In case at any time after the Initial Date the Company shall be
required to increase the number of Additional Shares of Common Stock subject to
any Option or into which any Convertible Securities (other than the Warrants)
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are convertible or exchangeable pursuant to the operation of anti-dilution
provisions applicable thereto, such Additional Shares of Common Stock shall be
deemed to be issued for purposes of Section 2.2 as of the time of such increase.
2.4. Treatment of Stock Dividends, Stock Splits, Etc. In case the
Company at any time or from time to time after the Initial Date shall declare or
pay any dividend or other distribution on any class of stock of the Company
payable in Common Stock, or shall effect a subdivision of the outstanding shares
of Common Stock into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock),
then, and in each such case, Additional Shares of Common Stock shall be deemed
to have been issued (a) in the case of any such dividend, immediately after the
close of business on the record date for the determination of holders of any
class of securities entitled to receive such dividend, or (b) in the case of any
such subdivision, at the close of business on the day immediately prior to the
day upon which such corporate action becomes effective.
2.5. Computation of Consideration. For the purposes of this
Section 2:
(a) The consideration for the issue or sale of any Additional
Shares of Common Stock or for the issue, sale, grant or assumption of
any Options or Convertible Securities, irrespective of the accounting
treatment of such consideration, shall
(x) insofar as it consists of cash, be computed at the amount
of cash received by the Company, without deducting any expenses
paid or incurred by the Company or any commissions or compensation
paid or concessions or discounts allowed to underwriters, dealers
or others performing similar services and any accrued interest or
dividends in connection with such issue or sale,
(y) insofar as it consists of consideration (including
securities) other than cash, be computed at the fair value thereof
at the time of such issue or sale, as determined in good faith by
the Board of Directors of the Company, without deducting any
expenses paid or incurred by the Company for any commissions or
compensation paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services and
any accrued interest or dividends in connection with such issue or
sale, and
(z) in case Additional Shares of Common Stock are issued or
sold or Convertible Securities are issued, sold, granted or
assumed together with other stock or securities or other assets of
the Company for a consideration which covers both, be the
proportion of such consideration so received, computed as provided
in subdivisions (x) and (y) above, allocable to such Additional
Shares of Common Stock or Convertible Securities, as the case may
be, all as determined in good faith by the Board of Directors of
the Company.
(b) All options issued, sold, granted or assumed together with
other stock or securities or other assets of the Company for a
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consideration which covers both, all Additional Shares of Common Stock,
Options or Convertible Securities issued in payment of any dividend or
other distribution on any class of stock of the Company and all
Additional Shares of Common Stock issued to effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock) shall be deemed to have been issued without
consideration.
(c) Additional Shares of Common Stock deemed to have been issued
for consideration pursuant to Section 2.3, relating to Options and
Convertible Securities, shall be deemed to have been issued for a
consideration per share determined by dividing
(x) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption
of the Options or Convertible Securities in question, plus the
minimum aggregate amount of additional consideration (as set forth
in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration) payable to the Company upon the exercise in full of
such Options or the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, in each
case computing such consideration as provided in the foregoing
subdivision (a), by
(y) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(d) Additional Shares of Common Stock issued or deemed to have
been issued pursuant to the operation of anti-dilution provisions
applicable to Convertible Securities (other than the Warrants), Options
or other securities of the Company (either as a result of the
adjustments provided for by the Warrants or otherwise) shall be deemed
to have been issued without consideration.
2.6. Adjustments for Combinations, Etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.7. Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any Common Stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other Person referred to in
Section 3) or to subscription, purchase or other acquisition pursuant to any
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options issued or granted by the Company (or any such other issuer or Person)
for a consideration such as to dilute, on a basis consistent with the standards
established in the other provisions of this Section 2, the purchase rights
granted by this Warrant, then, and in each such case, the computations,
adjustments and readjustments provided for in this Section 2 with respect to the
Warrant Price shall be made as nearly as possible in the manner so provided and
applied to determine the amount of Other Securities from time to time receivable
upon the exercise of this Warrant, so as to protect the holder of this Warrant
against the effect of such dilution.
2.8. Minimum Adjustment of Warrant Price. If the amount of any
adjustment of the Warrant Price required pursuant to this Section 2 would be
less than one-tenth of one percent of the Warrant Price in effect at the time
such adjustment is otherwise so required to be made, such amount shall be
carried forward and adjustment with respect thereto made at the time of and
together with any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate at least one-tenth
of one percent of such Warrant Price; provided that, upon the exercise of this
Warrant, all adjustments carried forward and not theretofore made up to and
including the date of such exercise shall be made to the nearest one
one-hundredth of a cent.
3. Consolidation, Merger, Sale of Assets, Reorganization. Etc.
3.1. General Provisions. In case the Company, after the Initial
Date, (a) shall consolidate with or merge into any other Person and shall not be
the continuing or surviving corporation of such consolidation or merger, or (b)
shall permit any other Person to consolidate with or merge into the Company and
the Company shall be the continuing or surviving Person but, in connection with
such consolidation or merger, Common Stock or Other Securities shall be changed
into or exchanged for cash, stock or other securities of any other Person or any
other property, or (c) shall transfer all or substantially all of its properties
and assets to any other Person, or (d) shall effect a capital reorganization or
reclassification of Common Stock or Other Securities (other than a capital
reorganization or reclassification resulting in the issue of additional Shares
of Common Stock for which adjustment in the Warrant Price is provided in Section
2.2.1 or 2.2.2), then, and in the case of each such transaction, the Company
shall give written notice thereof to the holder of this Warrant not less than 30
days prior to the consummation thereof and proper provision shall be made so
that, upon the basis and the terms and in the manner provided in this Section 3,
the holder of this Warrant, upon the exercise hereof at any time after the
consummation of such transaction, shall be entitled to receive, at the aggregate
Warrant Price in effect at the time of such consummation for all Common Stock
(or other Securities) issuable upon such exercise immediately prior to such
consummation, in lieu of the Common Stock (or Other Securities) issuable upon
such exercise prior to such consummation, either of the following, as such
holder shall elect by written notice to the Company on or before the date
immediately preceding the date of the consummation of such transaction (and, in
the absence of such notice, the provisions of subdivision (y) below shall be
deemed to have been elected by such holder):
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(x) the highest amount of cash, securities or other property
to which such holder would actually have been entitled as a
shareholder upon such consummation if such holder had exercised
this Warrant immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible
to the adjustments provided for in Section 2 and this Section 3,
provided that if a purchase, tender or exchange offer shall have
been made to and accepted by the holders of Common Stock under
circumstances in which, upon completion of such purchase, tender
or exchange offer, the maker thereof, together with members of any
group (within the meaning of Section 13(d)(3) of the Exchange Act)
of which such maker is a part, and together with any affiliate or
associate of such maker (within the meaning of Rule 12b-2 under
the Exchange Act) and any members of any such group of which any
such affiliate or associate is a part, own beneficially (within
the meaning of Rule 13d-3 under the Exchange Act) more than 50% of
the outstanding shares of Common Stock, and if the holder of this
Warrant so designates in such notice given to the Company, the
holder of this Warrant shall be entitled to receive the highest
amount of cash, securities or other property to which such holder
would actually have been entitled as a shareholder if the holder
of this Warrant had exercised this Warrant prior to the expiration
of such purchase, tender or exchange offer, accepted such offer
and all of the Common Stock held by such holder had been purchased
pursuant to such purchase, tender or exchange offer, subject to
adjustments (from and after the consummation of such purchase,
tender or exchange offer) as nearly equivalent as possible to the
adjustments provided for in Section 2 and this Section 3; or
(y) the number of shares of Voting Common Stock (or
equivalent equity interests) of the Acquiring Person or, if the
Acquiring Person fails to meet, but its Parent meets, the
requirements set forth in the proviso below, of its Parent,
subject to adjustments (subsequent to such corporate action) as
nearly equivalent as possible to the adjustments provided for in
Section 2 and this Section 3, determined by dividing (i) the
product obtained by multiplying (A) the number of shares of Common
Stock (or Other Securities) to which the holder of this Warrant
would have been entitled had such holder exercised this Warrant
immediately prior to the consummation of such transaction, times
(B) the greater of the Acquisition Price and the Warrant Price in
effect on the date immediately preceding the date of such
consummation, by (ii) the Current Market Price per share of the
Voting Common Stock (or equivalent equity interests) of the
Acquiring Person or its Parent, as the case may be, on the date
immediately preceding the date of such consummation;
provided that the Company shall not effect any of the transactions described in
subdivisions (a) through (d) above unless, immediately after the date of the
consummation of such transaction, the Acquiring Person or its Parent is required
to file, by virtue of having an outstanding class of Voting Common Stock (or
equivalent equity interests), reports with the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act, and such Voting Common Stock (or
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equivalent equity interest) is listed or admitted to trading on a national
securities exchange or is quoted in the NASD automated quotation system. In the
event that the Acquiring Person fulfills the requirements contained in the
immediately preceding proviso, then, if the holder of this Warrant shall elect
(or shall be deemed to elect) to receive Voting Common Stock (or equivalent
equity interests) pursuant to subdivision (y) above, such holder shall be
entitled to receive, upon the basis stated in such subdivision (y), only the
Voting Common Stock (or equivalent equity interests) of the Acquiring Person.
3.2. Assumption of Obligations. Notwithstanding anything contained
in this Warrant or the Merger Agreement to the contrary, the Company will not
effect any of the transactions described in subdivisions (a) through (d) of
Section 3.1 unless, prior to the consummation thereof, each Person (other than
the Company) which may be required to deliver any cash, stock or other
securities or other property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the holder of this Warrant, (a) the obligations of the Company
under this Warrant (and if the Company shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release the
Company from, any continuing obligations of the Company under this Warrant) and
(b) the obligation to deliver to such holder such cash, stock or other
securities or other property as, in accordance with the foregoing provisions of
this Section 3, such holder may be entitled to receive, and such Person shall
have similarly delivered to such holder an opinion of counsel for such Person,
which counsel shall be reasonably satisfactory to such holder, stating that this
Warrant shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of Section 2 and this
Section 3) shall be applicable to the cash, stock or other securities or other
property which such Person may be required to deliver upon any exercise of this
Warrant or the exercise of any rights pursuant hereto.
4. Other Dilutive Events. In case any event shall occur as to which the
provisions of Section 2 or Section 3 are not strictly applicable but the failure
to make any adjustment would not fairly protect the purchase rights represented
by this Warrant in accordance with the essential intent and principles of such
sections, then, in each such case, the Company shall appoint a firm of
independent public accountants of recognized national standing (which may be the
regular auditors of the Company), which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in Sections 2 and 3, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon receipt of such
opinion the Company will promptly mail a copy thereof to the holder of this
Warrant and shall make the adjustments described therein.
5. No Dilution or Impairment. The Company will not, by amendment of its
certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment. Without limiting the
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generality of the foregoing, the Company (a) will not permit the par value of
any shares of stock receivable upon the exercise of this Warrant to exceed the
amount payable therefor upon such exercise, (b) will take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of stock upon the exercise of all
outstanding warrants issued by the Company (including this Warrant) from time to
time, and (c) will not take any action which results in any adjustment of the
Warrant Price if the total number of shares of Common Stock (or Other
Securities) issuable after the action upon the exercise of all outstanding
warrants issued by the Company (including this Warrant) would exceed the total
number of shares of Common Stock (or other Securities) then authorized by the
Company's certificate of incorporation and available for the purpose of issue
upon such exercise.
6. Accountants' Report as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable upon the exercise of this Warrant, the Company at its expense will
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant, and will prepare a certificate of the chief financial officer of
the Company setting forth such adjustment or readjustment and showing in
reasonable detail the method of calculation thereof and the facts upon which
such adjustment or readjustment is based, including without limitation a
statement of (a) the consideration received or to be received by the Company for
any Additional Shares of Common Stock issued or sold or deemed to have been
issued, (b) the number of shares of Common Stock outstanding or deemed to be
outstanding, and (c) the Warrant Price in effect immediately prior to such issue
or sale and as adjusted and readjusted (if required by Section 2) on account
thereof. The Company will forthwith mail a copy of each such certificate to each
holder of a Warrant and will, upon the written request at any time of the holder
of this Warrant, furnish to such holder a like certificate setting forth the
Warrant Price at the time in effect and showing in reasonable detail how it was
calculated. In addition, with respect to any fiscal year of the Company during
which any such adjustment or readjustment shall have been made, the Company will
cause the independent public accountants reporting upon the Company's financial
statements for such fiscal year to verify, concurrently with their annual audit
of the Company's financial statements, the computations made by the Company
during such fiscal year and to prepare and to deliver to the holder of this
Warrant a report setting forth substantially the information described above in
this Section 6 with respect to all such adjustments and readjustments. The
Company will also keep copies of all such certificates and reports at its
principal office and will cause the same to be available for inspection at such
office during normal business hours by the holder of this Warrant or any
prospective purchaser of this Warrant designated by the holder thereof.
7. Notices of Corporate Action. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right, or
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(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and any
other Person or any transfer of all or substantially all the assets of
the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to the holder of this Warrant a notice specifying (x) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (y) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall be
mailed at least 20 days prior to the date therein specified, in the case of any
date referred to in the foregoing subdivision (x), and at least 30 days prior to
the date therein specified, in the case of the date referred to in the foregoing
subdivision (y).
8. Restrictions on Transfer.
8.1. Restrictive Legends. Except as otherwise permitted by this
Section 8, each certificate for Common Stock (or Other Securities) issued upon
the exercise of this Warrant and each certificate issued upon the direct or
indirect Transfer of any such Common Stock (or Other Securities) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred except in
compliance with such Act and applicable state securities laws. Such
shares are also subject to certain restrictions on transferability
imposed by a Common Stock Purchase Warrant expiring December 11, 2005,
a copy of which is on file at the offices of the Company."
8.2. Notice of Proposed Transfer; Opinions of Counsel. Prior to
any Transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act (other than a Transfer
pursuant to Rule 144 or any comparable rule under such Act), the holder thereof
will give written notice to the Company of such holder's intention to effect
such Transfer and to comply in all other respects with this Section 8.2. Each
such notice (a) shall describe the manner and circumstances of the proposed
Transfer in sufficient detail to enable counsel to render the opinions referred
to below, and (b) shall designate counsel for the holder giving such notice (who
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may be internal counsel for such holder). The holder giving such notice will
submit a copy thereof to the counsel designated in such notice and the Company
will promptly submit a copy thereof to its counsel. The following provisions
shall then apply:
(x) If in the opinion of such counsel for the holder the
proposed Transfer may be effected without registration (a copy of
which opinion shall be delivered to the Company), and if such
opinion is reasonably satisfactory to the Company, such holder
shall thereupon be entitled to Transfer such Restricted Securities
in accordance with the terms of the notice delivered by such
holder to the Company. Each Warrant or certificate, if any, issued
upon or in connection with such Transfer shall bear the
appropriate restrictive legend set forth in Section 8.1 unless, in
the opinion of such counsel and the Company's counsel, such legend
is no longer required to insure compliance with the Securities
Act.
(y) If the opinion of such counsel for the holder is not to
the effect that the proposed Transfer may legally be effected
without registration of such Restricted Securities under the
Securities Act, such holder shall not be entitled to Transfer such
Restricted Securities (other than in a Transfer pursuant to Rule
144 or any comparable rule under the Securities Act) until the
conditions specified in subdivision (x) above shall be satisfied
or until registration of such Restricted Securities under the
Securities Act has become effective.
Notwithstanding the foregoing provisions of this Section 8.2, the holder of any
Restricted Securities shall be permitted to Transfer any such Restricted
Securities pursuant to Rule 144A under the Securities Act, provided that each
transferee agrees in writing to be bound by all the restrictions on transfer of
such Restricted Securities contained in this Section 8.2.
8.3. Termination of Restrictions. The restrictions imposed by this
Section 8 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when such securities
shall have been effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering such Restricted
Securities, (a) when, in the opinions of both counsel for the holder thereof and
counsel for the Company, such restrictions are no longer required in order to
insure compliance with the Securities Act, or (c) when such securities may be
immediately sold by the holder as determined under Rule 144 under the Securities
Act. Whenever such restrictions shall terminate as to any Restricted Securities,
as soon as practicable thereafter and in any event within ten Business Days, the
holder thereof shall be entitled to receive from the Company, without expense
(other than transfer taxes, if any), new securities of like tenor not bearing
the applicable legend set forth in Section 8.1 hereof.
8.4. Holder's Representations and Warranties. Holder hereby
represents and warrants to the Company as follows:
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(a) Holder is acquiring this Warrant and any shares of Common
Stock acquired upon exercise of this Warrant for its own account, for
investment and not with a view to any "distribution" within the meaning
of the Securities Act.
(b) Holder is knowledgeable and experienced in making venture
capital investments, is able to bear the economic risk of loss of its
investment in the Company, has been granted the opportunity to make an
investigation of the affairs of the Company and has used such
opportunity either directly or through its authorized representative.
(c) Holder understands that because the shares of Common Stock
issuable under this Warrant have not been registered under the
Securities Act, it cannot dispose of any or all of such shares of
Common Stock unless such shares are subsequently registered under the
Securities Act or exemptions from registration are available. Holder
acknowledges and understands that, except as provided in this Warrant,
it has no registration rights. By reason of these restrictions, Holder
understands that it may be required to hold such shares of Common Stock
for an indefinite period of time.
(d) Xxxxxx is an "accredited investor" as such term is defined in
Regulation D promulgated under the Securities Act.
9. Registration under Securities Act, Etc.
9.1. Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at any
time on or prior to December 11, 2005 proposes to register any of its
securities under the Securities Act (other than by a registration on
Form S-4 or S-8 or any successor or similar forms), whether or not for
sale for its own account, in a manner which would permit registration
of Registrable Securities for sale to the public under the Securities
Act, it will each such time give prompt written notice to all holders
of Registrable Securities of its intention to do so and of such
holders' rights under this Section 9.1. Upon the written request of any
such holder made within 20 days after receipt of any such notice (which
request shall specify the Registrable Securities intended to be
disposed of by such holder and the intended method of disposition
thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the holders
thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered, by inclusion of such
Registrable Securities in the registration statement which covers the
securities which the Company proposes to register, provided that (x)
the Company shall not be required to effect the registration pursuant
to this Section 9.1 of any Warrants (but shall be required to effect
the registration of Registrable Securities described in clauses (b) and
(c) of the definition of Registrable Securities) and (y) if, at any
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time after giving written notice of its intention to register any
securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of
such securities, the Company may, at its election, give written notice
of such determination to each holder of Registrable Securities and,
thereupon, (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to pay
the Registration Expenses in connection therewith), and (ii) in the
case of a determination to delay registering, shall be permitted to
delay registering any Registrable Securities for the same period as the
delay in registering such other securities. The Company will pay all
Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 9.1.
(b) Priority in Incidental Registrations. If a registration
pursuant to this Section 9.1 involves an underwritten offering and the
managing underwriter advises the Company in writing that, in its
opinion, that the dollar amount or number of shares of Registrable
Securities and other shares of Common Stock or Other Securities to be
included in the offering exceeds the maximum dollar amount or number
that can be sold in such offering without adversely affecting the
proposed offering price, the timing, the distribution method or the
probability of success of such offering (the "Maximum Number of
Shares"), then the Company shall include in such registration:
(x) if the registration is a primary offering for the
Company, (i) first, the shares of Common Stock or Other Securities
that the Company proposes to sell for its own account which can be
sold without exceeding the Maximum Number of Shares; (ii) second,
to the extent the Maximum Number of Shares has not been reached
under the foregoing clause (i), the shares of Common Stock or
Other Securities requested to be included in such registration by
the holders thereof with registration rights granted prior to the
date hereof which can be sold without exceeding the Maximum Number
of Shares (allocated pro rata among such other security holders,
as nearly as practicable, on the basis of the number of shares of
Common Stock or Other Securities requested to be included in such
offering by such other security holders); and (iii) third, to the
extent the Maximum Number of Shares has not been reached under the
foregoing clauses (i) and (ii), the Registrable Securities and
shares of Common Stock or Other Securities requested to be
included in such registration by the holder of this Warrant and
other security holders with registration rights which can be sold
without exceeding the Maximum Number of Shares (allocated pro rata
among such holder and other security holders, as nearly as
practicable, on the basis of the number of shares of Registrable
Securities and Common Stock or Other Securities requested to be
included in such offering by the holder and such other security
holders); and
(y) if the registration is for a secondary offering for any
of the Company's securityholders, (i) first, if the registration
was requested by other security holders with demand registration
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rights, then the shares of Common Stock or Other Securities that
such other security holders have requested to be included in such
offering which can be sold without exceeding the Maximum Number of
Shares; (ii) second, to the extent the Maximum Number of Shares
has not been reached under the foregoing clause (i), the shares of
Common Stock or Other Securities requested to be included in such
registration by other security holders with registration rights
granted prior to the date hereof which can be sold without
exceeding the Maximum Number of Shares (allocated pro rata among
such other security holders, as nearly as practicable, on the
basis of the number of shares of Common Stock or Other Securities
requested to be included in such offering by such other security
holders); and (iii) third, to the extent the Maximum Number of
Shares has not been reached under the foregoing clauses (i) and
(ii), the Registrable Securities and shares of Common Stock or
Other Securities requested to be included in such registration by
the holder of this Warrant and other security holders with
registration rights which can be sold without exceeding the
Maximum Number of Shares (allocated pro rata among such holder and
other security holders, as nearly as practicable, on the basis of
the number of shares of Registrable Securities and Common Stock or
Other Securities requested to be included in such offering by the
holder and such other security holders).
9.2. Registration Procedures. If and whenever (x) the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Section 9.1 or (y) there is a
Requesting Holder in connection with any other proposed registration by the
Company under the Securities Act, the Company will as expeditiously as possible:
(a) prepare and file with the Commission the requisite
registration statement (including such audited financial statements as
may be required by the Securities Act or the rules and regulations
promulgated thereunder) to effect such registration and use its best
efforts to cause such registration statement to become effective,
provided that before filing such registration statement or any
amendments thereto, the Company will furnish to the counsel selected by
the holders of Registrable Securities whose Registrable Securities are
to be included in such registration copies of all such documents
proposed to be filed, which documents will be subject to the review of
such counsel, and provided, further, that the Company may discontinue
any registration of its securities which are not Registrable Securities
at any time prior to the effective date of the registration statement
relating thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness
of such registration statement and to comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement until the earlier of such time
as all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set
forth in such registration statement and the expiration of 90 days
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after such registration statement becomes effective, except with
respect to any such registration statement filed pursuant to Rule 415
(or any successor Rule) under the Securities Act, in which case such
period shall be 2 years;
(c) furnish to each seller of Registrable Securities covered by
such registration statement and each Requesting Holder such number of
conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request;
(d) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as
each seller thereof and each Requesting Holder shall reasonably
request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and take any
other action which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that the Company shall not for
any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for
the requirements of this subdivision (d) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(f) furnish to each seller of Registrable Securities and each
Requesting Xxxxxx a signed counterpart, addressed to such seller (and
the underwriters, if any), of
(x) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten Public Offering, dated the
date of any closing under the underwriting agreement), reasonably
satisfactory in form and substance to such seller, and
(y) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten Public Offering, dated the date of any closing under
the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement (it being understood that
such letter, if the cost thereof does not constitute a
"Registration Expense", is to be delivered only at the request of,
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and at the expense of, any seller of Registrable Securities or
Requesting Holder),
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten Public
Offerings of securities and, in the case of the accountants' letter, such other
financial matters, as such seller (or the underwriters, if any) may reasonably
request;
(g) immediately notify each seller of such Registrable Securities,
and (if requested by any such seller) confirm such advice in writing,
(w) when the prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to the registration
statement or any post-effective amendment, when the same has become
effective, (x) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information, (y) of the issuance by the Commission of any
stop order suspending the effectiveness of the registration statement
or the initiation of any proceedings for that purpose, and (z) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose;
(h) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration statement at
the earliest possible time;
(i) immediately notify each holder of Registrable Securities
covered by such registration statement and each Requesting Holder, at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made, and at the request of any
such holder promptly prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the purchasers
of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month
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after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and not file any amendment or supplement to such
registration statement or prospectus to which any such seller or any
Requesting Holder shall have reasonably objected on the grounds that
such amendment or supplement does not comply in all material respects
with the requirements of the Securities Act or of the rules or
regulations thereunder, having been furnished with a copy thereof at
least five (5) business days prior to the filing thereof;
(k) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement not later than the effective date of such registration
statement;
(1) cooperate with the sellers of such Registrable Securities to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which securities shall
not bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company; and enable such Registrable
Securities to be in such denominations and registered in such names as
such sellers may request at least two business days prior to any sale
of Registrable Securities;
(m) use its best efforts (x) to cause all such Registrable
Securities covered by such registration statement to be listed on a
national securities exchange (if such Registrable Securities are not
already so listed) and on each additional national securities exchange
on which similar securities issued by the Company are then listed, if
the listing of such Registrable Securities is then permitted under the
rules of such exchange, or (y) to secure designation of all such
Registrable Securities covered by such registration statement as a
NASDAQ "national market system security" within the meaning of Rule
llAa2-1 of the Commission or, failing that, secure NASDAQ authorization
for such Registrable Securities and, without limiting the generality of
the foregoing, to arrange for at least two market makers to register as
such with respect to such Registrable Securities with the NASD;
(n) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the applicable registration statement;
and
(o) enter into such agreements and take such other actions as the
Requisite Holders shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
The Company may require each holder of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such holder and the distribution of such securities as the Company may from time
to time reasonably request in writing.
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9.3. Underwritten Offerings.
9.3.1. Incidental Underwritten Offerings. If the Company at any
time proposes to register any of its securities under the Securities Act as
contemplated by Section 9.1 and such securities are to be distributed by or
through one or more underwriters, the Company will, subject to the provisions of
Section 9.1(b), use its best efforts, if requested by any holder of Registrable
Securities, to arrange for such underwriters to include the Registrable
Securities to be offered and sold by such holder among the securities to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting agreement
between the Company and such underwriters and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. No holder of Registrable
Securities shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder and such holder's intended method
of distribution and any other representation required by law.
9.3.2. Holdback Agreements.
(x) Each holder of Registrable Securities agrees, if so
required by the managing underwriter, not to effect any public
sale or distribution of securities of the Company of the same
class as the securities included in such Registration Statement,
during the seven days prior to the date on which any underwritten
registration pursuant to Section 9.1 has become effective and the
90 days thereafter, except as part of such underwritten
registration or to the extent that such holder is prohibited by
applicable law from agreeing to withhold Registrable Securities
from sale or is acting in its capacity as a fiduciary or an
investment adviser. Without limiting the scope of the term
"fiduciary," a holder shall be deemed to be acting as a fiduciary
or an investment adviser if its actions or the Registrable
Securities proposed to be sold are subject to ERISA, the
Investment Company Act of 1940 or the Investment Advisers Act of
1940 or if such Registrable Securities are held in a separate
account under applicable insurance law or regulation.
(y) The Company agrees (i) not to effect any public sale or
distribution of its equity securities or securities convertible
into or exchangeable or exercisable for any of such securities
during the seven (7) days prior to the date on which any
underwritten registration pursuant to Section 9.1 has become
effective and the 90 days thereafter, except as part of such
underwritten registration and except pursuant to registrations on
Form S-4 or S-8 or any successor or similar forms thereto, and
(ii) to cause each holder of its equity securities or of any
securities convertible into or exchangeable or exercisable for any
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of such securities, in each case purchased from the Company at any
time after the date of this Agreement (other than in a Public
Offering), to agree not to effect any such public sale or
distribution of such securities, during such period, except as
part of such underwritten registration.
9.4. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act,
the Company will give the holders of Registrable Securities registered under
such registration statement, their underwriters, if any, each Requesting Holder
and their respective counsel and accountants, the opportunity to participate in
the preparation of such registration statement, each prospectus included therein
or filed with the Commission, and each amendment thereof or supplement thereto,
and will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
9.5. Rights of Requesting Holders. The Company will not file any
registration statement under the Securities Act, whether or not pursuant to
registration rights granted to other holders of its securities and whether or
not for sale for its own account (other than by a registration on Form S-4, S-8
or any successor form thereto), unless it shall first have given to each Person
which holds any Registrable Securities issued by the Company at least 30 days'
prior written notice thereof. Any such holder who shall so request within 30
days after such notice (a "Requesting Holder") shall have the rights of a
Requesting Holder provided in Sections 9.2, 9.4 and 9.6. In addition, if any
registration statement refers to any Requesting Holder by name or otherwise as
the holder of any securities of the Company, then such holder shall have the
right to require (a) the insertion therein of language, in form and substance
reasonably satisfactory to such holder, to the effect that, if true, the holding
by such holder of such securities does not necessarily make such holder a
"controlling person" of the Company within the meaning of the Securities Act and
is not to be construed as a recommendation by such holder of the investment
quality of the Company's debt or equity securities covered thereby and that such
holding does not imply that such holder will assist in meeting any future
financial requirements of the Company, or (b) in the event that such reference
to such holder by name or otherwise is not required by the Securities Act or any
rules and regulations promulgated thereunder, the deletion of the reference to
such holder.
9.6. Indemnification.
(a) The Company will, and hereby does, indemnify, to the extent
permitted by applicable law, each holder of Registrable Securities and
its Affiliates and their respective officers and directors, if any, and
each Person, if any, who controls such holder within the meaning of
Section 15 of the Securities Act, against all losses, claims, damages,
liabilities (or proceedings in respect thereof) and expenses (under the
Securities Act or common law or otherwise), joint or several, caused by
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any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus (and as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus or caused by any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities
(or proceedings in respect thereof) or expenses are caused by any
untrue statement or alleged untrue statement contained in or by any
omission or alleged omission from information furnished in writing to
the Company by such holder expressly for use therein. If the offering
pursuant to any registration statement provided for under this Warrant
is made through underwriters, no action or failure to act on the part
of such underwriters (whether or not any such underwriter is an
Affiliate of any holder of Registrable Securities) shall affect the
obligations of the Company to indemnify any holder of Registrable
Securities or any other Person pursuant to the preceding sentence. If
the offering pursuant to any registration statement provided for under
this Agreement is made through underwriters, the Company agrees to
enter into an underwriting agreement in customary form with such
underwriters and the Company agrees to indemnify such underwriters,
their officers and directors, if any, and each Person, if any, who
controls such underwriters within the meaning of Section 15 of the
Securities Act to the same extent as hereinbefore provided with respect
to the indemnification of the holders of Registrable Securities;
provided that the Company shall not be required to indemnify any such
underwriter, or any officer or director of such underwriter or any
Person who controls such underwriter within the meaning of Section 15
of the Securities Act, to the extent that the loss, claim, damage,
liability (or proceedings in respect thereof) or expense for which
indemnification is claimed results from such underwriter's failure to
send or give a copy of the amended or supplemented final prospectus to
the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of
the sale of Registrable Securities to such Person if such statement or
omission was corrected in such amended or supplemented final prospectus
prior to such written confirmation and the underwriter was given notice
of the availability of such amended or supplemented final prospectus.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder
will indemnify, to the extent permitted by applicable law, the Company,
its officers and directors and each Person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act, against
any losses, claims, damages, liabilities (or proceedings in respect
thereof) and expenses resulting from any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission
of a material fact required to be stated in the registration statement
or prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement is
contained in or such omission is from information so furnished in
writing by such holder expressly for use therein, provided that such
holder's obligations hereunder shall be limited to an amount equal to
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the proceeds to such holder of the Registrable Securities sold pursuant
to such registration statement.
(c) Any Person entitled to indemnification under the provisions of
this Section 9.6 shall (x) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification (but the
failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 9.6, except to the extent that
the indemnifying party is actually prejudiced by such failure) and (y)
unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in
respect of such claim, permit such indemnifying party to assume the
defense of such claim, with counsel reasonably satisfactory to the
indemnified party; and if such defense is so assumed, such indemnifying
party shall not enter into any settlement without the consent of the
indemnified party if such settlement attributes liability to the
indemnified party and such indemnifying party shall not be subject to
any liability for any settlement made without its consent (which shall
not be unreasonably withheld); and any underwriting agreement entered
into with respect to any registration statement provided for under this
Agreement shall so provide. In the event an indemnifying party shall
not be entitled, or elects not, to assume the defense of a claim, such
indemnifying party shall not be obligated to pay the fees and expenses
of more than one counsel or firm of counsel for all parties indemnified
by such indemnifying party in respect of such claim, unless in the
reasonable judgment of any such indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties in respect to such claim. Such indemnity shall
remain in full force and effect regardless of any investigation made by
or on behalf of a participating holder of Registrable Securities, its
officers, directors or any Person, if any, who controls such holder as
aforesaid, and shall survive the transfer of such securities by such
holder.
(d) If the indemnification provided for in this Section 9.6 shall
for any reason be held by a court to be unavailable to an indemnified
party under Section 9.6(a) or (b) hereof in respect of any loss, claim,
damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 9.6(a) or (b), the indemnified
party and the indemnifying party under Section 9.6(a) or (b) shall
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection
with investigating the same), (x) in such proportion as is appropriate
to reflect the relative fault of the Company and the prospective
sellers of Registrable Securities covered by the registration statement
which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action or proceeding in respect thereof, as well as any other relevant
equitable considerations or (y) if the allocation provided by clause
(x) above is not permitted by applicable law, in such proportion as
shall be appropriate to reflect the relative benefits received by the
Company and such prospective sellers from the offering of the
securities covered by such registration statement, provided, that for
purposes of clauses (x) or (y), the relative benefits received by the
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prospective sellers shall be deemed not to exceed the amount of
proceeds received by such prospective sellers and no holder of
Registrable Securities shall be required to contribute any amount in
excess of the amount such holder could have been required to pay to an
indemnified party if the indemnity under subsection (a) of this Section
9.6 was available. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Such sellers' obligations to contribute
as provided in this Section 9.6(d) are several in proportion to the
relative value of their respective Registrable Securities covered by
such registration statement and not joint. In addition, no Person shall
be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's
consent, which consent shall not be unreasonably withheld.
(e) Indemnification and contribution similar to that specified in
the preceding subdivisions of this Section 9.6 (with appropriate
modifications) shall be given by the Company and each seller of
Registrable Securities with respect to any required registration or
other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) An indemnifying party shall make payments of all amounts
required to be made pursuant to the foregoing provisions of this
Section 9.6 to or for the account of the indemnified party from time to
time promptly upon receipt of bills or invoices relating thereto or
when otherwise due or payable.
9.7. Adjustments Affecting Registrable Securities. The Company
will not effect or permit to occur any combination or subdivision of shares
which would materially and adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in any
registration of its securities contemplated by this Section 9 or the
marketability of such Registrable Securities under any such registration.
9.8. Other Registration of Common Stock. If any shares of the
Common Stock required to be reserved for purposes of issuance upon exercise of
this Warrant in connection with their sale in a registration pursuant to Section
9.1 require registration with or approval of any governmental authority under
any federal or state law (other than the Securities Act) before such shares may
be issued upon such exercise, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered or approved, as the case may be.
9.9. Nominees for Beneficial Owners. For purposes of this Section
9, in the event that any Registrable Securities are held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its election, be
treated as the holder of such Registrable Securities for purposes of any request
or other action by any holder or holders of Registrable Securities pursuant to
this Section 9 or any determination of any number or percentage of shares of
Registrable Securities held by any holder or holders of Registrable Securities
contemplated by this Section 9. If the beneficial owner of any Registrable
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Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
9.10. Rule 144 and Rule 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of Rule 144 and Rule 144A under the Securities Act, as such
rules may be amended from time to time, or any similar rules or regulations
hereafter adopted by the Commission, including, without limitation, filing on a
timely basis all reports required to be filed pursuant to the Exchange Act.
10. Availability of Information. The Company will cooperate with each
holder of any Restricted Securities in supplying such information as may be
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities. The Company will furnish to the holder of this Warrant,
promptly upon their becoming available, copies of all financial statements,
reports, notices and proxy statements sent or made available generally by the
Company to its stockholders, and copies of all regular and periodic reports and
all registration statements and prospectuses filed by the Company with any
securities exchange or with the Commission.
11. Reservation of Stock, Etc. The Company will at all times reserve
and keep available, solely for issuance and delivery upon exercise of this
Warrant, the number of shares of Common Stock (or Other Securities) from time to
time issuable upon exercise of this Warrant at the time outstanding. All shares
of Common Stock (or Other Securities) shall be duly authorized and, when issued
upon such exercise, shall be validly issued and, in the case of shares, fully
paid and nonassessable, with no liability on the part of the holders thereof.
12. Listing on Securities Exchange. The Company will (a) list on each
national securities exchange on which any Common Stock may at any time be
listed, subject to official notice of issuance upon exercise of this Warrant,
and will maintain such listing of, all shares of Common Stock from time to time
issuable upon exercise of this Warrant or (b) secure and maintain designation of
all shares of Common Stock from time to time issuable upon exercise of this
Warrant as a NASDAQ "national market system security" within the meaning of Rule
llAa2-1 of the Commission or, failing that, secure NASDAQ authorization for such
shares of Common Stock.
13. Ownership, Transfer and Substitution of Warrants.
13.1. Ownership of Warrants. The Company may treat the person in
whose name this Warrant is registered on the register kept at the principal
office of the Company as the owner and holder thereof for all purposes,
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notwithstanding any notice to the contrary, except that, if and when any Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer thereof as the owner of such Warrant for all purposes,
notwithstanding any notice to the contrary. Subject to Section 8, a Warrant, if
properly assigned, may be exercised by a new holder without first having a new
Warrant issued.
13.2. Transfer and Exchange of Warrants. Upon the surrender of any
Warrant, properly endorsed, for registration of transfer or for exchange at the
principal office of the Company, the Company at its expense will (subject to
compliance with Section 8, if applicable) execute and deliver to or upon the
order of the holder thereof a new Warrant or Warrants of like tenor, in
denominations of at least 1,000 shares, in the name of such holder or as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock called for on the face or faces of the Warrant or
Warrants so surrendered.
13.3. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant
held by a Person other than the Purchaser or any institutional investor, upon
delivery of indemnity reasonably satisfactory to the Company in form and amount
or, in the case of any such mutilation, upon surrender of such Warrant for
cancellation at the principal office of the Company, the Company at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
14. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
Acquiring Person: the continuing or surviving corporation or other
entity of a consolidation or merger with the Company (if other than the
Company), the transferee of substantially all of the properties and assets of
the Company, the corporation or other entity consolidating with or merging into
the Company in a consolidation or merger in connection with which the Common
Stock is changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or, in the case of a capital
reorganization or reclassification, the Company.
Acquisition Price: as applied to the Common Stock, with respect to
any transaction to which Section 3 applies, (a) the price per share equal to the
greater of the following, determined in each case as of the date immediately
preceding the date of consummation of such transaction: (x) the Market Price of
the Common Stock and (y) the highest amount of cash plus the Fair Value of the
highest amount of securities or other property which the holder of this Warrant
would have been entitled as a shareholder to receive upon such consummation if
such holder had exercised this Warrant immediately prior thereto, or (b) if a
purchase, tender or an exchange offer is made by the Acquiring Person (or by any
of its affiliates) to the holders of the Common Stock and such offer is accepted
by the holders of more than 50% of the outstanding shares of Common Stock, the
greater of (i) the price determined in accordance with the foregoing subdivision
(a), and (ii) the price per share equal to the greater of the following,
determined in each case as of the date immediately preceding the acceptance of
such offer by the holders of more than 50% of the outstanding shares of Common
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Stock: (A) the Market Price of the Common Stock and (B) the highest amount of
cash plus the Fair Value of the highest amount of securities or other property
which the holder of this Warrant would be entitled as a shareholder to receive
pursuant to such offer if such holder had exercised this Warrant immediately
prior to the expiration of such offer and accepted the same.
Additional Shares of Common Stock: all shares (including treasury
shares) of Common Stock issued or sold (or, pursuant to Section 2.3 or 2.4,
deemed to be issued) by the Company after the Initial Date, whether or not
subsequently reacquired or retired by the Company, other than (a) shares of
Common Stock issued upon the exercise of any Warrants and (b) not more than
3,010,000 shares of Common Stock issued upon the exercise of stock options
granted to directors, officers and other employees of the Company pursuant to
the DTN Stock Option Plan of 1989, as amended, and the DTN Non-Employee Director
Option Plan, as amended, and (c) 75,000 shares of Common Stock issuable upon the
exercise of existing warrants.
Base Price: on any date specified herein, the lesser of (a) the
Current Market Price or (b) the Warrant Price.
Business Day: any day other than a Saturday or a Sunday or a day
on which commercial banking institutions in the City of New York are authorized
by law to be closed, provided that, in determining the period within which
certificates or Warrants are to be issued and delivered pursuant to Section 1.3
at a time when shares of Common Stock (or Other Securities) are listed or
admitted to trading on any national securities exchange or in the
over-the-counter market and in determining the Market Price of any securities
listed or admitted to trading on any national securities exchange or in the
over-the-counter market, "Business Day" shall mean any day when the principal
exchange in which securities are then listed or admitted to trading is open for
trading or, if such securities are traded in the over-the-counter market in the
United States, such system is open for trading, and provided, further, that any
reference to "days" (unless Business Days are specified) shall mean calendar
days.
Commission: the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act or the Exchange Act,
whichever is the relevant statute for the particular purpose.
Common Stock: the Company's common stock, par value $.001 per
share, as constituted on the date hereof, any stock into which such common stock
shall have been changed or any stock resulting from any reclassification of such
common stock, and all other stock of any class or classes (however designated)
of the Company the holders of which have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference.
Company: Data Transmission Network Corporation, a Delaware
corporation.
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Convertible Securities: any evidences of indebtedness, shares of
stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
Current Market Price: on any date specified herein, (a) with
respect to Common Stock or to Voting Common Stock (or equivalent equity
interests) of an Acquiring Person or its Parent, (x) the average daily Market
Price during the period of the most recent 20 consecutive Business Days ending
on such date, or (y) if shares of Common Stock or such Voting Common Stock (or
equivalent equity interests), as the case may be, are not then listed or
admitted to trading on any national securities exchange and if the closing bid
and asked prices thereof are not then quoted or published in the
over-the-counter market, the Market Price on such date; and (b) with respect to
any other securities, the Market Price on such date.
Exchange Act: the Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time of determination.
Fair Value: with respect to any securities or other property, the
fair value thereof as of a date which is within 15 days of the date as of which
the determination is to be made (a) determined by an agreement between the
Company and the Requisite Holders or (b) if the Company and the Requisite
Holders fail to agree, determined jointly by an independent investment banking
firm retained by the Company and by an independent investment banking firm
retained by the Requisite Holders, either of which firms may be an independent
investment banking firm regularly retained by the Company or any such holder or
(c) if the Company or such holders shall fail so to retain an independent
investment banking firm within five Business Days of the retention of such firm
by such holders or the Company, as the case may be, determined solely by the
firm so retained or (d) if the firms so retained by the Company and by such
holders shall be unable to . reach a joint determination within 15 Business Days
of the retention of the last firm so retained, determined by another independent
investment banking firm which is not a regular investment banking firm of the
Company or any such holder chosen by the first two such firms. Each of the
Company and the holders of the Warrants shall be responsible for the fees and
expenses of the investment banking firm retained by them under the foregoing
clause (b) and shall share equally the fees and expenses of any investment
banking firm retained under the foregoing clause (d).
Initial Date: the meaning specified in Section 2.2.
Market Price: on any date specified herein, (a) with respect to
Common Stock or to Voting Common Stock (or equivalent equity interests) of an
Acquiring Person or its Parent, the amount per share equal to (x) the last sale
price of shares of such security, regular way, on such date or, if no such sale
takes place on such date, the average of the closing bid and asked prices
thereof on such date, in each case as officially reported on the principal
national securities exchange on which the same are then listed or admitted to
trading, or (y) if no shares of such security are then listed or admitted to
trading on any national securities exchange but such security is designated as a
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national market system security by the NASD, the last trading price of such
security on such date, or if such security is not so designated, the average of
the reported closing bid and asked prices thereof on such date as shown by the
NASDAQ system or, if no shares thereof are then quoted in such system, as
published by the National Quotation Bureau, Incorporated or any successor
organization, and in either case as reported by any member firm of the New York
Stock Exchange selected by the Company, or (z) if no shares of such security are
then listed or admitted to trading on any national exchange or designated as a
national market system security and if no closing bid and asked prices thereof
are then so quoted or published in the over-the-counter market, the higher of
(x) the book value thereof as determined by agreement between the Company and
the Requisite Holders, or if the Company and the Requisite Holders fail to
agree, by any firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company, as of the last day of any
month ending within 60 days preceding the date as of which the determination is
to be made and (y) the fair value thereof determined in good faith by the Board
of Directors of the Company thereof as of a date which is within 15 days of the
date as of which the determination is to be made; and (b) with respect to any
other securities, the fair value thereof determined in good faith by the Board
of Directors of the Company as of a date which is within 15 days of the date as
of which the determination is to be made.
Maximum Number of Shares: the meaning specified in Section 9.1(b).
Merger Agreement: the meaning specified in the opening paragraphs
of this Warrant.
NASD: the National Association of Securities Dealers.
NASDAO: the Automated Quotation System of the NASD.
Options: rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
Other Securities: any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
holder of this Warrant at any time shall be entitled to receive, or shall have
received, upon the exercise of this Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 3 or otherwise.
Parent: as to any Acquiring Person, any corporation or other
Person which (a) controls the Acquiring Person directly or indirectly through
one or more intermediaries, (b) is required to include the Acquiring Person in
its consolidated financial statements under generally accepted accounting
principles and (c) is not itself included in the consolidated financial
statements of any other Person (other than its consolidated subsidiaries).
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Person: an individual, a partnership, limited liability company,
an association, a joint venture, a corporation, a business, a trust, an
unincorporated organization or a government or any department, agency or
subdivision thereof.
Public Offering: any offering of Common Stock to the public
pursuant to an effective registration statement under the Securities Act.
Registrable Securities: (a) this Warrant, (b) any shares of Common
Stock or Other Securities issued or issuable upon exercise of this Warrant and
(c) any securities issued or issuable with respect to any Common Stock or Other
Securities referred to in subdivision (b) by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (x) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (y) they shall have been sold as permitted under Rule 144 (or any
successor provision) under the Securities Act, or (z) they shall have ceased to
be outstanding.
Registration Expenses: all expenses incident to the Company's
performance of or compliance with Section 9, including, without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance (provided that "Registration Expenses" will
not include any "cold comfort" letter requested solely by the holders of
Registrable Securities in connection with any registration if the Company shall
not have elected or been required by the underwriters with respect to such
registration to cause such a letter to be delivered), the reasonable fees and
disbursements of a single counsel and single firm of accountants retained by the
holders of the Registrable Securities being registered, premiums and other costs
of policies of insurance against liabilities arising out of the public offering
of the Registrable Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but excluding
underwriting discounts and commissions and transfer taxes, if any, provided
that, in any case where Registration Expenses are not to be borne by the
Company, such expenses shall not include salaries of Company personnel or
general overhead expenses of the Company, auditing fees, premiums or other
expenses relating to liability insurance required by underwriters of the
Company, or other expenses for the preparation of financial statements or other
data normally prepared by the Company in the ordinary course of its business or
which the Company would have incurred in any event.
Requesting Holder: the meaning specified in Section 9.5.
Requisite Holders: the holders of more than 50% of the Registrable
Securities issued and outstanding at such time.
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Restricted Securities: (a) any Warrants bearing the applicable
legend set forth in Section 8.1, (b) any shares of Common Stock (or Other
Securities) which have been issued upon the exercise of Warrants and which are
evidenced by a certificate or certificates bearing the applicable legend set
forth in such Section 8.1, and (c) unless the context otherwise requires, any
shares of Common Stock (or Other Securities) which are at the time issuable upon
the exercise of Warrants and which, when so issued, will be evidenced by a
certificate or certificates bearing the applicable legend set forth in Section
8.1.
Securities Act: the Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time of determination.
Subsidiary: any corporation, association or other business entity
a majority (by number of votes) of the Voting Common Stock of which is at the
time owned by the Company or by one or more Subsidiaries or by the Company and
one or more Subsidiaries.
Transfer: unless the context otherwise requires, any sale,
assignment, pledge or other disposition of any security, or of any interest
therein, which could constitute a "sale" as that term is defined in Section 2(3)
of the Securities Act.
Voting Common Stock: with respect to any corporation, association
or other business entity, stock of any class or classes (or equivalent interest)
, if the holders of the stock of such class or classes (or equivalent interests)
are ordinarily, in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or persons performing similar
functions) of such corporation, association or business entity, even if the
right so to vote has been suspended by the happening of such a contingency.
Warrant Price: the meaning specified in Section 2.1.
Warrants: the Common Stock Purchase Warrants issued by the Company
under the Merger Agreement.
15. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
16. No Rights or Liabilities as Stockholder. Nothing contained in this
Warrant shall be construed as conferring upon the holder hereof any voting or
other rights as a stockholder of the Company or as imposing any liabilities on
such holder to purchase any securities or as a stockholder of the Company,
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whether such liabilities are asserted by the Company or by creditors or
stockholders of the Company or otherwise.
17. Notices. All notices and other communications under this Warrant
shall be in writing and shall be mailed by registered or certified mail, return
receipt requested, addressed (a) if to the holder of this Warrant or any holder
of any Common Stock (or Other Securities), at the registered address of such
holder as set forth in the register kept at the principal office of the Company,
or (b) if to the Company, to the attention of its Chief Financial Officer at its
principal office, provided that the exercise of any Warrant shall be effected in
the manner provided in Section 1.
18. Expiration; Notice. The Company will give the holder of this
Warrant no less than 45 days' nor more than 90 days' notice of the expiration of
the right to exercise this Warrant. The right to exercise this Warrant shall
expire at 3 P.M., New York City time, December 11, 2005. The registration rights
provided in Section 9 shall expire at 3 P.M., New York City time, December 11,
2005 with respect to any shares of Common Stock issued previously to such time
upon the exercise hereof.
19. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. The agreements of the Company contained in this Warrant other than
those applicable solely to the Warrants and the holders thereof shall inure to
the benefit of and be enforceable by any holder or holders at the time of any
Common Stock (or Other Securities) issued upon the exercise of Warrants, whether
so expressed or not. This Warrant shall be construed and enforced in accordance
with and governed by the laws of the State of New York. The section headings in
this Warrant are for purposes of convenience only and shall not constitute a
part hereof.
DATA TRANSMISSION NETWORK CORPORATION
By: ________________________________
Its: _______________________________
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FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To: _______________________
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, ____________
shares of Common Stock of Data Transmission Network Corporation, a Delaware
corporation, and herewith makes payment of $____________ therefor, and requests
that the certificates for such shares be issued in the name of
____________________________, and delivered to __________________, whose address
is ____________________________.
Dated: ___________________.
------------------------------------
(Signature must conform in all respects
to the name of holder as specified on the
face of this Warrant)
[insert address]
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FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto ____________________________
the right represented by such Warrant to purchase shares of Common Stock of Data
Transmission Network Corporation, a Delaware corporation, to which such Warrant
relates, and appoints ______________________ Attorney to make such transfer on
the books of _________________ maintained for such purpose, with full power of
substitution in the premises.
Dated: _________________.
------------------------------------
(Signature must conform in all respects
to the name of holder as specified on the
face of this Warrant)
[insert address]
Signed in the presence of:
----------------------------
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