EXECUTION COPY
WARRANT AGREEMENT
Dated April 13, 1998
by and between
FIRSTWORLD COMMUNICATIONS, INC.
and
THE BANK OF NEW YORK
TABLE OF CONTENTS
Page
Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3. Issuance of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4. Execution of Warrant Certificates. . . . . . . . . . . . . . . . . . . . . . . 4
Section 5. Separation of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 6. Registration and Countersignature. . . . . . . . . . . . . . . . . . . . . . . 4
Section 7. Registration of Transfers and Exchanges. . . . . . . . . . . . . . . . . . . . 5
Section 8. Terms of Warrants: Exercise of Warrants. . . . . . . . . . . . . . . . . . . .12
Section 9. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Section 10. Mutilated or Missing Warrant Certificates . . . . . . . . . . . . . . . . . .14
Section 11. Reservation of Warrant Shares . . . . . . . . . . . . . . . . . . . . . . . .14
Section 12. Obtaining Stock Exchange Listings . . . . . . . . . . . . . . . . . . . . . .15
Section 13. Adjustment of Exercise Price and Number of Warrant Shares Issuable. . . . . .15
(a) Stock Splits, Combinations, etc. . . . . . . . . . . . . . . . . . . . . . . . . .15
(b) Reclassification, Combinations, Mergers, etc.. . . . . . . . . . . . . . . . . . .15
(c) Issuance of Options or Convertible Securities. . . . . . . . . . . . . . . . . . .16
(d) Dividends and Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
(e) Issuance of Common Stock Below Current Market Price. . . . . . . . . . . . . . . .18
(f) Current Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
(g) Certain Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
(h) Consideration Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
(i) Deferral of Certain Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . .19
(j) Changes in Options and Convertible Securities. . . . . . . . . . . . . . . . . . .20
(k) Expiration of Options and Convertible Securities . . . . . . . . . . . . . . . . .20
(l) Other Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(m) No Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 14. Statement on Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 15. Fractional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
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Section 16. Notices to Warrant Holders. . . . . . . . . . . . . . . . . . . . . . . . . .22
Section 17. Merger, Consolidation or Change of Name of Warrant Agent. . . . . . . . . . .23
Section 18. Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 19. Resignation and Removal of Warrant Agent; Appointment of Successor. . . . . .25
Section 20. Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 21. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 22. Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 23. Notices to Company and Warrant Agent. . . . . . . . . . . . . . . . . . . . .27
Section 24. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 25. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 26. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 27. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 28. Benefits of This Agreement. . . . . . . . . . . . . . . . . . . . . . . . . .29
Section 29. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
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WARRANT AGREEMENT dated April 13, 1998 (this "Agreement") between
FIRSTWORLD COMMUNICATIONS, INC., a California corporation (the "Company"), and
THE BANK OF NEW YORK, a New York banking corporation, as warrant agent (the
"Warrant Agent").
WHEREAS, the Company proposes to issue common stock warrants, as
hereinafter described (the "Warrants"), initially exercisable (on the
Exercisability Date) to purchase an aggregate of 3,713,094 shares of Common
Stock (as defined below), in connection with an offering of units (the
"Units"), each Unit consisting of $1,000 principal amount at maturity of the
Company's 13% Senior Discount Notes due 2008 (the "Notes") and one Warrant, each
such Warrant entitling the holder thereof to purchase initially 7.9002 shares of
Common Stock.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
exercise of the Warrant Certificates (as defined below) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company, the Warrant Agent and the Holders (as
defined below), the parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER,
that beneficial ownership of 10% or more of the Voting Stock (as defined in the
Indenture) of a Person shall be deemed to be control.
"Cheap Stock Issued" has the meaning assigned to it in Section 13(e).
"Commission" means the Securities and Exchange Commission or any
successor.
"Common Stock" means the Series B common stock, no par value, of the
Company.
"Company" means FirstWorld Communications, Inc., a California
corporation, and its successors and assigns.
"Definitive Warrant" means a certificated Warrant registered in the
name of the Holder thereof and issued in accordance with Section 3 and
substantially in the form of Exhibit A.
"Depositary" means, with respect to the Global Warrants, the Person
specified in Section 3 as the depositary for the Global Warrants, and any and
all successors thereto appointed as depositary hereunder.
"Excluded Securities" means shares of Common Stock or other securities
convertible or exchangeable into Common Stock issued (i) pursuant to employee
stock ownership, stock option or other benefit or incentive plans, (ii) in
connection with mergers and acquisitions with non-affiliated third parties or
(iii) as compensation to directors (in the ordinary course) in lieu of cash.
"Exercisability Date" means any time on or after the earliest to occur
of (i) May 1, 1999, (ii) an initial Public Equity Offering of the Company and
(iii) in the event a Change of Control (as defined in the Indenture) occurs, the
date the Company mails notice thereof to holders of Notes and to the Holders.
"Exercise Price" means the purchase price per share of Common Stock to
be paid upon the exercise of each Warrant in accordance with the terms hereof,
which price shall initially be $.01 per share, subject to adjustment from time
to time pursuant to Section 13 hereof.
"Expiration Date" means April 15, 2008.
"Global Warrant" means a certificated Warrant in global form
registered in the name of the Depositary and issued in accordance with Section 3
and substantially in the form of Exhibit A.
"Holder" means a registered holder of Registrable Securities.
"Indenture" means the indenture, dated as of April 13, 1998, between
the Company and The Bank of New York, as trustee.
"Initial Purchasers" means Bear, Xxxxxxx & Co. Inc., ING Baring (U.S.)
Securities, Inc., X.X. Xxxxxx Securities Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated.
"Officer's Certificate" has the meaning assigned thereto in the
Indenture.
"Ownership Ratio" has the meaning assigned to it in Section 13(e).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof.
"Public Equity Offering" means an underwritten offering of Common
Stock pursuant to a registration statement that has been declared effective by
the Commission pursuant to the Securities Act (other than a registration
statement on Form S-8 or otherwise relating to equity securities issuable under
any employee benefit plan of the Company).
"QIB" has the meaning assigned to it in Exhibit C attached hereto.
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"Registrable Securities" means the Warrant Shares and any other
securities issued or issuable with respect to the Warrants or the Warrant Shares
by way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise until such date as such security (i) is effectively registered under
the Securities Act and disposed of in accordance with a registration statement
or (ii) is distributed to the public pursuant to Rule 144 under the Securities
Act.
"Registration Rights Agreement" means the registration rights
agreement relating to notes issued pursuant to the Indenture, dated April 13,
1998, by and among the Company and the Initial Purchasers, as such agreement may
be amended, modified or supplemented from time to time.
"Resale Restriction Termination Date" has the meaning assigned to it
in Section 7.
"Securities Act" means the Securities Act of 1933, as amended.
"Separation Date" means the earlier of (i) 90 days after the issuance
of the Units, (ii) such date as the Initial Purchasers may, in their discretion,
deem appropriate, (iii) in the event a Change of Control (as defined in the
Indenture) occurs, the date the Company mails notice thereof to holders of
Units, (iv) the date on which the Registered Exchange Offer (as defined in the
Registration Rights Agreement) is consummated and (v) the date on which the
Shelf Registration Statement (as defined in the Registration Rights Agreement)
is declared effective. On the Separation Date, the Notes and the Warrants will
be automatically separated.
"Transfer Agent" has the meaning assigned to it in Section 11 hereof.
"Trustee" means the trustee under the Indenture.
"Warrant Agent" means The Bank of New York or the successor or
successors of such Warrant Agent appointed in accordance with the terms hereof.
"Warrant Certificates" has the meaning set forth in Section 3 hereof.
"Warrant Registration Rights Agreement" means the registration rights
agreement, dated April 13, 1998, by and among the Company and the Initial
Purchasers relating to the Warrants and the Warrant Shares.
"Warrant Shares" means the shares of Common Stock issued or issuable
upon the exercise of the Warrants.
Section 2. APPOINTMENT OF WARRANT AGENT. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 3. ISSUANCE OF WARRANTS. Warrant Certificates
representing Warrants offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more
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permanent Global Warrants (the "Global Warrants"), substantially in the form of
Exhibit A hereto (including footnote 1 thereto). The Warrant Certificates
evidencing the Global Warrants to be delivered pursuant to this Agreement shall
be substantially in the form set forth in Exhibit A attached hereto. Global
Warrants shall represent such of the outstanding Warrants as shall be specified
therein and each shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of a Global Warrant to
reflect the amount of any increase or decrease in the amount of outstanding
Warrants represented thereby shall be made by the Warrant Agent and the
Depositary in accordance with instructions given by the holder thereof. The
Depository Trust Company shall act as the Depositary with respect to the Global
Warrants until a successor shall be appointed by the Company. Upon written
request, a holder of a beneficial interest in a Global Warrant may receive from
the Warrant Agent Definitive Warrants as set forth in Section 7 hereof.
Section 4. EXECUTION OF WARRANT CERTIFICATES. Certificates (the
"Warrant Certificates") evidencing Global Warrants or Definitive Warrants to be
delivered pursuant hereto shall be signed on behalf of the Company by its
Chairman of the Board or its President or a Vice President and by its Secretary
or an Assistant Secretary. Each such signature upon the Warrant Certificates
may be in the form of a facsimile signature of the present or any future
Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be countersigned and delivered or
disposed of such person shall have ceased to hold such office.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Agreement any
such person was not such officer.
Warrant Certificates shall be dated the date of countersignature.
Section 5. SEPARATION OF WARRANTS. The Notes and Warrants shall
not be separately transferable prior to the Separation Date and shall be
automatically separated on the Separation Date. The Company shall give the
Warrant Agent prompt written notice of the Separation Date.
Section 6. REGISTRATION AND COUNTERSIGNATURE. The Warrant Agent,
on behalf of the Company, shall number and register the Warrant Certificates in
a register as they are issued by the Company.
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Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board, the
President, a Vice President, the Treasurer or the Controller of the Company and
at the expense of the Company, initially countersign, issue and deliver Warrants
entitling the Holders thereof to purchase not more than the aggregate number of
Warrant Shares referred to above in the first recital hereof and shall
countersign and deliver Warrants as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the Holder(s) of
the Warrant Certificates as the absolute owner(s) thereof (notwithstanding any
notation of ownership or other writing thereon made by anyone), for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
Section 7. REGISTRATION OF TRANSFERS AND EXCHANGES. (a) Transfer
and Exchange of Definitive Warrants. When Definitive Warrants are presented to
the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Warrant Agreement as set forth in this Section 7
for such transactions are met; provided that the Definitive Warrants presented
or surrendered for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Company
and the Warrant Agent, duly executed by the holder thereof
or by his attorney, duly authorized in writing; and
(y) in the case of Warrants the offer and sale of which have not
been registered under the Securities Act and are presented
for transfer or exchange prior to (x) the date which is two
years after the later of the date of original issue and the
last date on which the Company or any Affiliate of the
Company was the owner of such Warrant, or any predecessor
thereto and (y) such later date, if any, as may be required
by any subsequent change in applicable law (the "Resale
Restriction Termination Date"), such Warrants shall be
accompanied by the following additional information and
documents, as applicable:
(A) if such Warrant is being delivered to the Warrant Agent
by a holder for registration in the name of such
holder, without
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transfer, a certification from such holder to that
effect (in substantially the form of Exhibit B hereto);
or
(B) if such Warrant is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Regulation
S under the Securities Act, a certification to that
effect (in substantially the form of Exhibit B hereto);
or
(C) if such Warrant is being transferred to an
institutional "accredited investor" within the meaning
of subparagraphs (a)(l), (a)(2), (a)(3) or (a)(7) of
Rule 501 under the Securities Act, delivery of a
Certificate of Transfer in the form of Exhibit C hereto
and an opinion of counsel and/or other information
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(D) if such Warrant is being transferred in reliance on
another exemption from the registration requirements of
the Securities Act, a certification to that effect (in
substantially the form of Exhibit B hereto) and an
opinion of counsel reasonably acceptable to the Company
to the effect that such transfer is in compliance with
the Securities Act.
(b) RESTRICTIONS ON TRANSFER AND EXCHANGE OF A DEFINITIVE WARRANT FOR
A BENEFICIAL INTEREST IN A GLOBAL WARRANT. A Definitive Warrant may not be
transferred or exchanged for a beneficial interest in a Global Warrant except
upon satisfaction of the requirements set forth below. Upon receipt by the
Warrant Agent of a Definitive Warrant, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Warrant Agent,
together with:
(A) certification, substantially in the form of Exhibit B
hereto, that such Definitive Warrant is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under
the Securities Act; and
(B) written instructions directing the Warrant Agent to make, or
to direct the Depositary to make, an endorsement on the
Global Warrant to reflect an increase in the aggregate
amount of the Warrants represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant
and cause, or direct the Depositary to cause, in accordance
with the standing instructions and procedures existing
between the Depositary and the Warrant
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Agent, the number of Warrants represented by the Global
Warrant to be increased accordingly.
(c) TRANSFER AND EXCHANGE OF GLOBAL WARRANTS. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Section 7 and the procedures of
the Depositary therefor.
(d) TRANSFER OR EXCHANGE OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT
FOR A DEFINITIVE WARRANT.
(i) Any person having a beneficial interest in a Global Warrant
may upon request transfer or exchange of such beneficial
interest for a Definitive Warrant. Upon receipt by the
Warrant Agent of written instructions or such other form of
instructions as is customary for the Depositary on behalf of
any person having a beneficial interest in a Global Warrant
and upon receipt by the Warrant Agent of a written order or
such other form of instructions as is customary for the
Depositary or the person designated by the Depositary as
having such a beneficial interest containing registration
instructions and, in the case of any such transfer or
exchange prior to the Resale Restriction Termination Date,
the following additional information and documents (all of
which may be submitted by facsimile):
(A) if such beneficial interest is being exchanged by the
person designated by the Depositary as being the
beneficial owner, a certification from such person to
that effect (in substantially the form of Exhibit B
hereto); or
(B) if such beneficial interest is being transferred to a
qualified institutional buyer (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an exemption
from registration in accordance with Rule 144 or
Regulation S under the Securities Act, a certification
to that effect from the transferee or transferor (in
substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being transferred to an
institutional "accredited investor" within the meaning
of subparagraphs (a)(l), (a)(2), (a)(3) or (a)(7) of
Rule 501 under the Securities Act, delivery of a
Certificate of Transfer in the form of Exhibit C hereto
and an opinion of counsel and/or other information
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
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(D) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect (in substantially the form of Exhibit B
hereto) and an opinion of counsel reasonably acceptable
to the Company to the effect that such transfer is in
compliance with the Securities Act, then the Warrant
Agent will cause, in accordance with the standing
instructions and procedures existing between the
Depositary and the Warrant Agent, the aggregate amount
of the Global Warrant to be reduced and, following such
reduction, the Company will execute and, upon receipt
of a countersignature order in accordance with Section
6, the Warrant Agent will countersign and deliver to
the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 7
shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions
from a person having a beneficial interest in a Global
Warrant, shall instruct the Warrant Agent in writing. The
Warrant Agent shall deliver such Definitive Warrants to the
persons in whose names such Warrants are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 7), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) COUNTERSIGNATURE OF DEFINITIVE WARRANTS IN ABSENCE OF DEPOSITARY.
If at any time:
(i) the Depositary for the Warrants notifies the Company that
the Depositary is unwilling or unable to continue as
Depositary for the Global Warrant and a successor Depositary
for the Global Warrant is not appointed by the Company
within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of
Definitive Warrants under this Warrant Agreement, then the
Company will execute, and the Warrant Agent, upon receipt of
an officers' certificate signed by two officers of the
Company (one of whom must be the principal executive
officer, principal financial officer or principal
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accounting officer) (an "Officers' Certificate") requesting
the countersignature and delivery of Definitive Warrants,
will countersign and deliver Definitive Warrants, in an
aggregate number equal to the aggregate number of warrants
represented by the Global Warrant, in exchange for such
Global Warrant.
(g) LEGENDS.
(i) Except to the extent permitted by the following paragraph
(ii), each Warrant Certificate evidencing the Global
Warrants and the Definitive Warrants (and all Warrants
issued in exchange therefor or substitution thereof) shall
bear a legend substantially to the following effect:
EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE (AS DEFINED
HEREIN).
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY
ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH
CONSIST OF ONE NOTE, $1,000 PRINCIPAL AMOUNT AT MATURITY,
AND ONE WARRANT INITIALLY ENTITLING THE HOLDER THEREOF TO
PURCHASE 7.9002 SHARES OF SERIES B COMMON STOCK, NO PAR
VALUE, OF THE COMPANY. THE NOTES AND WARRANTS WILL BE
AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF (i) 90
DAYS FROM THE DATE OF ISSUANCE, (ii) SUCH DATE AS THE
INITIAL PURCHASERS MAY, IN THEIR DISCRETION, DEEM
APPROPRIATE, (iii) IN THE EVENT OF A CHANGE OF CONTROL (AS
DEFINED IN THE INDENTURE), THE DATE THE COMPANY MAILS NOTICE
THEREOF TO HOLDERS OF NOTES, (iv) THE DATE ON WHICH THE
EXCHANGE OFFER (AS DEFINED IN THE INDENTURE) IS CONSUMMATED
AND (v) THE DATE ON WHICH THE SHELF REGISTRATION STATEMENT
(AS DEFINED IN THE INDENTURE) IS DECLARED EFFECTIVE (THE
EARLIEST OF SUCH DATES, THE "SEPARATION DATE"). THE
WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED OR SEPARATED FROM, BUT MAY BE TRANSFERRED OR
EXCHANGED ONLY TOGETHER, WITH THE NOTES UNTIL THE SEPARATION
DATE.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES ACT OF 1933,
AS
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AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR"),
THAT PRIOR TO SUCH TRANSFER, FURNISHED THE WARRANT AGENT A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE
WARRANT AGENT) AND, IF THE COMPANY SO REQUESTS, AN OPINION
OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND, IN THE CASE OF CLAUSE (b), (c), (d) OR (e), BASED UPON
AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO
THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY
10
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.
To the extent a Warrant Certificate evidences a Global Warrant, such
Warrant Certificate shall also bear the legend with respect thereto
substantially in the form set forth on Exhibit A hereto.
(ii) Upon any sale or transfer of a Warrant pursuant to Rule 144
under the Securities Act in accordance with Section 7 hereof
or an effective registration statement under the Securities
Act:
(A) in the case of any Warrant that is a Definitive
Warrant, the Warrant Agent shall permit the holder
thereof to exchange such Warrant for a Definitive
Warrant that does not bear the legends set forth above
and rescind any related restriction on the transfer of
such Warrant; and
(B) any such Warrant represented by a Global Warrant shall
not be subject to the provisions set forth in (i) above
(such sales or transfers being subject only to the
provisions of Section 7 hereof) provided, however, that
with respect to any request for an exchange of a
Warrant that is represented by a Global Warrant for a
Definitive Warrant that does not bear the legends set
forth above, which request is made in reliance upon
Rule 144 under the Securities Act, the holder thereof
shall certify in writing to the Warrant Agent that such
request is being made pursuant to Rule 144 under the
Securities Act (such certification to be substantially
in the form of Exhibit B hereto).
(h) CANCELLATION AND/OR ADJUSTMENT OF A GLOBAL WARRANT. At such time
as all beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or canceled, such Global Warrant
shall be returned to or retained and canceled by the Warrant Agent. At any time
prior to such cancellation, if any beneficial interest in a Global Warrant is
exchanged for Definitive Warrants, redeemed, repurchased or canceled, the number
of Warrants represented by such Global Warrant shall be reduced and an
endorsement shall be made on such Global Warrant, by the Warrant Agent to
reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF DEFINITIVE
WARRANTS.
(i) To permit registrations of transfers and exchanges, the
Company shall execute, at the Warrant Agent's request, and
the Warrant Agent shall, upon receipt of a
countersignature order in accordance
11
with Section 6 hereof, countersign Definitive Warrants and
Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon
any registration, transfer or exchange of Definitive
Warrants or Global Warrants shall be the valid obligations
of the Company, entitled to the same benefits under this
Warrant Agreement as the Definitive Warrants or Global
Warrants surrendered upon the registration of transfer or
exchange.
(iii) Prior to due presentment for registration of transfer of
any Warrant, the Warrant Agent and the Company may deem
and treat the person in whose name any Warrant is
registered as the absolute owner of such Warrant, and
neither the Warrant Agent nor the Company shall be
affected by notice to the contrary.
Section 8. TERMS OF WARRANTS: EXERCISE OF WARRANTS. Subject to the
terms of this Agreement, each Warrant holder shall have the right, which may be
exercised commencing at the opening of business on the Exercisability Date and
until 5:00 p.m., New York City time, on the Expiration Date to receive from the
Company the number of fully paid and nonassessable Warrant Shares which the
holder may at the time be entitled to receive on exercise of such Warrants and
payment of the Exercise Price then in effect for such Warrant Shares; PROVIDED,
HOWEVER, that no holder shall be entitled to exercise such holder's Warrants at
any time, unless, at the time of exercise, (i) a registration statement under
the Securities Act relating to the Warrant Shares has been filed with, and
declared effective by, the Commission, and no stop order suspending the
effectiveness of such registration statement has been issued by the Commission
or (ii) the issuance of the Warrant Shares is permitted pursuant to an exemption
from the registration requirements of the Securities Act. Subject to the
provisions of the following paragraph of this Section 8, each Warrant not
exercised prior to 5:00 p.m., New York City time, on the Expiration Date shall
become void and all rights thereunder and all rights in respect thereof under
this Agreement shall cease as of such time. No adjustments as to dividends will
be made upon exercise of the Warrants.
The Company shall give notice not less than 90, and not more than 120,
days prior to the Expiration Date to the holders of all then outstanding
Warrants to the effect that the Warrants will terminate and become void as of
5:00 p.m., New York City time, on the Expiration Date. If the Company fails to
give such notice, the Warrants will not expire until 90 days after the Company
gives such notice; PROVIDED, HOWEVER, in no event will holders be entitled to
any damages or other remedy for the Company's failure to give such notice other
than any such extension.
A Warrant may be exercised upon surrender to the Company at the
principal office of the Warrant Agent of the certificate or certificates
evidencing the Warrant to be exercised with the form of election to purchase on
the reverse thereof duly completed and signed, which signature shall be
guaranteed by a bank or trust company having an office or correspondent in the
United States or a broker or dealer which is a member of a registered
12
securities exchange or the National Association of Securities Dealers, Inc., and
upon payment to the Warrant Agent for the account of the Company of the Exercise
Price in federal funds as adjusted as herein provided for each of the Warrant
Shares in respect of which such Warrant is then exercised. Payment of the
aggregate Exercise Price shall be made by Federal wire transfer to the account
designated by the Company or by certified or official bank check, payable to the
order of the Company. In the alternative, each holder may exercise its right to
receive Warrant Shares on a net basis, such that without the exchange of any
funds, the holder receives that number of Warrant Shares otherwise issuable upon
exercise of its Warrants less that number of Warrant Shares having a fair market
value equal to the aggregate Exercise Price that would otherwise have been paid
by the holder of the Warrant Shares. For purposes of the foregoing sentence,
"fair market value" of the Warrant Shares shall be the current market price of
the Warrant Shares on the date immediately preceding the date of payment of the
Exercise Price as determined by the procedures set forth in Section 13(f).
Subject to the provisions of Section 9 hereof, upon surrender of
Warrants and payment of the Exercise Price as provided above by any holder, the
Warrant Agent shall promptly notify the Company, and the Company shall promptly
transfer to such holder a certificate or certificates for the appropriate number
of Warrant Shares or other securities or property (including any money) to which
such holder is entitled, registered or otherwise placed in, or payable to the
order of, such name or names as may be directed in writing by such holder, and
shall deliver such certificate or certificates representing the Warrant Shares
and any other securities or property (including any money) to such holder or any
other Person or Persons entitled to receive the same, together with an amount in
cash in lieu of any fraction of a share as provided in Section 15. Any such
certificate or certificates representing the Warrant Shares shall be deemed to
have been issued and any Person so designated to be named therein shall be
deemed to have become a holder of record of such Warrant Shares as of the date
of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable commencing on the Exercisability
Date, at the election of the holders thereof, either in full or from time to
time in part, and, in the event that a certificate evidencing Warrants is
exercised in respect of fewer than all of the Warrant Shares issuable on such
exercise at any time prior to the Expiration Date, a new certificate evidencing
the remaining Warrant or Warrants will be issued, and the Warrant Agent is
hereby irrevocably authorized to countersign and to deliver the required new
Warrant Certificate or Certificates pursuant to the provisions of this Section 8
and of Section 4 hereof, and the Company, whenever required by the Warrant
Agent, will supply the Warrant Agent with Warrant Certificates duly executed on
behalf of the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled by the Warrant Agent. Such canceled Warrant Certificates shall be
returned by the Warrant Agent to the Company. The Warrant Agent shall account
promptly to the Company with respect to Warrants exercised and concurrently pay
to the Company all monies received by the Warrant Agent for the purchase of the
Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder by or from the Company available for inspection by
the holders during
13
normal business hours at its office. The Company shall supply the Warrant Agent
from time to time with such numbers of copies of this Agreement as the Warrant
Agent may request.
Section 9. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Warrant
Shares upon the exercise of Warrants or to any separation of the Warrants
from the Notes; PROVIDED, HOWEVER, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer involved
in the issue of any Warrant Certificates or any certificates for Warrant
Shares in a name other than that of the holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
Person or Persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
Section 10. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue and the Warrant Agent shall countersign, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, also
reasonably satisfactory to them. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company or the Warrant Agent may prescribe.
Section 11. RESERVATION OF WARRANT SHARES. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The transfer agent for the Common Stock (the "Transfer Agent") and
every subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep
a copy of this Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the exercise of the rights of purchase represented by the Warrants. The
Warrant Agent is hereby irrevocably authorized to requisition from time to time
from such Transfer Agent the stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement.
The Company will supply such Transfer Agent with duly executed certificates for
such purposes and will provide or otherwise make available any cash which may be
payable as provided in Section 15. The Company will furnish such Transfer Agent
a copy of all notices of adjustments and certificates related thereto,
transmitted to each holder of the Warrants pursuant to Section 16 hereof. Prior
to the initial Public Equity Offering of the Company, the Company may act as
Transfer Agent for the Common Stock.
14
Before taking any action which would cause an adjustment pursuant to
Section 13 hereof that would reduce the Exercise Price below the then par value
(if any) of the Warrant Shares, the Company will take any corporate action which
may, in the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants in accordance with the terms of this Agreement (including
the payment of the Exercise Price) will, upon issue, be duly and validly issued,
fully paid, nonassessable, free of preemptive rights and free from all taxes,
liens, charges and security interests with respect to the issue thereof.
Section 12. OBTAINING STOCK EXCHANGE LISTINGS. The Company will
from time to time take all action which may be necessary so that the Warrant
Shares, immediately upon their issuance upon the exercise of Warrants, will be
listed on the principal securities exchanges and markets (including, without
limitation, the Nasdaq National Market) within the United States of America, if
any, on which other shares of Common Stock are then listed. Upon the listing of
such Warrant Shares, the Company shall promptly notify the Warrant Agent in
writing. The Company will obtain and keep all required permits and records in
connection with such listing.
Section 13. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES ISSUABLE. The number and kind of shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
as follows:
(a) STOCK SPLITS, COMBINATIONS, etc. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (B) subdivide its outstanding shares of Common Stock, (C)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect and the number of
Warrant Shares issuable upon exercise of each Warrant immediately prior to such
action shall be adjusted so that the holder of any Warrant thereafter exercised
shall be entitled to receive the number of shares of capital stock of the
Company which such holder would have owned immediately following such action had
such Warrant been exercised immediately prior thereto. An adjustment made
pursuant to this paragraph shall become effective immediately after the record
date in the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this paragraph, the holder of
any Warrant thereafter exercised shall become entitled to receive shares of two
or more classes of capital stock of the Company, the Board of Directors of the
Company (whose determination shall be conclusive) shall determine the allocation
of the adjusted Exercise Price between or among shares of such classes of
capital stock.
(b) RECLASSIFICATION, COMBINATIONS, MERGERS, ETC. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
other than a change in par value, or
15
from par value to no par value, or from no par value to par value or as a result
of a subdivision or combination), or in case of any consolidation or merger of
the Company with or into another corporation (other than a merger or acquisition
in which the Company is the continuing corporation and which does not result in
any reclassification or change of the then outstanding shares of Common Stock or
other capital stock issuable upon exercise of the Warrants) or in case of any
sale or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, then, as a condition of such
reclassification, change, consolidation, merger, sale or conveyance, the Company
or such a successor or purchasing corporation, as the case may be, shall
forthwith make lawful and adequate provision whereby the holder of each Warrant
then outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance equivalent in value to the number of shares of Common Stock issuable
upon exercise of such Warrant immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance and enter into a supplemental
warrant agreement so providing. Such provisions shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 13. If the issuer of securities
deliverable upon exercise of Warrants under the supplemental warrant agreement
is an Affiliate of the formed, surviving or transferee corporation, that issuer
shall join in the supplemental warrant agreement. The above provisions of this
paragraph (b) shall similarly apply to successive reclassifications and changes
of shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.
(c) ISSUANCE OF OPTIONS OR CONVERTIBLE SECURITIES. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, distribute or otherwise grant in any manner (including by assumption) to
all holders of the Common Stock any rights to subscribe for or to purchase, or
any warrants or options for the purchase of, Common Stock or any stock or
securities convertible into or exchangeable for Common Stock (any such rights,
warrants or options being herein called "Options" and any such convertible or
exchangeable stock or securities being herein called "Convertible Securities")
or any Convertible Securities (other than upon exercise of any Option), whether
or not such Options or the rights to convert or exchange such Convertible
Securities are immediately exercisable, and the price per share at which Common
Stock is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
aggregate amount, if any, received or receivable by the Company as consideration
for the issuance, sale, distribution or granting of such Options or any such
Convertible Security, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all such
Options or upon conversion or exchange of all such Convertible Securities, plus,
in the case of Options to acquire Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the conversion or
exchange of all such Convertible Securities, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of all such Options or upon
the conversion or exchange of all such Convertible Securities or upon the
conversion or exchange of all Convertible Securities issuable upon the exercise
of all such Options) shall be less than the current market price per share of
Common Stock on the record date for the issuance, sale, distribution or granting
of such Options or Convertible Securities (any such event being herein called a
"Distribution"), then, effective upon such Distribution, (I) the Exercise Price
shall
16
be reduced to the price (calculated to the nearest 1/1,000 of one cent)
determined by multiplying the Exercise Price in effect immediately prior to such
Distribution by a fraction, the numerator of which shall be the sum of (i) the
number of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to such Distribution multiplied by the current market price
per share of Common Stock on the date of such Distribution plus (ii) the
consideration, if any, received by the Company upon such Distribution, and the
denominator of which shall be the product of (A) the total number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately after
such Distribution multiplied by (B) the current market price per share of Common
Stock on the record date for such Distribution and (II) the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall be increased to
a number determined by multiplying the number of shares of Common Stock so
purchasable immediately prior to the record date for such Distribution by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (I) of this sentence and
the denominator of which shall be the Exercise Price in effect immediately after
such adjustment. For purposes of the foregoing, the total maximum number of
shares of Common Stock issuable upon exercise of all such Options or upon
conversion or exchange of all such Convertible Securities or upon the conversion
or exchange of the total maximum amount of the Convertible Securities issuable
upon the exercise of all such Options shall be deemed to have been issued as of
the date of such Distribution and thereafter shall be deemed to be outstanding
and the Company shall be deemed to have received as consideration therefor such
price per share, determined as provided above. Except as provided in paragraphs
(j) and (k) below, no additional adjustment of the Exercise Price shall be made
upon the actual exercise of such Options or upon conversion or exchange of the
Convertible Securities or upon the conversion or exchange of the Convertible
Securities issuable upon the exercise of such Options.
(d) DIVIDENDS AND DISTRIBUTIONS. In the event the Company shall, at
any time or from time to time after the date hereof, distribute to all the
holders of Common Stock any dividend or other distribution of cash, evidences of
its indebtedness, other securities or other properties or assets (in each case
other than (i) dividends payable in Common Stock, Options or Convertible
Securities and (ii) any cash dividend that, when added to all other cash
dividends paid in the one year prior to the declaration date of such dividend
(excluding any such other dividend included in a previous adjustment of the
Exercise Price pursuant to this paragraph (d) and excluding any cash dividends
or other cash distributions from current or retained earnings), does not exceed
5% of the current market price per share of Common Stock on such declaration
date) or any options, warrants or other rights to subscribe for or purchase any
of the foregoing, then (A) the Exercise Price shall be decreased to a price
determined by multiplying the Exercise Price then in effect by a fraction, the
numerator of which shall be the current market price per share of Common Stock
on the record date for such distribution less the sum of (X) the cash portion,
if any, of such distribution per share of Common Stock outstanding (exclusive of
any treasury shares) on the record date for such distribution plus (Y) the then
fair market value (as determined in good faith by the Board of Directors of the
Company) per share of Common Stock outstanding (exclusive of any treasury
shares) on the record date for such distribution of that portion, if any, of
such distribution consisting of evidences of indebtedness, other securities,
properties, assets, options, warrants or subscription or purchase rights, and
the denominator of which shall be such current market price per share of Common
Stock and (B) the number of
17
shares of Common Stock purchasable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number of shares of Common
Stock so purchasable immediately prior to the record date for such distribution
by a fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (A) of this sentence and
the denominator of which shall be the Exercise Price in effect immediately after
such adjustment. The adjustments required by this paragraph (d) shall be made
whenever any such distribution occurs retroactive to the record date for the
determination of stockholders entitled to receive such distribution.
(e) ISSUANCE OF COMMON STOCK BELOW CURRENT MARKET PRICE. In case the
Company shall, in a transaction to which Sections 13(a)-(d) are inapplicable,
issue or sell shares of Common Stock, or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, at a price per share of Common Stock
(determined, in the case of such rights, options, warrants or convertible or
exchangeable securities, by dividing (A) the total amount receivable by the
Company in consideration of the issuance and sale of such rights, options,
warrants or convertible or exchangeable securities, plus the total
consideration, if any, payable to the Company upon exercise, conversion or
exchange thereof, by (B) the total number of shares of Common Stock covered by
such rights, options, warrants or convertible or exchangeable securities) that
is lower than the then current market price per share of the Common Stock in
effect immediately prior to such sale or issuance, then the number of shares of
Common Stock thereafter issuable upon the exercise of all Warrants then
outstanding shall be determined by adding the number of shares of Common Stock
theretofore issuable upon exercise of all Warrants then outstanding to the
product of (x) the Cheap Stock Issued, multiplied by (y) the Ownership Ratio.
Such adjustment shall be made successively whenever any such sale or issuance is
made.
For purposes of this Section 13(e)(i) the "Cheap Stock Issued" shall
be the number of additional shares of any Common Stock issued or offered by the
Company for subscription or purchase as described above minus the number of
shares of Common Stock that the aggregate offering price of the total number of
shares of Common Stock so offered would purchase at the then current market
price per share of Common Stock and (ii) the "Ownership Ratio" shall be a
fraction, the numerator of which shall be the number of shares of Common Stock
theretofore issuable upon exercise of all Warrants then outstanding, and the
denominator of which shall be the number of shares of Common Stock then
outstanding (on a fully diluted basis) on the date of issuance or sale of such
Common Stock or such rights, options, warrants or convertible or exchangeable
securities. For purposes of such adjustments, the shares of Common Stock which
the holder of any such rights, options, warrants or convertible or exchangeable
securities shall be entitled to subscribe for or purchase shall be deemed to be
issued and outstanding as of the date of the sale and issuance of the rights,
warrants or convertible or exchangeable securities.
Any adjustment to the number of shares of Common Stock issuable upon
exercise of all Warrants then outstanding made pursuant to this Section 13(e)
shall be allocated among each Warrant then outstanding on a pro rata basis.
18
(f) CURRENT MARKET PRICE For the purpose of any computation of
current market price under this Section 13 and Section 15, the current market
price per share of Common Stock at any date shall be (x) for purposes of
Section 15, the closing price on the business day immediately prior to the
exercise of the applicable Warrant pursuant to Section 8 and (y) in all other
cases, the average of the daily closing prices for the shorter of (i) the 20
consecutive trading days ending on the last full trading day on the exchange or
market specified in the second succeeding sentence prior to the Time of
Determination (as defined below) and (ii) the period commencing on the date next
succeeding the first public announcement of the issuance, sale, distribution or
granting in question through such last full trading day prior to the Time of
Determination. The term "Time of Determination" as used herein shall be the
time and date of the earlier to occur of (A) the date as of which the current
market price is to be computed and (B) the last full trading day on such
exchange or market before the commencement of "ex-dividend" trading in the
Common Stock relating to the event giving rise to the adjustment required by
paragraph (a), (b), (c) or (d). The closing price for any day shall be the last
reported sale price regular way or, in case no such reported sale takes place on
such day, the average of the closing bid and asked prices regular way for such
day, in each case (1) on the principal national securities exchange on which the
shares of Common Stock are listed or to which such shares are admitted to
trading or (2) if the Common Stock is not listed or admitted to trading on a
national securities exchange, in the over-the-counter market as reported by
Nasdaq National Market or any comparable system or (3) if the Common Stock is
not listed on Nasdaq National Market or a comparable system, as furnished by two
members of the NASD selected from time to time in good faith by the Board of
Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any other reason the current market price per share cannot
be determined pursuant to the foregoing provisions of this paragraph (f), the
current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company.
(g) CERTAIN DISTRIBUTIONS. If the Company shall pay a dividend or
make any other distribution payable in Options or Convertible Securities, then,
for purposes of paragraph (c) above, such Options or Convertible Securities
shall be deemed to have been issued or sold without consideration.
(h) CONSIDERATION RECEIVED. If any shares of Common Stock, Options
or Convertible Securities shall be issued, sold or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the Board of
Directors of the Company). If any Options shall be issued in connection with
the issuance and sale of other securities of the Company, together comprising
one integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
without consideration; PROVIDED, HOWEVER, that if such Options have an exercise
price equal to or greater than the current market price of the Common Stock on
the date of issuance of such Options, then such Options shall be deemed to have
been issued for consideration equal to such exercise price.
(i) DEFERRAL OF CERTAIN ADJUSTMENTS. No adjustment to the Exercise
Price (including the related adjustment to the number of shares of Common Stock
purchasable upon
19
the exercise of each Warrant) shall be required hereunder unless such
adjustment, together with other adjustments carried forward as provided below,
would result in an increase or decrease of at least one percent of the Exercise
Price; PROVIDED that any adjustments which by reason of this paragraph (i) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. No adjustment need be made for a change in the par value
of the Common Stock. All calculations under this Section 13 shall be made to
the nearest 1/1,000 of one cent or to the nearest 1/1,000 of a share, as the
case may be.
(j) CHANGES IN OPTIONS AND CONVERTIBLE SECURITIES. If the exercise
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (c) or (e) above, or the rate at
which any Convertible Securities referred to in paragraph (c) or (e) above are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Section 13), the Exercise Price then in effect and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall forthwith be
readjusted (effective only with respect to any exercise of any Warrant after
such readjustment) to the Exercise Price and number of shares of Common Stock so
purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.
(k) EXPIRATION OF OPTIONS AND CONVERTIBLE SECURITIES. If, at any
time after any adjustment to the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall have been made pursuant to paragraph
(c), (e) or (j) above or this paragraph (k), any Options or Convertible
Securities shall have expired unexercised, the number of such shares so
purchasable shall, upon such expiration, be readjusted and shall thereafter be
such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the only
shares of Common Stock deemed to have been issued in connection with such
Options or Convertible Securities were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such Options or Convertible
Securities and (ii) such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale, distribution or granting of all such Options or Convertible
Securities, whether or not exercised; PROVIDED that no such readjustment shall
have the effect of decreasing the number of such shares so purchasable by an
amount (calculated by adjusting such decrease to account for all other
adjustments made pursuant to this Section 13 following the date of the original
adjustment referred to above) in excess of the amount of the adjustment
initially made in respect of the issuance, sale, distribution or granting of
such Options or Convertible Securities.
(l) OTHER ADJUSTMENTS. In the event that at any time, as a result of
an adjustment made pursuant to this Section 13, the holders shall become
entitled to receive any securities of the Company other than shares of Common
Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants and the Exercise Price applicable to
20
such exercise shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the shares of Common Stock contained in this Section 13.
(m) NO ADJUSTMENT. Without limiting any other exception contained in
this Section 13, and in addition thereto, no adjustment will be made for:
(i) exercises or conversions of any Options or Convertible
Securities outstanding on the date hereof;
(ii) issuances of Options, Convertible Securities or Common
Stock to employees, directors or consultants of the Company or any of
its subsidiaries pursuant to a plan approved by the Board of Directors
of the Company or the exercise or conversion of such Options or
Convertible Securities;
(iii) issuances of rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest;
(iv) issuances of Options, Convertible Securities or Common
Stock in bona fide public offerings or private placements pursuant to
Section 4(2) of the Securities Act, Regulation D thereunder or
Regulation S, involving at least one investment bank of national
reputation;
(v) issuances of Options, Convertible Securities or Common
Stock in connection with the establishment of commercial bank
facilities, capital lease obligations or other issuances of primarily
debt obligations or securities; or
(vi) issuances of Excluded Securities.
Section 14. STATEMENT ON WARRANTS. Irrespective of any adjustment
in the number or kind of shares issuable upon the exercise of the Warrants or
the Exercise Price, Warrants theretofore or thereafter issued may continue to
express the same number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
Section 15. FRACTIONAL INTEREST. The Company shall not be required
to issue fractional shares of Common Stock on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same holder, the number of full shares of Common Stock which shall be issuable
upon such exercise shall be computed on the basis of the aggregate number of
shares of Common Stock acquirable on exercise of the Warrants so presented. If
any fraction of a share of Common Stock would, except for the provisions of this
Section 15, be issuable on the exercise of any Warrant (or specified portion
thereof), the Company shall direct the Transfer Agent to pay an amount in cash
calculated by it to equal the then current market price per share multiplied by
such fraction computed to the nearest whole cent. The holders, by their
acceptance of the Warrant Certificates, expressly waive any and all rights to
receive any fraction of a share of Common Stock or a stock certificate
representing a fraction of a share of Common Stock.
21
Section 16. NOTICES TO WARRANT HOLDERS. Upon any adjustment of the
Exercise Price (and number of shares of Common Stock purchasable upon the
exercise of each Warrant) pursuant to Section 13, the Company shall promptly
thereafter (i) cause to be filed with the Warrant Agent a certificate of a firm
of independent public accountants of recognized standing selected by the Board
of Directors of the Company (who may be the regular auditors of the Company)
setting forth the Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register
written notice of such adjustments by first-class mail, postage prepaid. The
Warrant Agent shall be entitled to rely on the above-referenced accountant's
certificate and shall be under no duty or responsibility with respect to any
such certificate, except to exhibit the same from time to time to any holder
desiring an inspection thereof during reasonable business hours. The Warrant
Agent shall not at any time be under any duty or responsibility to any holder to
determine whether any facts exist that may require any adjustment of the number
of shares of Common Stock or other stock or property issuable on exercise of the
Warrants or the Exercise Price, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed in making such
adjustment or the validity or value (or the kind or amount) of any shares of
Common Stock or other stock or property which may be issuable on exercise of the
Warrants. The Warrant Agent shall not be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other common stock or property upon the
exercise of any Warrant.
In case:
(i) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
(ii) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidence of its indebtedness or
assets (other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in shares
of Common Stock or distributions referred to in Section 13 hereof); or
(iii) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required (other than a merger of the Company into a subsidiary
effected for the primary purpose of changing the Company's state of
incorporation), or of the conveyance or transfer of the properties and
assets of the Company substantially as an entirety, or of any
reclassification or change of Common Stock issuable upon exercise of
the Warrants (other than a change in par value, or from par value to
no par value, or
22
from no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of
Common Stock; or
(iv) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(v) a Change of Control (as defined in the Indenture) occurs;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered holders of the Warrant Certificates at
such holder's address appearing on the Warrant register, at least 20 days (or 10
days in any case specified in clauses (a) or (b) above) prior to the applicable
record date hereinafter specified, or promptly in the case of events for which
there is no record date, by first class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up or Change of Control is expected to become effective or
consummated, and, if applicable, the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up or Change of Control. The failure to give the notice
required by this Section 16 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or Change of
Control or the vote upon any action. Nothing contained in this Agreement or in
any of the Warrant Certificates shall be construed as conferring upon the
holders thereof the right to vote or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company.
Section 17. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT
AGENT. Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 19. Any such successor Warrant Agent shall promptly
cause notice of its succession as Warrant Agent to be mailed (by first class
mail, postage prepaid) to each holder at such holder's last address as shown on
the register maintained by the Warrant Agent pursuant to this Agreement. In
case at the time such successor to the Warrant Agent shall succeed to the agency
created by this Agreement, and in case at that time any of the Warrant
Certificates shall have been countersigned but not delivered, any such successor
to the Warrant Agent may adopt the countersignature of the original Warrant
Agent; and in case at that time any of the Warrant Certificates shall not have
been countersigned, any successor to the Warrant Agent may countersign such
Warrant Certificates either in the name of the predecessor Warrant Agent or in
the name of the successor
23
to the Warrant Agent; and in all such cases such Warrant Certificates shall have
the full force and effect provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
Section 18. WARRANT AGENT. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
(i) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company and the
Warrant Agent assumes no responsibility for the correctness of any of
the same except such as describe the Warrant Agent or action taken or
to be taken by it. The Warrant Agent assumes no responsibility with
respect to the distribution of the Warrant Certificates except as
herein otherwise provided.
(ii) The Warrant Agent shall not be responsible for any failure
of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the
Company.
The Warrant Agent may consult at any time with counsel satisfactory to
it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant
Certificate in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument,
whether in its original or facsimile form, believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.
The Company agrees to pay to the Warrant Agent such compensation for
all services rendered by the Warrant Agent in the execution of this Agreement as
the parties shall agree from time to time, to reimburse the Warrant Agent for
all expenses, taxes and governmental charges and other charges of any kind and
nature reasonably incurred by the Warrant Agent in the execution of this
Agreement and to indemnify each of the Warrant Agent and any predecessor Warrant
Agent and save it harmless against any and all claims, damages, losses, expenses
and liabilities, including judgments, costs and counsel fees, for anything done
or omitted by the Warrant Agent in the execution of this Agreement except as a
result of its gross
24
negligence or willful misconduct. The indemnity described in the previous
sentence shall survive the termination of this Agreement or resignation of the
Warrant Agent.
The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more holders of Warrant Certificates shall
furnish the Warrant Agent with security and indemnity satisfactory to the
Warrant Agent for any costs and expenses which may be incurred, but this
provision shall not affect the power of the Warrant Agent to take such action as
it may consider proper, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent and any recovery of judgment shall
be for the ratable benefit of the holders of the Warrants, as their respective
rights or interests may appear. No provision of this Agreement shall require
the Warrant Agent to expend or risk its own funds.
The Warrant Agent, and any stockholder, director, officer or employee
of it, may buy, sell or deal in any of the Warrants or other securities of the
Company or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
The Warrant Agent shall act hereunder solely as agent for the Company,
and its duties shall be determined solely by the provisions hereof. The Warrant
Agent shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own negligence or willful
misconduct.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether
any such Warrant Shares or other securities will when issued be validly issued
and fully paid and nonassessable, and makes no representation with respect
thereto.
Section 19. RESIGNATION AND REMOVAL OF WARRANT AGENT; APPOINTMENT
OF SUCCESSOR. No resignation or removal of the Warrant Agent and no appointment
of a successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant
Agent may resign its duties and be discharged from all further duties and
liability hereunder (except liability arising as a result of the Warrant
25
Agent's own negligence or willful misconduct) after giving written notice to the
Company. The Company may remove the Warrant Agent upon written notice, and the
Warrant Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall,
at the Company's expense, cause to be mailed (by first class mail, postage
prepaid) to each holder of a Warrant at such holder's last address as shown on
the register of the Company maintained by the Warrant Agent a copy of said
notice of resignation or notice of removal, as the case may be. Upon such
resignation or removal, the Company shall appoint in writing a new warrant
agent. If the Company shall fail to make such appointment within a period of 30
days after it has been notified in writing of such resignation by the resigning
Warrant Agent or after such removal, then the Company shall become Warrant Agent
until a successor Warrant Agent has been appointed, and the resigning Warrant
Agent or the holder of any Warrant may, at the expense of the Company, apply to
any court of competent jurisdiction for the appointment of a new warrant agent.
Any new warrant agent, whether appointed by the Company or by such a court,
shall be a corporation doing business under the laws of the United States or any
state thereof, in good standing and having a combined capital and surplus of not
less than $50,000,000. The combined capital and surplus of any such new warrant
agent shall be deemed to be the combined capital and surplus as set forth in the
most recent annual report of its condition published by such warrant agent prior
to its appointment, provided that such reports are published at least annually
pursuant to law or to the requirements of a federal or state supervising or
examining authority. After acceptance in writing of such appointment by the new
warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such
appointment, the Company shall give notice thereof to the resigning or removed
Warrant Agent. Failure to give any notice provided for in this Section 19,
however, or any defect therein, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new warrant agent, as
the case may be.
Section 20. REGISTRATION. The Company and the Warrant Agent
acknowledge that holders shall have the registration rights set forth in the
Warrant Registration Rights Agreement.
Section 21. REPORTS.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Warrants are outstanding, the Company will furnish to
the holders of Warrants upon request (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file such
forms and (ii) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports, in
each case within the time periods specified in the Commission's rules and
regulations (the information and reports in clauses (i) and (ii), collectively,
"SEC Reports").
26
(b) The Company shall provide the Warrant Agent with a sufficient
number of copies of all SEC Reports that the Warrant Agent may be required to
deliver to the holders of the Warrants under this Section 21.
(c) Delivery of such reports, information and documents to the
Warrant Agent is for informational purposes only and the Warrant Agent's receipt
of such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Warrant Agent is entitled to rely exclusively on Officer's Certificates).
Section 22. RULE 144A. The Company hereby agrees with each holder,
for so long as any Registrable Securities remain outstanding, to make available,
upon request of any holder of Registrable Securities, to any holder or
beneficial owner of Registrable Securities in connection with any sale thereof
and any prospective purchaser of such Registrable Securities designated by such
holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A.
Section 23. NOTICES TO COMPANY AND WARRANT AGENT. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:
FirstWorld Communications, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Chief Financial Officer
with copies to:
Xxxxxx & Xxxxxxx
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
27
Any notice pursuant to this Agreement to be given by the Company or by
the holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if deposited in the mail, first-class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) to the Warrant Agent as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Corporate Trust Trustee Administration
Section 24. SUPPLEMENTS AND AMENDMENTS. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any holders of Warrant Certificates in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not in any way materially adversely affect the interests of the holders of
Warrant Certificates. Any amendment or supplement to this Agreement that has a
material adverse effect on the interests of holders shall require the written
consent of holders representing a majority of the then outstanding Warrants.
The consent of each holder of a Warrant affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided for in Section 13 hereof or
amendments to Section 13 which can be made by the written consent of holders
representing a majority of the then outstanding Warrants). The Warrant Agent
shall be entitled to receive and, subject to Section 18, shall be fully
protected in relying upon, an officers' certificate and opinion of counsel as
conclusive evidence that any such amendment or supplement is authorized or
permitted hereunder, that it is not inconsistent herewith, and that it will be
valid and binding upon the Company in accordance with its terms. Notwithstanding
any other provision hereof, the Warrant Agent's consent must be obtained
regarding any supplement or amendment pursuant to this Section which alters the
Warrant Agent's rights or duties.
Section 25. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 26. TERMINATION. This Agreement (other than any party's
obligations with respect to Warrants previously exercised and with respect to
indemnification under Section 18) shall terminate at 5:00 p.m., New York City
time on the Expiration Date.
Section 27. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL
28
BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE, WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
Section 28. BENEFITS OF THIS AGREEMENT.
(a) Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Warrant Agent and the holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the holders of the Warrant Certificates.
(b) Prior to the exercise of the Warrants, no holder of a Warrant
Certificate, as such, shall be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of meetings of stockholders for the election of
directors of the Company or any other matter or to receive any notice of any
proceedings of the Company, except as may be specifically provided for herein.
The holders of the Warrants are not entitled to share in the assets of the
Company in the event of the liquidation, dissolution or winding up of the
Company's affairs.
(c) All rights of action in respect of this Agreement are vested in
the holders of the Warrants, and any holder of any Warrant, without the consent
of the Warrant Agent or the holder of any other Warrant, may, on such holder's
own behalf and for such holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, such holder's rights hereunder, including the right
to exercise, exchange or surrender for purchase such holder's Warrants in the
manner provided in this Agreement.
Section 29. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Page Follows]
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
FIRSTWORLD COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President, Corporate
Finance and Administration
THE BANK OF NEW YORK, as Warrant Agent
By: /s/ Xxxxxxx Xxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
30
EXHIBIT A
[Form of Warrant Certificate]
[Face]
EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE (AS DEFINED HEREIN).
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSIST OF ONE NOTE, $1,000 PRINCIPAL AMOUNT AT
MATURITY, AND ONE WARRANT INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE
7.9002 SHARES OF SERIES B COMMON STOCK, NO PAR VALUE, OF THE COMPANY. THE NOTES
AND WARRANTS WILL BE AUTOMATICALLY SEPARATED (THE "SEPARATION DATE") UPON THE
EARLIEST TO OCCUR OF (i) 90 DAYS FROM THE DATE OF ISSUANCE, (ii) SUCH DATE AS
THE INITIAL PURCHASERS MAY, IN THEIR DISCRETION, DEEM APPROPRIATE, (iii) IN THE
EVENT OF A CHANGE OF CONTROL (AS DEFINED IN THE INDENTURE), THE DATE THE COMPANY
MAILS NOTICE THEREOF TO HOLDERS OF NOTES, (iv) THE DATE ON WHICH THE EXCHANGE
OFFER (AS DEFINED IN THE INDENTURE) IS CONSUMMATED AND (v) THE DATE ON WHICH THE
SHELF REGISTRATION STATEMENT (AS DEFINED IN THE INDENTURE) IS DECLARED
EFFECTIVE. THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
SEPARATED FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE
NOTES UNTIL THE SEPARATION DATE.
No. ______ ______ Warrants
This Warrant Certificate certifies that ________________, or
registered assigns, is the registered holder of ___________ Warrants (the
"Warrants") to purchase shares of Common Stock, no par value (the "Common
Stock"), of FIRSTWORLD COMMUNICATIONS, INC., a California corporation (the
"Company"). Each Warrant entitles the holder to purchase from the Company at any
time on or after the earliest to occur of (i) May 1, 1999, (ii) an initial
Public Equity Offering of the Company and (iii) in the event a Change of Control
(as defined in the Indenture dated April 13, 1998 between the Company and The
Bank of New York) occurs, the date the Company mails notice thereof to holders
of Notes and to the Holders (the earliest of such dates, the "Exercisability
Date") until 5:00 p.m., California time, on April 15, 2008 (the "Expiration
Date"), 7.9002 fully paid and non-assessable shares of Series B Common Stock (a
"Share," or, if adjusted, the "Shares," which may also include any other
securities or property purchasable upon exercise of a Warrant, such adjustment
and inclusion each as provided in the Warrant Agreement) at the exercise price
(the "Exercise Price") of $.01 per Share upon surrender of this Warrant
Certificate and payment of the Exercise Price at any office or agency maintained
for that purpose by the Company (the "Warrant Agent Office"), subject to the
conditions set forth herein and in the Warrant Agreement.
A-1
No Warrant may be exercised before the Exercisability Date. Except in
certain circumstances, no warrant may be exercised after 5:00 p.m., New York
City Time on April 15, 2008, and to the extent not exercised by such time such
Warrants shall become void.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
2
WITNESS the facsimile seal of the Company and facsimile signatures of
its duly authorized officers.
Dated April 13, 1998:
FIRSTWORLD COMMUNICATIONS, INC.
[Seal]
By:
----------------------------
Name:
Title:
Attest:
By:
----------------------------
Name:
Title:
Certificate of Countersignature:
This is one of the Warrants referred
to in the within mentioned Warrant
Agreement:
THE BANK OF NEW YORK
as Warrant Agent
By:
-----------------------
Authorized Signatory
3
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
[Unless and until it is exchanged in whole or in part for Warrants in
certificated form, this Warrant may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the issuer
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.](1)
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR"), THAT PRIOR TO SUCH TRANSFER, FURNISHED THE
WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
(THE FORM OF WHICH CAN BE OBTAINED FROM THE WARRANT AGENT) AND, IF THE COMPANY
SO REQUESTS, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE
-------------------------
(1) This paragraph is to be included only if the Warrant is in global form.
4
SECURITIES ACT (AND, IN THE CASE OF CLAUSE (b), (c), (d) OR (e), BASED UPON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, each of which represents the right to purchase at
any time on or after, the earliest to occur of (i) May 1, 1999, (ii) an initial
Public Equity Offering of the Company and (iii) in the event a Change of Control
(as defined in the Indenture dated April 13, 1998 between the Company and The
Bank of New York) occurs, the date the Company mails notice thereof to holders
of Notes and to the Holders (the earliest of such dates, the "Exercisability
Date"), until 5:00 p.m., New York City time, on April 15, 2008, 7.9002 shares
of Series B common stock, no par value per share ("Common Stock"), of the
Company, subject to adjustment as set forth in the Warrant Agreement. The
Warrants are issued pursuant to a Warrant Agreement dated as of April 13, 1998
(the "Warrant Agreement"), duly executed and delivered by the Company to The
Bank of New York, as Warrant Agent (the "Warrant Agent"), which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Warrant Agreement.
Warrants may be exercised at any time from 9:00 a.m. on or after the
Exercisability Date and until 5:00 p.m., New York City time, on April 15, 2008.
The holder of Warrants evidenced by this Warrant Certificate may exercise them
by surrendering this Warrant Certificate, with the form of election to purchase
set forth hereon properly completed and executed, together with payment of the
Exercise Price in lawful money of the United States of America at the office of
the Warrant Agent. In the alternative, each Holder may exercise its right to
receive Warrant Shares on a net basis, such that without the exchange of any
funds, the Holder receives that number of Warrant Shares otherwise issuable upon
exercise of its Warrants less that number of Warrant Shares having a fair market
value equal to the aggregate Exercise Price that would otherwise have been paid
by the Holder for the Warrant Shares being issued. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any dividends
on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof and/or the number of
shares of Common Stock issuable upon the exercise of each Warrant shall, subject
to certain conditions, be adjusted. No
5
fractions of a share of Common Stock will be issued upon the exercise of any
Warrant, but the Company will pay the cash value thereof determined as provided
in the Warrant Agreement.
The Warrant Agreement provides that the Company shall be bound by
certain registration obligations with respect to the Common Stock issuable upon
exercise of the Warrants as set forth in the Warrant Registration Rights
Agreement (as defined in the Warrant Agreement).
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder thereof in
person or by legal representative or attorney duly authorized in writing, may be
exchanged for a new Warrant Certificate or new Warrant Certificates evidencing
in the aggregate a like number of Warrants, in the manner and subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that purpose,
a new Warrant Certificate evidencing in the aggregate a like number of Warrants
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement, without charge
except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone) for the
purpose of any exercise hereof and for all other purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in New
York City, (ii) the principal national securities exchange or market on which
the Common Stock is listed or admitted to trading and (iii) the principal
national securities exchange or market on which the Warrants are listed or
admitted to trading are open for business.
6
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise ______ of the
Warrants represented by this Warrant Certificate and purchase the whole number
of Warrant Shares issuable upon the exercise of such Warrants and herewith
tenders payment for such Warrant Shares in the amount of $_________ in cash or
by certified or official bank check, in accordance with the terms hereof. The
undersigned requests that a certificate representing such Warrant Shares be
registered in the name of ___________________________ whose address is
______________________________ and that such certificate be delivered to
___________________________ whose address is __________________________________.
Any cash payments to be paid in lieu of a fractional Share should be made to
__________________________________ whose address is
________________________________ and the check representing payment thereof
should be delivered to ____________________________ whose address is
___________________________.
Dated ,
------------- -----
Name of holder of Warrant Certificate:
(Please Print)
Tax Identification or Social Security Number:
------------------------
Address:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Signature:
---------------------------
Note: The above signature must correspond with the name as written upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
Dated ,
------------- -----
7
[FORM OF ASSIGNMENT]
For value received ________________________ hereby sells, assigns and
transfers unto _________________________ the within Warrant Certificate,
together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _________________________________ attorney, to transfer
said Warrant Certificate on the books of the within-named Company, with full
power of substitution in the premises.
Dated ,
------------- -----
Signature:
---------------------
Note: The above signature must correspond with the name as written upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
8
SCHEDULE OF EXCHANGES OF GLOBAL WARRANTS(2)
The following exchanges of a part of this Global Warrant for
certificated Warrants have been made:
Number of
Warrants of this Signature
Amount of increase Global Warrant of
Date of Amount of decrease in in Number of following such authorized
officer of Number of Warrants of Warrants of this decrease (or Warrant
Exchange this Global Warrant Global Warrant increase) Agent
---------- --------------------- ------------------ ----------------- ----------
-------------------------
(2) This is to be included only if the Warrant is in global form.
9
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: WARRANTS TO PURCHASE COMMON STOCK (THE "WARRANTS") OF FIRSTWORLD
COMMUNICATIONS, INC.
This Certificate relates to ______ Warrants held in* / / book-entry or* / /
certificated form by __________________ (the "Transferor").
The Transferor confirms that if it is transferring Warrants prior to the
Separation Date it will transfer such Warrants only together with the Notes with
which they were issued.
The Transferor:*
/ / has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depositary a Warrant or Warrants in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Warrant (or the portion thereof indicated above);
or
/ / has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such Warrant, the
Transferor does hereby certify that the Transferor is familiar with the Warrant
Agreement relating to the above captioned Warrants and the restrictions on
transfers thereof as provided in Section 7 of such Warrant Agreement, and that
the transfer of this Warrant does not require registration under the Securities
Act of 1933, as amended (the "Act") because*:
/ / Such Warrant is being acquired for the Transferor's own account,
without transfer.
/ / Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Act), in reliance on Rule 144A
under the Act.
/ / Such Warrant is being transferred in accordance with Rule 144
under the Act.
/ / Such Warrant is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act,
other than Rule 144A or Rule 144 under the Act. An opinion of counsel to
the effect that such transfer does not require registration under the Act
accompanies this Certificate.
(Name of Transferor)
By:
Date:
*Check applicable box.
B-1
EXHIBIT C
Transferee Letter of Representation
FirstWorld Communications, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
In connection with our proposed purchase of warrants to purchase
Series B Common Stock, no par value (the "Securities") of FirstWorld
Communications, Inc. (the "Company") we confirm that:
1. We understand that the Securities have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") and, unless so
registered, may not be sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor account for which we are
purchasing Securities to offer, sell or otherwise transfer such Securities prior
to the date which is two years after the later of the date of original issue and
the last date on which the Company or any affiliate of the Company was the owner
of such Securities, or any predecessor thereto (the "Resale Restriction
Termination Date") only (a) to the Company, (b) pursuant to a registration
statement which has been declared effective under the Securities Act, (c) so
long as the Securities are eligible for resale pursuant to Rule 144A, under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
account of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the
United States within the meaning of Regulation S under the Securities Act, (e)
to an institutional "accredited investor" within the meaning of subparagraph
(a)(l), (2), (3) or (7) of Rule 501 under the Securities Act (an "IAI") that is
purchasing for his own account or for the account of such an IAI, or (f)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject in each of the foregoing cases to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and to
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Securities is proposed to be made
pursuant to clause (e) above prior to the Resale Restriction Termination Date,
the transferor shall deliver a letter from the transferee substantially in the
form of this letter to the warrant agent under the Warrant Agreement pursuant to
which the Securities were issued (the "Warrant Agent") which shall provide,
among other things, that the transferee is an IAI and that it is acquiring such
Securities for investment purposes and not for distribution in violation of the
Securities Act. The Warrant Agent and the Company reserve the right prior to any
offer, sale or other transfer prior to the Resale Restriction Termination Date
of the Securities pursuant to clause (e) or (f) above to require the delivery of
a written opinion of counsel, certifications, and/or other information
satisfactory to the Company and the Warrant Agent.
2. We are an IAI purchasing for our own account or for the account
of such an institutional "accredited investor," and we are acquiring the
Securities for investment purposes and not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act and we
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment for an indefinite period.
C-1
3. We are acquiring the Securities purchased by us for our own
account or for one or more accounts as to each of which we exercise sole
investment discretion.
4. You, the Warrant Agent and your respective counsel are entitled
to rely upon this letter and you are irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
Very truly yours,
(Name of Purchaser)
By:
-------------------------
Date: ,
---------- -----
Upon transfer the Securities would be registered in the name of the new
beneficial owner as follows:
Name:
-------------------
Address:
----------------
Taxpayer ID Number:
-------------------
2