Exhibit 4.12
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WARRANT AGREEMENT
Dated as of March 5, 1998
By and Between
WAM!NET INC.
and
FIRST TRUST NATIONAL ASSOCIATION
as Warrant Agent
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Warrants to Purchase Common Stock
Par Value $.01 Per Share
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TABLE OF CONTENTS
PAGE
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ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrants...........................................8
SECTION 1.02. Form of Warrant Certificates...................................8
SECTION 1.03. Execution of Warrant Certificates..............................8
SECTION 1.04. Authentication and Delivery....................................9
SECTION 1.05. Temporary Warrant Certificates................................10
SECTION 1.06. Separation of Warrants and Notes..............................10
SECTION 1.07. Registration..................................................10
SECTION 1.08. Registration of Transfers or Exchanges........................11
SECTION 1.09. Lost, Stolen, Destroyed, Defaced or Mutilated
Warrant Certificates..........................................16
SECTION 1.10. Offices for Exercise, etc.....................................17
ARTICLE II
DURATION, EXERCISE OF WARRANTS;
EXERCISE PRICE AND REPURCHASE OF WARRANTS
SECTION 2.01. Duration of Warrants..........................................17
SECTION 2.02. Exercise, Exercise Price, Settlement and Delivery.............18
SECTION 2.03. Cancellation of Warrant Certificates..........................21
SECTION 2.04. Notice of an Exercise Event...................................21
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. Enforcement of Rights.........................................21
SECTION 3.02. Obtaining Stock Exchange Listings.............................22
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Taxes..............................................22
SECTION 4.02. Qualification Under the Securities Laws.......................22
SECTION 4.03. Rules 144 and 144A............................................23
SECTION 4.04. Form of Initial Public Equity Offering........................23
SECTION 4.05. Registration of Shares........................................23
ARTICLE V
ADJUSTMENTS
SECTION 5.01. Adjustment of Exercise Rate; Notices..........................24
SECTION 5.02. Fractional Shares.............................................30
SECTION 5.03. Certain Distributions.........................................30
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. Warrant Agent.................................................31
SECTION 6.02. Conditions of Warrant Agent's Obligations.....................31
SECTION 6.03. Resignation and Appointment of Successor......................35
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment.....................................................36
SECTION 7.02. Notices and Demands to the Company and Warrant Agent..........37
SECTION 7.03. Addresses for Notices to Parties and for
Transmission of Documents.....................................37
SECTION 7.04. Notices to Holders............................................38
SECTION 7.05. APPLICABLE LAW; SUBMISSION TO JURISDICTION....................38
SECTION 7.06. Persons Having Rights Under Agreement.........................38
SECTION 7.07. Headings......................................................38
SECTION 7.08. Counterparts..................................................38
SECTION 7.09. Inspection of Agreement.......................................38
SECTION 7.10. Availability of Equitable Remedies............................39
SECTION 7.11. Obtaining of Governmental Approvals...........................39
EXHIBITS:
EXHIBIT A Form of Warrant Certificate
EXHIBIT B Form of Legend for Global Warrant
EXHIBIT C Certificate to be Delivered Upon Exchange or Registration of
Transfer of Warrants
EXHIBIT D Form of Certificate to be Delivered in Connection with
Regulation S Transfers
INDEX OF DEFINED TERMS
DEFINED TERM SECTION
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Affiliate SECTION 5.01.(l)
Agreement Preamble
Business Day SECTION 2.01.
Capital Stock SECTION 5.01.(l)
Cashless Exercise SECTION 2.02.(b)
Cashless Exercise Ratio SECTION 2.02.(b)
Common Stock Preamble
Company Preamble
control SECTION 5.01.(l)
Current Market Value SECTION 5.01.(l)
Definitive Warrants SECTION 1.02.
Distribution SECTION 5.03.
Distribution Rights SECTION 5.03.
Election to Exercise SECTION 2.02.(a)
Exercisability Date SECTION 2.02.
Exercise Date SECTION 2.02.(c)
Exercise Event SECTION 2.02.
Exercise Price SECTION 2.02.
Exercise Rate SECTION 2.02.
Expiration Date SECTION 2.01.
Fundamental Transaction SECTION 5.01.(d)
Global Shares SECTION 2.02.(e)
Global Warrants SECTION 1.02.
Indenture Preamble
Independent Financial Expert SECTION 5.01.(l)
Initial Public Equity Offering SECTION 2.02.
Initial Purchasers Preamble
Merrill Lynch Preamble
Notes Preamble
Officers' Certificate SECTION 1.08.(d)(i)
Person SECTION 2.02.
Private Placement Legend SECTION 1.08.(g)
Prospectus SECTION 4.02.
Purchase Agreement Preamble
QIB SECTION 1.08.(a)(B)
Registrar SECTION 1.07.
Registration Rights Agreement Preamble
Related Parties SECTION 6.02.(e)
Requisite Warrant Holders SECTION 7.01.
Resale Restriction Termination Date SECTION 1.08.(a)(y)
Securities Act SECTION 1.06.
Separability Date SECTION 1.06.
Separation SECTION 1.06.
Shares SECTION 1.01.
Subject Class SECTION 4.04.
Surviving Person SECTION 5.01.(d)
Time of Determination SECTION 5.01.(l)
Trustee Preamble
Units Preamble
Warrant Agent Preamble
Warrant Agent Office SECTION 1.10.
Warrant Certificates SECTION 2.01
Warrant Change of Control SECTION 2.01
Warrant Exercise Office SECTION 2.02.(a)
Warrant Register SECTION 1.07.
Warrants Preamble
WARRANT AGREEMENT
WARRANT AGREEMENT ("AGREEMENT"), dated as of March 5, 1998 by and between
WAM!NET INC., a Minnesota corporation (together with any successor thereto, the
"COMPANY"), and FIRST TRUST NATIONAL ASSOCIATION, as warrant agent (with any
successor Warrant Agent, the "WARRANT AGENT").
WHEREAS, the Company has entered into a purchase agreement (the "PURCHASE
AGREEMENT") dated February 26, 1998 with Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MERRILL LYNCH"), Credit Suisse First Boston Corporation and First
Chicago Capital Markets, Inc. (collectively, the "INITIAL PURCHASERS") in which
the Company has agreed to sell to the Initial Purchasers 208,530 Units (the
"UNITS") consisting, in the aggregate, of (i) $208,530,000 aggregate principal
amount at maturity of Senior Discount Notes due 2005 (the "NOTES") of the
Company, to be issued under an Indenture dated as of March 5, 1998 (the
"INDENTURE"), between the Company and First Trust National Association, as
trustee (in such capacity, the "TRUSTEE"), and (ii) 625,590 Warrants (the
"WARRANTS"), each Warrant initially entitling the holder thereof to purchase
2.01 shares of Common Stock, par value $.01 per share (the "COMMON STOCK"'), of
the Company, to be issued under this Agreement. First Trust National Association
has been appointed Unit Agent by the Company (in such capacity, the "Unit
Agent"). The certificates evidencing the Warrants are herein referred to
collectively as the "WARRANT CERTIFICATES"; and
WHEREAS, each Unit will consist of one Note in the principal amount at
maturity of $1,000 and three Warrants; the Notes and the Warrants comprising
part of the Units shall not be separately transferable until the Separability
Date (as defined below); and
WHEREAS, the holders of the Warrants are entitled to the benefits of a
Common Stock Registration Rights Agreement dated as of March 5, 1998 among the
Company, the Initial Purchasers and WorldCom Inc. (the "REGISTRATION RIGHTS
AGREEMENT"); and
WHEREAS, the Company desires the Warrant Agent to assist the Company in
connection with the issuance, exchange, cancellation, replacement and exercise
of the Warrants, and in this Agreement wishes to set forth, among other things,
the terms and conditions on which the Warrants may be issued, exchanged,
canceled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. ISSUANCE OF WARRANTS. Warrants comprising part of the Units
shall be originally issued in connection with the issuance of the Units and such
Warrants shall not be separately transferable from the Notes until on or after
the Separability Date as provided in Section 1.06 hereof.
Each Warrant Certificate shall evidence the number of Warrants specified
therein, and each Warrant evidenced thereby shall, when exercisable as provided
herein and therein, represent the right, subject to the provisions contained
herein and therein, to purchase from the Company (and the Company shall issue
and sell to the holder of such Warrant) 2.01 fully paid, registered and
non-assessable shares of Common Stock at an exercise price of $0.01 per share.
The number of shares issuable upon exercise of a Warrant is subject to
adjustment as provided herein and in the Warrant. The shares purchasable upon
exercise of a Warrant are hereinafter referred to as the "SHARES" and, unless
the context otherwise requires, such term shall also include any other
securities or property purchasable and deliverable upon exercise of a Warrant as
provided in Article V, subject to adjustment as provided herein and in the
Warrant.
SECTION 1.02. FORM OF WARRANT CERTIFICATES. The Warrant Certificates will
initially be issued either in global form (the "GLOBAL WARRANTS"), substantially
in the form of EXHIBIT A hereto, or in registered form as definitive Warrant
Certificates (the "DEFINITIVE WARRANTS") substantially in the form of EXHIBIT A
attached hereto. Any Global Warrants to be delivered pursuant to this Agreement
shall bear the legend set forth in EXHIBIT B attached hereto. Such Global
Warrants shall represent such of the outstanding Warrants as shall be specified
therein and each shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of a Global Warrant to
reflect the amount of any increase or decrease in the amount of outstanding
Warrants represented thereby shall be made by the Warrant Agent and the
Depositary (as defined below) in accordance with instructions given by the
holder thereof. The Depository Trust Company shall act as the Depositary with
respect to the Global Warrants until a successor shall be appointed by the
Company and the Warrant Agent. Upon written request, a holder of Warrants may
receive from the Warrant Agent or the Depository Definitive Warrants as set
forth in Section 1.08 hereof.
SECTION 1.03. EXECUTION OF WARRANT CERTIFICATES. The Warrant Certificates
shall be executed on behalf of the Company by the Chairman of its Board of
Directors, its President or any Vice President and attested by its Secretary or
Assistant Secretary. Such signatures may be the manual or facsimile signatures
of the present or any future such officers. Typographical and other minor errors
or defects in any such reproduction of any such signature shall not affect the
validity
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or enforceability of any Warrant Certificate that has been duly countersigned
and delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer before the Warrant Certificate so
signed shall be countersigned and delivered by the Warrant Agent or disposed of
by the Company, such Warrant Certificate nevertheless may be countersigned and
delivered or disposed of as though the person who signed such Warrant
Certificate had not ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by such persons as, at the
actual date of the execution of such Warrant Certificate, shall be the proper
officers of the Company, although at the date of the execution and delivery of
this Agreement any such person was not such an officer.
SECTION 1.04. AUTHENTICATION AND DELIVERY. Subject to the immediately
following paragraph, Warrant Certificates shall be authenticated by manual
signature and dated the date of authentication by the Warrant Agent and shall
not be valid for any purpose unless so authenticated and dated. The Warrant
Certificates shall be numbered and shall be registered in the Warrant Register
(as defined in Section 1.07 hereof).
Upon the receipt by the Warrant Agent of a written order of the Company,
which order shall be signed by the Chairman of its Board of Directors, its
President or any Vice President and attested by its Secretary or Assistant
Secretary, and shall specify the amount of Warrants to be authenticated, whether
the Warrants are to be Global Warrants or Definitive Warrants, the date of such
Warrants and such other information as the Warrant Agent may reasonably request,
without any further action by the Company, the Warrant Agent is authorized, upon
receipt from the Company at any time and from time to time of the Warrant
Certificates, duly executed as provided in Section 1.03 hereof, to authenticate
the Warrant Certificates and upon the holder's request deliver them. Such
authentication shall be by a duly authorized signatory of the Warrant Agent
(although it shall not be necessary for the same signatory to sign all Warrant
Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such an
authorized signatory before the Warrant Certificate shall be disposed of by the
Company or the Warrant Agent, such Warrant Certificate nevertheless may be
delivered or disposed of as though the person who authenticated such Warrant
Certificate had not ceased to be such authorized signatory of the Warrant Agent,
and any Warrant Certificate may be authenticated on behalf of the Warrant Agent
by such persons as, at the actual time of authentication of such Warrant
Certificates, shall be the duly authorized signatories of the Warrant Agent,
although at the time of the execution and delivery of this Agreement any such
person is not such an authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall be in
substantially the form set forth in EXHIBIT A hereto.
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SECTION 1.05. TEMPORARY WARRANT CERTIFICATES. Pending the preparation of
definitive Warrant Certificates, the Company may execute, and the Warrant Agent
shall authenticate and deliver, temporary Warrant Certificates, which are
printed, lithographed, typewritten or otherwise produced, substantially of the
tenor of the definitive Warrant Certificates in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Warrant Certificates may determine, as
evidenced by their execution of such Warrant Certificates.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay. After
the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for that purpose pursuant to Section 1.10 hereof.
Subject to the provisions of Section 4.01 hereof, such exchange shall be without
charge to the holder. Upon surrender for cancellation of any one or more
temporary Warrant Certificates, the Company shall execute, and the Warrant Agent
shall authenticate and deliver in exchange therefor, one or more definitive
Warrant Certificates representing in the aggregate a like number of Warrants.
Until so exchanged, the holder of a temporary Warrant Certificate shall in all
respects be entitled to the same benefits under this Agreement as a holder of a
definitive Warrant Certificate.
SECTION 1.06. UNITS; SEPARATION OF WARRANTS AND NOTES. The Warrants shall
initially be issued as part of a Unit, each Unit consisting of three Warrants
and $1,000 principal face amount of Notes. The Notes and the Warrants comprising
a Unit will not be separately transferable until the Separability Date.
"SEPARABILITY DATE" shall mean the earliest to occur of: (i) September 1, 1998,
(ii) the occurrence of an Exercise Event (as defined herein), (iii) the
occurrence of an Event of Default (as defined in the Indenture), (iv) the date
on which a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to a registered exchange offer for the
Notes or covering the sale by holders of the Notes is declared effective under
the Securities Act, (v) immediately prior to any redemption of Notes by the
Company from the net proceeds of an Initial Public Equity Offering (as defined
in the Indenture), (vi) immediately prior to the occurrence of a Warrant Change
of Control (as defined herein) or (v) such earlier date as determined by Merrill
Lynch & Co. in its sole discretion and specified to the Company, the Trustee,
the Warrant Agent and the Unit Agent in writing. The separation of the Warrants
and the Notes is herein referred to as a "SEPARATION". Transfers of the Units
shall be made by the Unit Agent in accordance with the restrictions set forth in
Section1.08 hereof. The Unit Agent shall be entitled to the same benefits and
privileges as those accorded to the Warrant Agent under this Warrant Agreement.
SECTION 1.07. REGISTRATION. The Company will keep, at the office or agency
maintained by the Company for such purpose, a register or registers in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of, and registration of transfer and exchange of,
Warrants as provided in this Article. Each person designated by the Company from
time to time as a person authorized to register the transfer and exchange of the
Warrants is hereinafter called, individually and collectively, the "REGISTRAR."
The
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Company hereby initially appoints the Warrant Agent as Registrar. Upon written
notice to the Warrant Agent and any acting Registrar, the Company may appoint a
successor Registrar for such purposes.
The Company will at all times designate one person (who may be the Company
and who need not be a Registrar) to act as repository of a master list of names
and addresses of the holders of Warrants (the "WARRANT REGISTER"). The Warrant
Agent will act as such repository unless and until some other person is, by
written notice from the Company to the Warrant Agent and the Registrar,
designated by the Company to act as such. The Company shall cause each Registrar
to furnish to such repository, on a current basis, such information as to all
registrations of transfer and exchanges effected by such Registrar, as may be
necessary to enable such repository to maintain the Warrant Register on as
current a basis as is practicable.
SECTION 1.08. REGISTRATION OF TRANSFERS OR EXCHANGES.
(a) TRANSFER OR EXCHANGE OF DEFINITIVE WARRANTS. When Definitive Warrants
are presented to the Warrant Agent with a request from the holder:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of Definitive
Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Warrant Agreement as set forth in this Section
1.08 hereof for such transactions are met; PROVIDED, HOWEVER, that the
Definitive Warrants presented or surrendered by a holder for registration of
transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer or exchange in form satisfactory to the Company and the
Warrant Agent, duly executed by such holder or by his attorney, duly
authorized in writing; and
(y) in the case of Warrants the offer and sale of which have not been
registered under the Securities Act and are presented for transfer or
exchange prior to (X) the date which is two years (or such shorter
period as may be prescribed by Rule 144(k) (or any successor provision
thereto)) after the later of the date of original issuance of the
Warrants and the last date on which the Company or any affiliate of
the Company was the owner of such Warrants, 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:
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(A) if such Warrants are being delivered to the Warrant Agent by a
holder for registration in the name of such holder, without
transfer, a certi fication from such holder to that effect (in
substantially the form of EXHIBIT C hereto); or
(B) if such Warrants are being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities
Act) (a "QIB") in accordance with Rule 144A under the Securities
Act, a certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto); or
(C) if such Warrants are being transferred in reliance on Regulation
S under the Securities Act, delivery by the transferor of a
certification to that effect (in substantially the form of
EXHIBIT C hereto), and a Certificate for Regulation S Transfers
in the form of EXHIBIT D hereto; or
(D) if such Warrants are being transferred in reliance on Rule 144
under the Securities Act, delivery by the transferor of (i) a
certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto), and (ii) an opinion
of counsel reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities Act; or
(E) if such Warrants are being transferred in reliance on another
exemption from the registration requirements of the Securities
Act, a certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto) and an opinion of
counsel reasonably satisfactory to the Company to the effect that
such transfer is in compliance with the Securities Act; PROVIDED
that the Company may, based upon the views of its own counsel,
instruct the Warrant Agent not to register such transfer in any
case where the proposed transferee is not a QIB or non-U.S.
Person.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE WARRANT FOR A BENEFICIAL
INTEREST IN A GLOBAL WARRANT. A Definitive Warrant may not be transferred by a
holder for a beneficial interest in a Global Warrant except upon satisfaction of
the requirements set forth below. Upon receipt by the Warrant Agent of a
Definitive Warrant, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Warrant Agent, together with:
(A) certification from such holder (in substantially the form of
EXHIBIT C hereto) that such Definitive Warrant is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act; and
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(B) written instructions directing the Warrant Agent to make, or to
direct the Depositary to make, an endorsement on the Global
Warrant to reflect an increase in the aggregate amount of the
Warrants represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Shares represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall upon written instructions from the Company authenticate a new Global
Warrant in the appropriate amount.
(c) TRANSFER OR EXCHANGE OF GLOBAL WARRANTS. The transfer or exchange of
Global Warrants or beneficial interests therein shall be effected through the
Depositary, in accordance with this Section 1.08, the Private Placement Legend,
this Agreement (including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefor.
(d) TRANSFER OR EXCHANGE OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT FOR A
DEFINITIVE WARRANT.
(i) Any person having a beneficial interest in a Global Warrant may
transfer or exchange such beneficial interest for a Definitive Warrant
upon receipt by the Warrant Agent of written instructions or such
other form of instructions as is customary for the Depositary from the
Depositary or its nominee on behalf of any person having a beneficial
interest in a Global Warrant, including a written order containing
registration instructions and, in the case of any such transfer or
exchange prior to the Resale Restriction Termination Date, the
following additional information and documents:
(A) if such beneficial interest is being transferred to the person
designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in substantially
the form of EXHIBIT C hereto); or
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a
certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto); or
(C) if such beneficial interest is being transferred in reliance on
Regulation S under the Securities Act, delivery by the transferor
of (i) a certification to that effect (in substantially the form
of EXHIBIT C
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hereto) and (ii) a Certificate for Regulation S Transfers in the
form of EXHIBIT D hereto; or
(D) if such beneficial interest is being transferred in reliance on
Rule 144 under the Securities Act, delivery by the transferor of
(i) a certi fication to that effect (in substantially the form of
EXHIBIT C hereto) and (ii) an opinion of counsel reasonably
satisfactory to the Company to the effect that such transfer is
in compliance with the Securities Act; or
(E) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification from the transferor to that
effect (in substantially the form of EXHIBIT C hereto) and an
opinion of counsel reasonably satisfactory to the Company to the
effect that such transfer is in compliance with the Securities
Act; PROVIDED that the Company may instruct the Warrant Agent not
to register such transfer in any case where the proposed
transferee is not a QIB or Non-U.S. Person;
then the Warrant Agent will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Warrant Agent, the aggregate amount of the Global Warrant to be
reduced and, following such reduction, the Company will execute and,
upon receipt from the Comany of an authentication order in the form of
an officers' certificate (a certificate signed by two officers of the
Company, one of whom must be the principal executive officer,
principal financial officer or principal accounting officer) (an
"OFFICERS' CERTIFICATE"), the Warrant Agent will authenticate and
deliver to the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial interest in a
Global Warrant pursuant to this Section 1.08(d) shall be registered in
such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Warrant Agent in writing. The Warrant
Agent shall deliver such Definitive Warrants to the persons in whose
names such Warrants are so registered and adjust the Global Warrant
pursuant to paragraph (h) of this Section 1.08.
(e) RESTRICTIONS ON TRANSFER OR EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in subsection (f) of this Section 1.08), a Global Warrant
may not be transferred or exchanged as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
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another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) AUTHENTICATION OF DEFINITIVE WARRANTS IN ABSENCE OF DEPOSITARY. If at
any time:
(i) the Depositary for the Global Warrants notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the
Global Warrant and a successor Depositary for the Global Warrant is
not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion, notifies the Warrant Agent in
writing that it elects to cause the issuance of Definitive Warrants
for all Global Warrants under this Agreement,
then the Company will execute, and the Warrant Agent will, upon receipt of an
Officers' Certificate requesting the authentication and delivery of Definitive
Warrants, authenticate and deliver Definitive Warrants, in an aggregate number
equal to the aggregate number of Warrants represented by the Global Warrant, in
exchange for such Global Warrant.
(g) PRIVATE PLACEMENT LEGEND. Upon the registration of transfer, exchange
or replacement of Warrant Certificates not bearing the legend set forth in the
first paragraph of EXHIBIT A attached hereto (the "PRIVATE PLACEMENT LEGEND"),
the Warrant Agent shall deliver Warrant Certificates that do not bear the
Private Placement Legend. Upon the registration of transfer, exchange or
replacement of Warrant Certificates bearing the Private Placement Legend, the
Warrant Agent shall deliver Warrant Certificates that bear the Private Placement
Legend unless, and the Warrant Agent is hereby authorized to deliver Warrant
Certificates without the Private Placement Legend if, (i) the requested transfer
is not prior to the date which is two years (or such shorter period as may be
prescribed by Rule 144(k) (or any successor provision thereto) under the
Securities Act or any successor provision thereunder) after the later of the
original Issue Date of the Warrants or the last day on which the Company or any
of its affiliates was the owner of the Warrant or any predecessor security, (ii)
there is delivered to the Warrant Agent an opinion of counsel reasonably
satisfactory to the Company and the Warrant Agent to the effect that neither
such legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act or (iii) the
Warrants to be transferred or exchanged represented by such Warrant Certificates
are being transferred or exchanged pursuant to an effective registration
statement under the Securities Act.
(h) CANCELLATION OR ADJUSTMENT OF A GLOBAL WARRANT. At such time as all
beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or canceled, such Global Warrant
shall be returned to the Company or, upon written order to the Warrant Agent in
the form of an Officers' Certificate from the Company, retained and canceled by
the Warrant Agent. At any time prior to such cancellation, if any beneficial
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interest in a Global Warrant is exchanged for Definitive Warrants, redeemed,
repurchased or cancelled, the number of Warrants represented by such Global
Warrant shall be reduced and an endorsement shall be made on such Global Warrant
by the Warrant Agent to reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS OR EXCHANGES OF DEFINITIVE
WARRANTS.
(i) To permit registrations of transfers or exchanges, the Company shall
execute, at the Warrant Agent's request, and the Warrant Agent shall
authenticate Definitive Warrants and Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration, transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to
the same benefits under this Warrant Agreement as the Definitive
Warrants or Global Warrants surrendered upon the registration of
transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any Warrant,
the Warrant Agent and the Company may deem and treat the person in
whose name any Warrant is registered as the absolute owner of such
Warrant, and neither the Warrant Agent nor the Company shall be
affected by notice to the contrary.
SECTION 1.09. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED WARRANT
CERTIFICATES. Upon receipt by the Company and the Warrant Agent (or any agent of
the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or mutilation
of any Warrant Certificate and of an indemnity bond satisfactory to them and, in
the case of mutilation or defacement, upon surrender thereof to the Warrant
Agent for cancellation, then, in the absence of notice to the Company or the
Warrant Agent that such Warrant Certificate has been acquired by a BONA FIDE
purchaser or holder in due course, the Company shall execute, and an authorized
signatory of the Warrant Agent shall manually authenticate and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced or mutilated
Warrant Certificate, a new Warrant Certificate representing a like number of
Warrants, bearing a number or other distinguishing symbol not contemporaneously
outstanding. Upon the issuance of any new Warrant Certificate under this Section
in a name other than the prior registered holder of the lost, stolen, destroyed,
defaced or mutilated Warrant Certificate, the Company may require the payment
from the holder of such Warrant Certificate of a sum sufficient to cover any
tax, stamp tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Warrant
Agent and the Registrar) in connection therewith. Every substitute Warrant
Certificate executed and delivered pursuant to this Section in lieu of any lost,
stolen or destroyed Warrant Certificate shall constitute an additional
contractual obligation of the Company, whether or not the lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone, and
shall be entitled to the benefits of (but shall be subject to all the
limitations of rights set forth in) this Agreement equally and proportionately
with any and all other Warrant Certificates duly executed and delivered
hereunder. The provisions of this Section 1.09 are exclusive with respect to
16
the replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates and shall preclude (to the extent lawful) any and all other rights
or remedies notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement of lost, stolen, destroyed, defaced
or mutilated Warrant Certificates.
The Warrant Agent is hereby authorized to authenticate in accordance with
the provisions of this Agreement, and deliver the new Warrant Certificates
required pursuant to the provisions of this Section.
SECTION 1.10. OFFICES FOR EXERCISE, ETC. So long as any of the Warrants
remain outstanding, the Company will designate and maintain in the Borough of
Manhattan, The City of New York: (a) an office or agency where the Warrant
Certificates may be presented for exercise, (b) an office or agency where the
Warrant Certificates may be presented for registration of transfer and for
exchange (including the exchange of temporary Warrant Certificates for
definitive Warrant Certificates pursuant to Section 1.05 hereof), and (c) an
office or agency where notices and demands to or upon the Company in respect of
the Warrants or of this Agreement may be served. The Company may from time to
time change or rescind such designation, as it may deem desirable or expedient;
PROVIDED, HOWEVER, that an office or agency shall at all times be maintained in
the Borough of Manhattan, The City of New York, as provided in the first
sentence of this Section. In addition to such office or offices or agency or
agencies, the Company may from time to time designate and maintain one or more
additional offices or agencies within or outside The City of New York, where
Warrant Certificates may be presented for exercise or for registration of
transfer or for exchange, and the Company may from time to time change or
rescind such designation, as it may deem desirable or expedient. The Company
will give to the Warrant Agent written notice of the location of any such office
or agency and of any change of location thereof. The Company hereby designates
the Warrant Agent at its principal corporate trust office identified in Section
7.03 in the Borough of Manhattan, The City of New York (the "WARRANT AGENT
OFFICE"), as the initial agency maintained for each such purpose. In case the
Company shall fail to maintain any such office or agency or shall fail to give
such notice of the location or of any change in the location thereof,
presentations and demands may be made and notice may be served at the Warrant
Agent Office and the Company appoints the Warrant Agent as its agent to receive
all such presentations, surrenders, notices and demands.
ARTICLE II
DURATION, EXERCISE OF WARRANTS;
EXERCISE PRICE AND REPURCHASE OF WARRANTS
SECTION 2.01. DURATION OF WARRANTS. Subject to the terms and conditions
established herein, the Warrants shall expire at 5:00 p.m., New York City time,
on March 1, 2005. The date of expiration of a particular Warrant is referred to
herein as the "EXPIRATION DATE" of such Warrant. Each Warrant may be exercised
on any Business Day (as defined below) on or after the
17
Exercisability Date (as defined in Section 2.02) and on or prior to the close of
business on the Expiration Date.
Any Warrant not exercised before the close of business on the Expiration
Date shall become void, and all rights of the holder under the Warrant
Certificate evidencing such Warrant and under this Agreement shall cease.
"BUSINESS DAY" shall mean any day on which (i) banks in New York City, (ii)
the principal U.S. securities exchange or market, if any, on which any Common
Stock is listed or admitted to trading and (iii) the principal U.S. securities
exchange or market, if any, on which any other securities underlying the
Warrants are listed or admitted to trading are open for business.
SECTION 2.02. EXERCISE, EXERCISE PRICE, SETTLEMENT AND DELIVERY. (a)
Subject to the provisions of this Agreement, a holder of a Warrant shall have
the right to purchase from the Company on or after the Exercisability Date, and
on or prior to the close of business on the Expiration Date, 2.01 fully paid,
registered and non-assessable shares of Common Stock (and any other securities
or property purchasable or deliverable upon exercise of such Warrant as provided
in Article V), subject to adjustment in accordance with Article V hereof, at the
purchase price of $0.01 for each share purchased (the "EXERCISE PRICE"). The
number of Shares for which a particular Warrant may be exercised (the "EXERCISE
RATE") shall be subject to adjustment from time to time as set forth in Article
V hereof.
"EXERCISABILITY DATE" means, with respect to each Warrant, the date as of
which both of the following shall have occurred (whether before or on such
date): (i) the Separability Date and (ii) an Exercise Event.
"EXERCISE EVENT" means, with respect to each Warrant, the date of the
occurrence of the earliest of: (1) immediately prior to the occurrence of a
Warrant Change of Control, (2) (a) the 90th day (or such earlier date as
determined by the Company in its sole discretion) following an Initial Public
Equity Offering or (b) upon the closing of an Initial Public Equity Offering but
only in respect of Warrants, if any, required to be exercised to permit the
holders thereof to sell Shares pursuant to their registration rights, (3) a
class of equity securities of the Company is listed on a national securities
exchange or authorized for quotation on the The Nasdaq Stock Market or is
otherwise subject to registration under the Exchange Act, or (4) September 1,
2000.
"INITIAL PUBLIC EQUITY OFFERING" means an initial public offering of equity
securities of the Company (whether or not underwritten and whether or not
pursuant to a primary or secondary offering but excluding any offering pursuant
to Form S-8 under the Securities Act or any other publicly registered offering
pursuant to an issuance of shares of Common Stock or securities exercisable
therefor under any benefit plan, employee compensation plan, or employee or
director stock purchase plan) pursuant to an effective registration statement
under the Securities Act.
18
"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity, including any predecessor of any such entity.
"VOTING STOCK" means, with respect to any Person, the Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors
or other members of the governing body of such Person.
"WARRANT CHANGE OF CONTROL" shall mean the occurrence of any of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")), excluding WorldCom Inc., a Georgia corporation ("WORLDCOM")
and its Affiliates, is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has or acquires
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of the
total voting power of all Voting Stock of the Company or has, directly or
indirectly, the right to elect or designate a majority of the Board of Directors
of the Company; or (b) the Company consolidates with, or merges with or into,
another Person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding Voting Stock of the Company
is converted into or exchanged for cash, securities or other property, other
than any such transaction where (i) the outstanding Voting Stock of the Company
is converted into or exchanged for Voting Stock of the surviving or transferee
corporation or its parent corporation, (ii) the "beneficial owners" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time) of the Voting Stock of the Company immediately before such
transaction own, directly or indirectly, immediately after such transaction, at
least a majority of the voting power of all Voting Stock of the surviving or
transferee corporation or its parent corporation immediately after such
transaction, as applicable, and (iii) no "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), excluding WorldCom and
its Affiliates, is the "beneficial owner" directly or indirectly, of more than
50% of the total voting power of the Voting Stock of the surviving or transferee
corporation or its parent corporation, as applicable, or has, directly or
indirectly, the right to elect or designate a majority of the board of directors
of the surviving or transferee corporation or its parent corporation, as
applicable. The good faith determination by the Board of Directors of the
Company, based upon advice of outside counsel, of the beneficial ownership of
securities of the Company within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act shall be conclusive, absent contrary controlling judicial precedent
or contrary written interpretation published by the Securities and Exchange
Commission.
19
(a) Warrants may be exercised, in whole but not in part, on or after the
date they are exercisable hereunder by (i) surrendering at any office or agency
maintained for that purpose by the Company pursuant to Section 1.10 (each a
"WARRANT EXERCISE OFFICE") the Warrant Certificate evidencing such Warrants with
the form of election to exercise Shares set forth on the reverse side of the
Warrant Certificate (the "ELECTION TO EXERCISE") duly completed and signed by
the registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney, and in the case of a
transfer, such signature shall be guaranteed by an eligible guarantor
institution, and (ii) paying in full the Exercise Price for each such Warrant
exercised. Each Warrant may be exercised only in whole.
(b) Simultaneously with the exercise of each Warrant, payment in full of
the aggregate Exercise Price may be made, at the option of the holder, (i) by
United States dollars or by certified or official bank check, (ii) by the
surrender (which surrender shall be evidenced by cancellation of the number of
Warrants represented by any Warrant Certificate presented in connection with a
Cashless Exercise) of a Warrant or Warrants (represented by one or more Warrant
Certificates), and without payment of the Exercise Price in cash, for such
number of Shares equal to the product of (1) the number of Shares for which such
Warrant is exercisable with payment in cash of the aggregate Exercise Price as
of the date of exercise and (2) the Cashless Exercise Ratio or (iii) with any
combination of (i) and (ii). For purposes of this Agreement, the "CASHLESS
EXERCISE RATIO" shall equal a fraction, the numerator of which is the excess of
the Current Market Value per share of the Common Stock on the date of exercise
over the Exercise Price per share as of the date of exercise, and the
denominator of which is the Current Market Value per share of the Common Stock
on the date of exercise. An exercise of a Warrant in accordance with the
immediately preceding sentences is herein called a "CASHLESS EXERCISE". Upon
surrender of a Warrant Certificate representing more than one Warrant in
connection with the holder's option to elect a Cashless Exercise, the number of
Shares deliverable upon a Cashless Exercise shall be equal to the Cashless
Exercise Ratio multiplied by the product of (a) the number of Warrants that the
holder specifies is to be exercised pursuant to a Cashless Exercise and (b) the
aggregate number of Shares for which such Warrants is then exercisable (without
giving effect to the Cashless Exercise option). All provisions of this Agreement
shall be applicable with respect to an exercise of a Warrant Certificate
pursuant to a Cashless Exercise for less than the full number of Warrants
represented thereby. No payment or adjustment shall be made on account of any
dividends on the Shares issued upon exercise of a Warrant. If the Company has
not effected the registration under the Securities Act of the offer and sale of
the Shares by the Company to the holders of the Warrants upon the exercise
thereof, the Company may elect to require that holders of the Warrants effect
the exercise of the Warrants solely pursuant to the Cashless Exercise option and
may also amend the Warrants to eliminate the requirement for payment of the
Exercise Price with respect to such Cashless Exercise option. The Warrant Agent
shall have no obligation under this section to calculate the Cashless Exercise
Ratio.
(c) Upon such surrender of a Warrant Certificate and payment and collection
of the Exercise Price at any Warrant Exercise Office (other than any Warrant
Exercise Office that also is an office of the Warrant Agent), such Warrant
Certificate and payment shall be promptly delivered
20
to the Warrant Agent. The "EXERCISE DATE" for a Warrant shall be the date when
all of the items referred to in the first sentence of paragraphs (b) and (c) of
this Section 2.02 are received by the Warrant Agent at or prior to 11:00 a.m.,
New York City time, on a Business Day and the exercise of the Warrants will be
effective as of such Exercise Date. If all items referred to in the first
sentence of paragraphs (b) and (c) are received after 11:00 a.m., New York City
time, on a Business Day, the exercise of the Warrants to which such items relate
will be effective on the next succeeding Business Day. Notwithstanding the
foregoing, in the case of an exercise of Warrants on the Expiration Date, if all
of the items referred to in the first sentence of paragraphs (b) and (c) are
received by the Warrant Agent at or prior to 5:00 p.m., New York City time, on
the Expiration Date, the exercise of the Warrants to which such items relate
will be effective on the Expiration Date.
(d) Upon the exercise of a Warrant in accordance with the terms hereof, the
receipt of a Warrant Certificate and payment of the Exercise Price (or election
of the Cashless Exercise option), the Warrant Agent shall: (i) except to the
extent exercise of the Warrant has been effected through Cashless Exercise,
cause an amount equal to the aggregate Exercise Price to be paid to the Company
by crediting the same to the account designated by the Company in writing to the
Warrant Agent for that purpose; (ii) advise the Company immediately by telephone
of the amount so deposited to the Company's account and promptly confirm such
telephonic advice in writing; and (iii) as soon as practicable, advise the
Company in writing of the number of Warrants exercised in accordance with the
terms and conditions of this Agreement and the Warrant Certificates, the
instructions of each exercising holder of the Warrant Certificates with respect
to delivery of the Shares to which such holder is entitled upon such exercise,
and such other information as the Company shall reasonably request.
(e) Subject to Section 5.02 hereof, as soon as practicable after the
exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
registered holder of the Warrant Certificate evidencing such exercised Warrant
or Warrants, a certificate or certificates evidencing the Shares to which such
holder is entitled, in fully registered form, registered in such name or names
as may be directed by such holder pursuant to the Election to Exercise, as set
forth on the reverse of the Warrant Certificate. Such certificate or
certificates evidencing the Shares shall be deemed to have been issued and any
Persons who are designated to be named therein shall be deemed to have become
the holder of record of such Shares as of the close of business on the Exercise
Date; the Shares may initially be issued in global form (the "GLOBAL SHARES").
Such Global Shares shall represent such of the outstanding Shares as shall be
specified therein and each shall provide that it shall represent the aggregate
amount of outstanding Shares from time to time endorsed thereon and that the
aggregate amount of outstanding Shares represented thereby may from time to time
be reduced or increased, as appropriate. Any endorsement of a Global Share to
reflect the amount of any increase or decrease in the amount of outstanding
Shares represented thereby shall be made by the registrar for the Shares and the
Depositary (referred to below) in accordance with instructions given by the
holder thereof. The Depository Trust Company shall (if possible) act as the
Depositary with respect to the Global Shares until a successor shall be
appointed by the Company and the registrar for the Shares. After such exercise
of any Warrant or Warrants, the Company shall also issue or cause to be issued
to or
21
upon the written order of the registered holder of such Warrant Certificate, a
new Warrant Certificate, countersigned by the Warrant Agent pursuant to written
instruction, evidencing the number of Warrants, if any, remaining unexercised
unless such Warrants shall have expired.
SECTION 2.03. CANCELLATION OF WARRANT CERTIFICATES. In the event the
Company shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall at the Company's written instruction be canceled by it and
retired. The Warrant Agent shall cancel all Warrant Certificates properly
surrendered for exchange, substitution, transfer or exercise. Upon the Company's
written request, the Warrant Agent shall deliver such canceled Warrant
Certificates to the Company.
SECTION 2.04. NOTICE OF AN EXERCISE EVENT. The Company shall, as soon as
practicable after the occurrence of an Exercise Event, send or cause to be sent
to each holder of Warrants, and to each beneficial owner of the Warrants with
respect to which such Exercise Event has occurred to the extent that the
Warrants are held of record by a depositary or other agent (with a copy to the
Warrant Agent), by first-class mail, at the addresses appearing on the Warrant
Register, a notice prepared by the Company advising such holder of the Exercise
Event which has occurred, which notice shall describe the type of Exercise Event
and the date of the occurrence thereof, as applicable, and the date and time of
expiration of the right to exercise the Warrants prominently set forth in the
face of such notice.
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. ENFORCEMENT OF RIGHTS. (a) Notwithstanding any of the
provisions of this Agreement, any holder of a Warrant Certificate, without the
consent of the Warrant Agent, the holder of any Shares or the holder of any
other Warrant Certificate, may, in and for his own behalf, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce his right to exercise the Warrant or Warrants evidenced by
his Warrant Certificate in the manner provided in such Warrant Certificate and
in this Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall entitle the
holders thereof to any of the rights of a holder of Shares, including, without
limitation, the right to vote or to receive any dividends or other payments or
to consent or to receive notice as stockholders in respect of the meetings of
stockholders or for the election of directors of the Company or any other
matter, or any rights whatsoever as stockholders of the Company, except as
expressly provided herein (including Section 5.03 hereof).
SECTION 3.02. OBTAINING STOCK EXCHANGE LISTINGS. The Company will from time
to time take all action which may be necessary so that the Shares, immediately
upon their issuance upon the exercise of Warrants, will be listed on the
principal securities exchanges and markets within
22
the United States (including the Nasdaq National Market), if any, on which other
shares of Common Stock are then listed.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrants and of the Shares upon
the exercise of Warrants; PROVIDED, HOWEVER, that the Company shall not be
required to pay any tax or other governmental charge which may be payable in
respect of any transfer or exchange of any Warrant Certificates or any
certificates for Shares in a name other than the registered holder of a Warrant
Certificate surrendered upon the exercise of a Warrant. In any such case, no
transfer or exchange shall be made unless or until the person or persons
requesting issuance thereof shall have paid to the Company the amount of such
tax or other governmental charge or shall have established to the satisfaction
of the Company that such tax or other governmental charge has been paid or an
exemption is available therefrom.
SECTION 4.02. QUALIFICATION UNDER THE SECURITIES LAWS. (a) Immediately
prior to the occurrence of an Exercise Event (or, in the case of a Warrant
Change of Control, as promptly as practicable thereafter), the Company will, if
permitted by applicable law, take all such action as is necessary to cause the
offer and sale by the Company of the Shares issuable or deliverable upon
exercise of the Warrants to be registered or otherwise qualified under the
provisions of the Securities Act and pursuant to all applicable state securities
laws and to provide for the issuance of all Shares delivered upon exercise of
the Warrants pursuant to an effective shelf registration statement under the
Securities Act. Subject to the last sentence of this Section 4.02(a) and to
paragraph (b) of this Section 4.02, so long as any unexpired Warrants which have
become exercisable due to the occurrence of an Exercise Event remain
outstanding, the Company will file such amendments and/or supplements to any
registration statement under the Securities Act or under any state securities
laws covering the issuance of such Shares and supplement and keep current any
prospectus forming a part of such registration statement as may be necessary to
permit the Company to deliver to each person exercising a Warrant a prospectus
meeting the requirements of Section 10(a)(3) of the Securities Act (a
"PROSPECTUS") and the regulations of the Securities and Exchange Commission and
otherwise complying with the Securities Act and regulations thereunder, and as
may be necessary to comply with any applicable state securities laws. The
Warrant Agent shall have no duty to monitor when such registration or
qualification is necessary nor shall the Warrant Agent be responsible for the
Company's failure to comply with this Section 4.02. The Company's obligation to
cause a shelf registration statement to become effective and maintain a
Prospectus for delivery to each person exercising a Warrant shall be terminated
on the date the Company delivers to the Warrant Agent an unqualified opinion of
counsel reasonably satisfactory to the Warrant Agent to the effect that all
Shares registrable or deliverable upon exercise of the Warrants may be issued
without the
23
requirement of registration under the Securities Act and will be freely
transferable after receipt without limitation under the Securities Act.
(b) The Company may suspend the effectiveness of such shelf registration
statement and the use of any related prospectus in the event that, and for a
period not to exceed an aggregate of 60 days in any calendar year if, (i) an
event occurs and is continuing as a result of which the shelf registration
statement would, in the Company's good faith judgement, which determination
shall be evidenced by a resolution of the Company's board of directors, contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make statements therein, in the light of the circumstances
under which they were made, not misleading, and (ii)(a) the Company determines
in its good faith judgment, which determination shall be evidenced by a
resolution of the Company's board of directors, that (A) the disclosure of such
event at such time would have a material adverse effect on the business,
operations or prospects of the Company (PROVIDED the Company is not otherwise
required to disclose such event) or (b) the disclosure relates to a pending
material business transaction which has not yet been publicly disclosed and
disclosure of such event at that time would jeopardize the success of such
transaction.
SECTION 4.03. RULES 144 AND 144A. The Company covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission thereunder in a timely manner in accordance with the requirements of
the Securities Act and the Exchange Act and, if at any time the Company is not
required to file such reports, it will, upon the request of any holder or
beneficial owner of Warrants or Shares, make available such information
necessary to permit sales pursuant to Rule 144A under the Securities Act.
SECTION 4.04. FORM OF INITIAL PUBLIC EQUITY OFFERING. The Company agrees
that it will not make an Initial Public Equity Offering of any class of its
Capital Stock other than the principal class and series of Capital Stock into
which the Warrants are then exercisable.
SECTION 4.05. REGISTRATION OF SHARES. The Company agrees that it will
comply with all applicable laws, including the Securities Act and any applicable
state securities laws, in connection with the offer and sale of Shares (and
other securities and property deliverable) upon exercise of the Warrants.
ARTICLE V
ADJUSTMENTS
SECTION 5.01. ADJUSTMENT OF EXERCISE RATE; NOTICES. The Exercise Rate is
subject to adjustment from time to time as provided in this Section.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If, after the date hereof, the
Company:
24
(i) pays a dividend or makes a distribution on any of its Common Stock
in shares of any of its Common Stock (other than any such dividend to the
extent covered by Section 5.03);
(ii) subdivides any of its outstanding shares of Common Stock into a
greater number of shares;
(iii) combines any of its outstanding shares of Common Stock into a
smaller number of shares;
(iv) pays a dividend or makes a distribution on any of its Common
Stock in shares of any of its Capital Stock (as defined below) (other than
Common Stock or rights, warrants, or options for its Common Stock to the
extent such issuance or distribution is covered by Section 5.03); or
(v) issues by reclassification of any of its Common Stock any shares
of any of its Capital Stock;
then the Exercise Rate in effect immediately prior to such action for each
Warrant then outstanding shall be adjusted so that the holder of a Warrant
thereafter exercised may receive the number of shares of Capital Stock of the
Company which such holder would have owned immediately following such action if
such holder had exercised the Warrant immediately prior to such action or
immediately prior to the record date applicable thereto, if any (regardless of
whether the Warrants then outstanding are then exercisable and without giving
effect to the Cashless Exercise option). If there are no outstanding shares of
Common Stock that are of the same class as the Shares at the time of any such
action and such action has therefore been taken only in respect of the Shares,
the adjustment shall relate to the Shares in their same form if it would not
frustrate the intent and purposes of this Section 5.01.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification. In the event that
such dividend or distribution is not so paid or made or such subdivision,
combination or reclassification is not effected, the Exercise Rate shall again
be adjusted to be the Exercise Rate which would then be in effect if such record
date or effective date had not been so fixed.
If after an adjustment a holder of a Warrant upon exercise of such Warrant
may receive shares of two or more classes of Capital Stock of the Company, the
Exercise Rate shall thereafter be subject to adjustment upon the occurrence of
an action taken with respect to any such class of Capital Stock as is
contemplated by this Article V with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article V.
25
(b) ADJUSTMENT FOR SALE OF COMMON STOCK BELOW CURRENT MARKET VALUE. If,
after the date hereof, the Company grants or sells to any Interested Person
(other than a wholly-owned subsidiary) any Common Stock or any securities
convertible into or exchangeable or exercisable for any Common Stock at a price
below the then Current Market Value (other than (1) pursuant to the exercise of
the Warrants, (2) pursuant to any security convertible into, or exchangeable or
exercisable for shares of Common Stock outstanding as of the date of this
Agreement, (3) upon the conversion, exchange or exercise of any convertible,
exchangeable or exercisable security as to which upon the issuance thereof an
adjustment pursuant to this Article V has previously been made, or (4) upon the
conversion, exchange or exercise of convertible, exchangeable or exercisable
securities of the Company outstanding on the date of this Agreement (to the
extent in accordance with the terms of such securities as in effect on the date
of this Agreement)), the Exercise Rate for each Warrant then outstanding shall
be adjusted in accordance with the following formula:
E' = E x (O + N)
---------------
(O + (N x P/M))
where:
E' = the adjusted Exercise Rate for each Warrant then outstanding;
E = the then current Exercise Rate for each Warrant then outstanding;
O = the number of shares of Common Stock outstanding immediately prior to the
sale of Common Stock or issuance of securities convertible, exchangeable or
exercisable for Common Stock;
N = the number of shares of Common Stock so sold or the maximum stated number
of shares of Common Stock issuable upon the conversion, exchange or
exercise of any such convertible, exchangeable or exercisable securities,
as the case may be;
P = the proceeds per share of Common Stock received by the Company, which (i)
in the case of shares of Common Stock is the amount received by the Company
in consideration for the sale and issuance of such shares; and (ii) in the
case of securities convertible into or exchangeable or exercisable for
shares of Common Stock is the amount received by the Company in
consideration for the sale and issuance of such convertible or exchangeable
or exercisable securities, plus the minimum aggregate amount of additional
consideration, other than the surrender of such convertible or exchangeable
securities, payable to the Company upon exercise, conversion or exchange
thereof; and
M = the Current Market Value as of the Time of Determination or at the time of
sale, as the case may be.
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The adjustment shall become effective (i) immediately after grant to an
Interested Person of the convertible, exchangeable or exercisable securities to
which this paragraph (b) applies or (ii) upon consummation of the sale of such
securities or Common Stock to an Interested Person, as the case may be. To the
extent that shares of Common Stock are not delivered after the expiration of
such convertible, exchangeable or exercisable securities, the Exercise Rate for
each Warrant then outstanding shall be readjusted to the Exercise Rate which
would otherwise be in effect had the adjustment made upon the grant or sale of
such convertible, exchangeable or exercisable securities been made on the basis
of only the number of shares of Common Stock actually delivered upon conversion,
exchange or exercise of such securities. In the event that such convertible,
exchangeable or exercisable securities are not issued after the grant thereof,
the Exercise Rate for each Warrant then outstanding shall be adjusted to be the
Exercise Rate which would then be in effect if no adjustment had been made to
the Exercise Rate for the grant of such convertible, exchangeable or exercisable
securities.
No adjustment shall be made under this paragraph (b) if the application of
the formula stated above in this paragraph (b) would result in a value of E'
that is lower than the value of E.
No adjustment shall be made under this paragraph (b) for any sale of Common
Stock that has been the subject of a previous adjustment pursuant to this
paragraph (b)(unless the terms of the securities on which the basis for such
adjustment was made are changed in a manner that decreases the sale price of the
Common Stock, in which event an adjustment shall be made to reflect such
decrease).
No adjustment shall be made under this paragraph (b) if any convertible,
exchangeable or exercisable securities to which this paragraph (b) would
otherwise apply are distributed to the holders of Warrants pursuant to Section
5.03.
No adjustment in the Exercise Rate shall be made under this paragraph (b)
upon the conversion, exchange or exercise of options to acquire shares of Common
Stock by officers, directors or employees of the Company; PROVIDED that the
exercise price of such options, at the time of issuance thereof, is at least
equal to the then Current Market Value of the Common Stock underlying such
options.
No adjustment in the Exercise Rate shall be made under this paragraph (b)
in connection with or upon the issuance of shares Common Stock to the former
stockholders of 4-Sight Limited, a private limited company organized under the
laws of England and Wales, pursuant to and in accordance with that certain stock
purchase agreement, dated February 10, 1998, between the Company and the
stockholders of 4-Sight Limited.
"INTERESTED PERSON" means (i) any Affiliate of the Company, (ii) any holder
of 10% of more in voting power of the outstanding Capital Stock of the Company
or (iii) any member of the Board of Directors or any executive officer of the
Company.
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(c) NOTICE OF ADJUSTMENT. Whenever the Exercise Rate is adjusted, the
Company shall promptly mail to holders of Warrants then outstanding at the
addresses appearing on the Warrant Register a notice of the adjustment. The
Company shall file with the Warrant Agent and any other Registrar such notice
and a certificate from the Company's independent public accountants briefly
stating the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence that the adjustment is correct, absent
manifest error. Neither the Warrant Agent nor any such Registrar shall be under
any duty or responsibility with respect to any such certificate except to
exhibit the same during normal business hours to any holder desiring inspection
thereof.
(d) REORGANIZATION OF COMPANY; SPECIAL DISTRIBUTIONS. (i) If the Company,
in a single transaction or through a series of related transactions, merges,
consolidates or amalgamates with or into any other person or sells, assigns,
transfers, leases, conveys or otherwise disposes of all or substantially all of
its properties and assets to another person or group of affiliated persons or is
a party to a merger or binding share exchange which reclassifies or changes its
outstanding Common Stock (a "FUNDAMENTAL TRANSACTION"), as a condition to
consummating any such transaction the person formed by any such consolidation or
merger (if other than the Company) or the person to whom such transfer has been
made (the "SURVIVING PERSON") shall enter into a supplemental warrant agreement.
The supplemental warrant agreement shall provide (a) that the holder of a
Warrant then outstanding may exercise it for the kind and amount of securities,
cash or other assets which such holder would have received immediately after the
Fundamental Transaction if such holder had exercised the Warrant immediately
before the effective date of the transaction (regardless of whether the Warrants
are then exercisable and without giving effect to the Cashless Exercise option),
assuming (to the extent applicable) that such holder (i) made no election with
respect to the form of consideration payable in such transaction and (ii) was
treated alike with the plurality of non-electing holders, and (b) that the
Surviving Person shall succeed to and be substituted to every right and
obligation of the Company in respect of this Agreement and the Warrants. The
supplemental warrant agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article V. The Surviving Person shall mail to holders of Warrants at the
addresses appearing on the Warrant Register a notice briefly describing the
supplemental warrant agreement. If the issuer of securities deliverable upon
exercise of Warrants is an affiliate of the Surviving Person, that issuer shall
join in the supplemental warrant agreement.
(ii) Notwithstanding the foregoing, if the Company enters into a
Fundamental Transaction with another Person (other than a subsidiary of the
Company) and the consideration payable in such Fundamental Transaction to
holders of the shares of Capital Stock (and other securities or property)
issuable or deliverable upon exercise of the Warrants consists solely of cash,
then the holders of Warrants shall be entitled to receive such cash on the date
of consummation of the Fundamental Transaction on an equal basis with holders of
such shares (or other securities issuable upon exercise of the Warrants) as if
the Warrants had been exercised immediately prior to such event, less the
Exercise Price therefor. Upon receipt of such cash payment the rights of a
holder of a Warrant shall terminate and cease and such holder's Warrants shall
expire.
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(iii) If this paragraph (d) applies, it shall supersede the application of
paragraph (a) of this Section 5.01.
(e) COMPANY DETERMINATION FINAL. Any determination that the Company or the
Board of Directors of the Company make that must be made pursuant to this
Article V shall be conclusive.
(f) WARRANT AGENT'S ADJUSTMENT DISCLAIMER. The Warrant Agent has no duty to
determine when an adjustment under this Article V should be made, how it should
be made or what it should be. The Warrant Agent has no duty to determine whether
a supplemental warrant agreement under paragraph (d) need be entered into or
whether any provisions of any supplemental warrant agreement are correct. The
Warrant Agent shall not be accountable for and makes no representation as to the
validity or value of any securities or assets issued upon exercise of Warrants.
The Warrant Agent shall not be responsible for the Company's failure to comply
with this Article V.
(g) ADJUSTMENT FOR TAX PURPOSES. The Company may make such increases in the
Exercise Rate, in addition to those otherwise required by this Section, as it
considers to be advisable in order that any event treated for Federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.
(h) UNDERLYING SHARES. The Company shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
Common Stock or Common Stock held in the treasury of the Company, for the
purpose of effecting the exercise of Warrants, the full number of Shares then
deliverable upon the exercise of all Warrants then outstanding, and the shares
so deliverable shall be fully paid and nonassessable and free from all liens and
security interests.
(i) SPECIFICITY OF ADJUSTMENT. Irrespective of any adjustments in the
number or kind of shares purchasable upon the exercise of the Warrants, Warrant
Certificates theretofore or thereafter issued may continue to express the same
number and kind of Shares per Warrant as are stated on the Warrant Certificates
initially issuable pursuant to this Agreement.
(j) VOLUNTARY ADJUSTMENT. The Company from time to time may increase the
Exercise Rate by any number and for any period of time (PROVIDED that such
period is not less than 20 Business Days). Whenever the Exercise Rate is so
increased, the Company shall mail to holders at the addresses appearing on the
Warrant Register and file with the Warrant Agent a notice of the increase. The
Company shall give the notice at least 15 days before the date the increased
Exercise Rate takes effect. The notice shall state the increased Exercise Rate
and the period it will be in effect.
(k) MULTIPLE ADJUSTMENTS. After an adjustment to the Exercise Rate for
outstanding Warrants under this Article V, any subsequent event requiring an
adjustment under this Article V shall cause an adjustment to the Exercise Rate
for outstanding Warrants as so adjusted.
(l) DEFINITIONS.
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"AFFILIATE" of any specified Person means any other Person which, directly
or indirectly, controls, is controlled by or is under direct or indirect common
control with such specified Person. For purposes of this definition, "CONTROL"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"AFFILIATED," "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing. None of the Initial Purchasers or any of their Affiliates shall be
deemed to be an Affiliate of the Company or of any of its subsidiaries or
Affiliates.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock, whether
outstanding on the date hereof or issued after the date hereof, and any and all
rights, warrants or options or other securities exchangeable for or convertible
into such capital stock.
"CURRENT MARKET VALUE" per share of Common Stock or any other security at
any date of determination means (i) if the security is not traded on a national
or regional securities exchange, The Nasdaq Stock Market or in a recognized
over-the-counter market (a "Quoted Security"), (a) the fair market value of the
security, as determined in good faith by the Board of Directors of the Company
and certified in a board resolution delivered to the Warrant Agent, which shall
be based on the most recently completed arms-length transaction between the
Company and a person other than an Affiliate of the Company, the closing of
which shall have occurred within the six-month period preceding such
determination, or (b) if no such transaction shall have occurred within such
six-month period, the fair market value of the security as determined by a
nationally or regionally recognized independent financial expert (provided that,
in the case of the calculation of Current Market Value solely for determining
the cash value of fractional shares, the last determination of Current Market
Value pursuant to this clause (i), if made within the preceding six months, may
be utilized), which determination shall be set forth in an officers' certificate
delivered to the Warrant Agent, or (ii) (a) if the security is a Quoted
Security, the average of the daily closing sales prices of such security for the
20 consecutive trading days immediately preceding such date, or (b) if the
security has been a Quoted Security for less than 20 consecutive trading days
before such date, then the average of the daily closing sales prices for all of
the trading days before such date for which closing sales prices are available.
The closing sales price of a security for each such trading day shall be: (A) in
the case of a security listed or admitted to trading on any United States
national or regional securities exchange or on The Nasdaq Stock Market, the
closing sales price, regular way, on such day, or if no sale takes place on such
day, the average of the closing bid and asked prices on such day or (B) in the
case of a security not then listed or admitted to trading on any national or
regional securities exchange or The Nasdaq Stock Market, the average of the
closing bid and asked prices on such day, as reported by a reputable quotation
source designated by the Company, or in the case of a security as to which no
such reported bid and asked prices are available on such day, the average of the
reported high bid and low asked prices on such day, as reported by a reputable
quotation service, or a newspaper of general circulation in the Borough of
Manhattan, City and State
30
of New York, customarily published on each business day, designated by the
Company, or, if there shall be no bid and asked prices on such day, the average
of the high bid and low asked prices, as so reported, on the most recent day
(not more than two days prior to the date in question) for which prices have
been so reported; provided, however, that if there are no bid and asked prices
reported for such security during such two-day period, Current Market Value
shall be determined as if the security were not a Quoted Security.
"INDEPENDENT FINANCIAL EXPERT" means a United States investment banking
firm of national or regional standing in the United States (i) which does not,
and whose directors and executive officers or Affiliates do not have a direct or
indirect material financial interest for its or their proprietary account in the
Company or any of its Affiliates and (ii) which, in the judgment of the Board of
Directors of the Company, is otherwise independent with respect to the Company
and its Affiliates and qualified to perform the task for which it is to be
engaged.
"TIME OF DETERMINATION" means, (i) in the case of any distribution of
securities or other property to existing stockholders to which paragraph (b)
applies, the time and date of the determination of stockholders entitled to
receive such securities or property or (ii) in the case of any other issuance
and sale to which paragraph (b) applies, the time and date of such issuance or
sale.
(m) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No Adjustment in the
Exercise Rate need be made unless the adjustment would require an increase of at
least 1% in the Exercise Rate. Any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustments. All
calculations under this Section 5 shall be made to the nearest 1/1000th of a
share, as the case may be.
SECTION 5.02. FRACTIONAL SHARES. The Company will not be required to issue
fractional Shares upon exercise of the Warrants or distribute Share certificates
that evidence fractional Shares. In addition, in no event shall any holder of
Warrants be required to make any payment of a fractional cent. In lieu of
fractional Shares, there shall be paid to the registered holders of Warrant
Certificates at the time Warrants evidenced thereby are exercised as herein
provided an amount in cash (rounded to the nearest cent) equal to the same
fraction of the Current Market Value per Share on the Business Day immediately
preceding the exercise of such Warrants. Such payments will be made by check or
by transfer to an account maintained by such registered holder with a bank in
The City of New York. If any holder surrenders for exercise more than one
Warrant Certificate, the number of Shares deliverable to such holder shall be
computed on the basis of the aggregate amount of all the Warrants exercised by
such holder.
SECTION 5.03. CERTAIN DISTRIBUTIONS. If at any time the Company grants,
issues or sells options, convertible securities or rights to purchase Capital
Stock, warrants or other securities PRO RATA to the record holders of Common
Stock (the "DISTRIBUTION RIGHTS") or, without duplication, makes any dividend or
otherwise makes any distribution, including, subject to applicable law, pursuant
to any plan of liquidation ("DISTRIBUTION") on Common Stock (whether in cash,
property, evidences of indebtedness or otherwise), then the Company shall grant,
issue, sell or make to each
31
registered holder of Warrants then outstanding the aggregate Distribution Rights
or Distribution, as the case may be, which such holder would have acquired if
such holder had held the maximum number of Shares acquirable upon complete
exercise of such holder's Warrants (regardless of whether the Warrants are then
exercisable and without giving effect to the Cashless Exercise option)
immediately before the record date for the grant, issuance or sale of such
Distribution Rights or Distribution, as the case may be, or, if there is no such
record date, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Distribution Rights or
Distribution, as the case may be.
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. WARRANT AGENT. The Company hereby appoints First Trust
National Association as Warrant Agent of the Company in respect of the Warrants
and the Warrant Certificates upon the terms and subject to the conditions herein
and in the Warrant Certificates set forth, and First Trust National Association
hereby accepts such appointment. The Warrant Agent shall have the powers and
authority specifically granted to and conferred upon it in the Warrant
Certificates and hereby and such further powers and authority to act on behalf
of the Company as the Company may hereafter grant to or confer upon it and it
shall accept in writing. All of the terms and provisions with respect to such
powers and authority contained in the Warrant Certificates are subject to and
governed by the terms and provisions hereof. The Warrant Agent may act through
agents and shall not be responsible for the misconduct or negligence of any such
agent appointed with due care.
SECTION 6.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant Agent
accepts its obligations herein set forth upon the terms and conditions hereof
and in the Warrant Certificates, including the following, to all of which the
Company agrees and to all of which the rights hereunder of the holders from time
to time of the Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to compensation to be agreed
upon with the Company in writing for all services rendered by it and the
Company agrees promptly to pay such compensation and to reimburse the
Warrant Agent for its reasonable out-of-pocket expenses (including
reasonable fees and expenses of counsel) incurred without gross negligence
or willful misconduct on its part in connection with the services rendered
by it hereunder. The Company also agrees to indemnify the Warrant Agent and
any predecessor Warrant Agent, their directors, officers, affiliates,
agents and employees for, and to hold them and their directors, officers,
affiliates, agents and employees harmless against, any loss, liability or
expense of any nature whatsoever (including, without limitation, reasonable
fees and expenses of counsel) incurred without gross negligence or willful
misconduct on the part of the Warrant Agent, arising out of or in
connection with its acting as such Warrant Agent hereunder and its exercise
of its rights and performance of its obligations hereunder. The
32
obligations of the Company under this Section 6.02 shall survive the
exercise and the expiration of the Warrant Certificates and the resignation
and removal of the Warrant Agent.
(b) In acting under this Agreement and in connection with the Warrant
Certificates, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship of agency or trust for
or with any of the owners or holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel of its selection and
any advice or written opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with such advice or
opinion.
(d) The Warrant Agent shall be fully protected and shall incur no
liability for or in respect of any action taken or omitted to be taken or
thing suffered by it in reliance upon any Warrant Certificate, notice,
direction, consent, certificate, affidavit, opinion of counsel,
instruction, statement or other paper or document reasonably believed by it
to be genuine and to have been presented or signed by the proper parties.
(e) The Warrant Agent, and its officers, directors, affiliates and
employees ("RELATED PARTIES"), may become the owners of, or acquire any
interest in, Warrant Certificates, shares or other obligations of the
Company with the same rights that it or they would have it if were not the
Warrant Agent hereunder and, to the extent permitted by applicable law, it
or they may engage or be interested in any financial or other transaction
with the Company and may act on, or as depositary, trustee or agent for,
any committee or body of holders of shares or other obligations of the
Company as freely as if it were not the Warrant Agent hereunder. Nothing in
this Agreement shall be deemed to prevent the Warrant Agent or such Related
Parties from acting in any other capacity for the Company.
(f) The Warrant Agent shall not be under any liability for interest
on, and shall not be required to invest, any monies at any time received by
it pursuant to any of the provisions of this Agreement or of the Warrant
Certificates.
(g) The Warrant Agent shall not be under any responsibility in respect
of the validity of this Agreement (or any term or provision hereof) or the
execution and delivery hereof (except the due execution and delivery hereof
by the Warrant Agent) or in respect of the validity or execution of any
Warrant Certificate (except its authentication thereof).
(h) The recitals and other statements contained herein and in the
Warrant Certificates (except as to the Warrant Agent's authentication
thereon) shall be taken as the statements of the Company and the Warrant
Agent assumes no responsibility for the correctness of the same. The
Warrant Agent does not make any representation as to the validity or
sufficiency of this Agreement or the Warrant Certificates, except for its
due execution and delivery of
33
this Agreement; PROVIDED, HOWEVER, that the Warrant Agent shall not be
relieved of its duty to authenticate the Warrant Certificates as authorized
by this Agreement. The Warrant Agent shall not be accountable for the use
or application by the Company of the proceeds of the exercise of any
Warrant.
(i) Before the Warrant Agent acts or refrains from acting with respect
to any matter contemplated by this Warrant Agreement, it may require:
(1) an Officers' Certificate stating on behalf of the Company
that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Warrant Agreement relating to the proposed action
have been complied with; and
(2) if reasonably necessary in the sole judgment of the Warrant
Agent, an opinion of counsel for the Company stating that, in the
opinion of such counsel, all such conditions precedent have been
complied with provided that such matter is one customarily opined on
by counsel.
Each Officers' Certificate or, if requested, an opinion of counsel with
respect to compliance with a condition or covenant provided for in this Warrant
Agreement shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she
has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform such duties as are
herein and in the Warrant Certificates specifically set forth and no implied
duties or obligations shall be read into this Agreement or the Warrant
Certificates against the Warrant Agent. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates authenticated by the Warrant Agent and delivered
by it to the Company pursuant to this Agreement. The Warrant Agent shall have no
duty or responsibility in case of any default by the Company in the performance
of its covenants or agreements contained in the Warrant Certificates or in the
case of the receipt of any written demand from a holder of a Warrant Certificate
with
34
respect to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or, except as provided in Section 7.02 hereof,
to make any demand upon the Company.
(k) Unless otherwise specifically provided herein, any order, certificate,
notice, request, direction or other communication from the Company made or given
under any provision of this Agreement shall be sufficient if signed by its
Chairman of the Board of Directors, its President, its Treasurer, its Controller
or any Vice President or its Secretary or any Assistant Secretary.
(l) The Warrant Agent shall have no responsibility in respect of any
adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing by the Warrant
Agent of the provisions of this Agreement.
(n) The Warrant Agent is hereby authorized and directed to accept written
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board of Directors, the President, the Treasurer, the
Controller, any Vice President or the Sec retary or any Assistant Secretary of
the Company or any other officer or official of the Company reasonably believed
to be authorized to give such instructions and to apply to such officers or
officials for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions with respect to any matter arising in connection
with the Warrant Agent's duties and obligations arising under this Agreement.
Such application by the Warrant Agent for written instructions from the Company
may, at the option of the Warrant Agent, set forth in writing any action
proposed to be taken or omitted by the Warrant Agent with respect to its duties
or obligations under this Agreement and the date on or after which such action
shall be taken and the Warrant Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall be not less than 10 Business
Days after the Company receives such application unless the Company consents to
a shorter period), provided that (i) such application includes a statement to
the effect that it is being made pursuant to this paragraph (n) and that unless
objected to prior to such date specified in the application, the Warrant Agent
will not be liable for any such action or omission to the extent set forth in
such paragraph (n) and (ii) prior to taking or omitting any such action, the
Warrant Agent has not received written instructions objecting to such proposed
action or omission.
(o) Whenever in the performance of its duties under this Agreement the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
35
established by a certificate signed on behalf of the Company by any one of the
Chairman of the Board of Directors, the President, the Treasurer, the
Controller, any Vice President or the Secretary or any Assistant Secretary of
the Company or any other officer or official of the Company reasonably believed
to be authorized to give such instructions and delivered to the Warrant Agent;
and such certificate shall be full authorization to the Warrant Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(p) The Warrant Agent shall not be required to risk or expend its own funds
in the performance of its obligations and duties hereunder.
SECTION 6.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR. (a) The Company
agrees, for the benefit of the holders from time to time of the Warrant
Certificates, that there shall at all times be a Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent by giving
written notice to the Company of such intention on its part, specifying the date
on which its desired resignation shall become effective; PROVIDED, HOWEVER, that
such date shall be at least 60 days after the date on which such notice is given
unless the Company agrees to accept less notice. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor Warrant Agent,
qualified as provided in Section 6.03(d) hereof, by written instrument in
duplicate signed on behalf of the Company, one copy of which shall be delivered
to the resigning Warrant Agent and one copy to the successor Warrant Agent. As
provided in Section 6.03(d) hereof, such resignation shall become effective upon
the earlier of (x) the acceptance of the appointment by the successor Warrant
Agent or (y) 60 days after receipt by the Company of notice of such resignation.
The Company may, at any time and for any reason, and shall, upon any event set
forth in the next succeeding sentence, remove the Warrant Agent and appoint a
successor Warrant Agent by written instrument in duplicate, specifying such
removal and the date on which it is intended to become effective, signed on
behalf of the Company, one copy of which shall be delivered to the Warrant Agent
being removed and one copy to the successor Warrant Agent. The Warrant Agent
shall be removed as aforesaid if it shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver of the Warrant Agent or of
its property shall be appointed, or any public officer shall take charge or
control of it or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation. Any removal of the Warrant Agent and any
appointment of a successor Warrant Agent shall become effective upon acceptance
of appointment by the successor Warrant Agent as provided in Section 6.03(d). As
soon as practicable after appointment of the successor Warrant Agent, the
Company shall cause written notice of the change in the Warrant Agent to be
given to each of the registered holders of the Warrants in the manner provided
for in Section 8.04 hereof.
(c) Upon resignation or removal of the Warrant Agent, if the Company shall
fail to appoint a successor Warrant Agent within a period of 60 days after
receipt of such notice of resignation or removal, then the holder of any Warrant
Certificate or the retiring Warrant Agent may apply to a court of competent
jurisdiction for the appointment of a successor to the Warrant Agent.
36
Pending appointment of a successor to the Warrant Agent, either by the Company
or by such a court, the duties of the Warrant Agent shall be carried out by the
Company.
(d) Any successor Warrant Agent, whether appointed by the Company or by a
court, shall be a bank or trust company in good standing, incorporated under the
laws of the United States of America or any State thereof and having, at the
time of its appointment, a combined capital surplus of at least $50 million.
Such successor Warrant Agent shall execute and deliver to its predecessor and to
the Company an instrument accepting such appointment hereunder and all the
provisions of this Agreement, and thereupon such successor Warrant Agent,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Warrant Agent hereunder, and such predecessor
shall thereupon become obligated to (i) transfer and deliver, and such successor
Warrant Agent shall be entitled to receive, all securities, records or other
property on deposit with or held by such predecessor as Warrant Agent hereunder
and (ii) upon payment of the amounts then due it pursuant to Section 6.02(a)
hereof, pay over, and such successor Warrant Agent shall be entitled to receive,
all monies deposited with or held by any predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent hereunder may be
merged or converted, or any corporation or bank with which the Warrant Agent may
be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
corporation or bank to which the Warrant Agent shall sell or otherwise transfer
all or substantially all of its corporate trust business, shall be the successor
to the Warrant Agent under this Agreement (provided that such corporation or
bank shall be qualified as aforesaid) without the execution or filing of any
document or any further act on the part of any of the parties hereto.
(f) No Warrant Agent under this Warrant Agreement shall be personally
liable for any action or omission of any successor Warrant Agent.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENT. This Agreement and the terms of the Warrants may
be amended by the Company and the Warrant Agent, without the consent of the
holder of any Warrant Certificate, for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective or inconsistent provision
contained herein or therein, or to effect any assumptions of the Company's
obligations hereunder and thereunder by a successor corporation under the
circumstances described in Section 5.01(d) hereof or in any other manner which
the Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of the Warrant Certificates.
37
The Company and the Warrant Agent may amend, modify or supplement this
Agreement and the terms of the Warrants, and waivers to departures from the
terms hereof and thereof may be given, with the consent of the Requisite Holders
(as defined below) for the purpose of adding any provision to or changing in any
manner or eliminating any of the provisions of this Agreement or modifying in
any manner the rights of the holders of the outstanding Warrants; PROVIDED,
HOWEVER, that no such modification may be made to a Warrant that increases the
Exercise Price or decreases the Exercise Rate, modifies anti-dilution
adjustments to the Exercise Rate in a manner adverse to the holder, makes any
change to the first paragraph of Section 5.01(d), reduces the period of time
during which such Warrant is exercisable hereunder, or effects any change to
this Section 7.01 without the consent of the holder of such Warrant. "REQUISITE
HOLDERS" means (i), in the case of any amendment, modification or supplement
that does not affect Article IV, the holders of a majority of the outstanding
Warrants or (ii) in the case of any amendment, modification or supplement that
affects Article IV, the holders of a majority of (x) the Shares issued upon
exercise of the Warrants that, at the date of determination, are "restricted
securities" within the meaning of the Securities Act and (y) of the outstanding
Warrants (treating for approval purposes each Warrant as entitling the holder to
a vote in an amount equal to the number of Shares issuable upon exercise of such
Warrant in full). Notwithstanding any other provision of this Agreement, the
Warrant Agent's consent must be obtained regarding any supplement or amendment
which alters the Warrant Agent's rights or duties (it being expressly understood
that the foregoing shall not be in derogation of the right of the Company to
remove the Warrant Agent in accordance with Section 6.03 hereof). For purposes
of any amendment, modification or waiver hereunder, Warrants held by the Company
or any of its Affiliates shall be disregarded.
Any modification or amendment made in accordance with this Agreement will
be conclusive and binding on all present and future holders of Warrant
Certificates whether or not they have consented to such modification or
amendment or waiver and whether or not notation of such modification or
amendment is made upon such Warrant Certificates. Any instrument given by or on
behalf of any holder of a Warrant Certificate in connection with any consent to
any modification or amendment will be conclusive and binding on all subsequent
holders of such Warrant Certificate.
SECTION 7.02. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT AGENT. If the
Warrant Agent shall receive any notice or demand addressed to the Company by the
holder of a Warrant Certificate pursuant to the provisions hereof or of the
Warrant Certificates, the Warrant Agent shall promptly forward such notice or
demand to the Company.
SECTION 7.03. ADDRESSES FOR NOTICES TO PARTIES AND FOR TRANSMISSION OF
DOCUMENTS. All notices hereunder to the parties hereto shall be deemed to have
been given when sent by certified or registered mail, postage prepaid, or by
facsimile transmission, confirmed by first class mail, postage prepaid,
addressed to any party hereto as follows:
38
To the Company:
WAM!NET Inc.
6100 West 110th Street
Minneapolis, Minnesota 55438
Facsimile No. (612) 885-0687
Attention: Chief Executive Officer
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Daniel D. Rubino, Esq.
To the Warrant Agent:
First Trust National Association
180 East 5th Street
St. Paul, Minnesota 55104
Facsimile No.: (612) 244-0711
Attention: Corporate Trust Department
Principal Corporate Trust Office in New York City:
100 Wall Street, Suite 2000
New York, NY 10005
or at any other address of which either of the foregoing shall have notified the
other in writing.
SECTION 7.04. NOTICES TO HOLDERS. Notices to holders of Warrants shall be
mailed to such holders at the addresses of such holders as they appear in the
Warrant Register. Any such notice shall be sufficiently given if sent by
first-class mail, postage prepaid.
SECTION 7.05. APPLICABLE LAW; SUBMISSION TO JURISDICTION. THE VALIDITY,
INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER AND OF THE RESPECTIVE TERMS AND PROVISIONS THEREOF SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PROVISIONS THEREOF.
39
SECTION 7.06. PERSONS HAVING RIGHTS UNDER AGREEMENT. Nothing in this
Agreement expressed or implied and nothing that may be inferred from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the Company, the Warrant Agent, the
holders of the Warrant Certificates and, with respect to Section 4.03 and 4.04,
the holders of Shares issued pursuant to Warrants, any right, remedy or claim
under or by reason of this Agreement or of any covenant, condition, stipulation,
promise or agreement hereof; and all covenants (except for Sections 4.03 and
4.04, which shall also be for the benefit of all holders of Shares issued
pursuant to Warrants), conditions, stipulations, promises and agreements in this
Agreement contained shall be for the sole and exclusive benefit of the Company
and the Warrant Agent and their successors and of the holders of the Warrant
Certificates.
SECTION 7.07. HEADINGS. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 7.08. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such counterparts shall together constitute but one and the same instrument.
SECTION 7.09. INSPECTION OF AGREEMENT. A copy of this Agreement shall be
available during regular business hours at the principal corporate trust office
of the Warrant Agent, for inspection by the holder of any Warrant Certificate.
The Warrant Agent may require such holder to submit his Warrant Certificate for
inspection by it.
SECTION 7.10. AVAILABILITY OF EQUITABLE REMEDIES. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, holders of Warrants shall be entitled, in addition to any other right
or remedy available to them, to an injunction restraining such breach or a
threatened breach and to specific performance of any such provision of this
Agreement, and in either case no bond or other security shall be required in
connection therewith, and the parties hereby consent to such injunction and to
the ordering of specific performance.
SECTION 7.11. OBTAINING OF GOVERNMENTAL APPROVALS. The Company will from
time to time take all action required to be taken by it which may be necessary
to obtain and keep effective any and all permits, consents and approvals of
governmental agencies and authorities and securities acts filings under United
States Federal and state laws, and the rules and regulations of all stock
exchanges on which the Warrants are listed which may be or become requisite in
connection with the issuance, sale, transfer, and delivery of the Warrant
Certificates, the exercise of the Warrants or the issuance, sale, transfer and
delivery of the Shares issued upon exercise of the Warrants.
40
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the
parties hereto as of the day and year first above written.
WAM!NET INC.
By: /s/ Edward J. Driscoll III
------------------------------
Name: Edward J. Driscoll III
----------------------------
Title: President and CEO
---------------------------
FIRST TRUST NATIONAL ASSOCIATION,
as Warrant Agent
By: /s/ Kathe Barrett
------------------------------
Name: Kathe Barrett
----------------------------
Title: Trust Officer
---------------------------
41
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OF OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECU RITIES ACT ("RULE 144A")) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 OF
REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), (2) AGREES THAT IT WILL
NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS
PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY
PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF
THIS SECURITY AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE
LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S, PURSUANT TO
RULE 904 OF REGULATION S OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE
MEANINGS GIVEN TO THEM IN REGULATION S.
A-1
REGISTERED No.
CUSIP 933590 11 9 ________ WARRANTS
WARRANT CERTIFICATE
WAM!NET INC.
This Warrant Certificate certifies that ____________, or registered
assigns, is the registered holder of ________ Warrants (the "Warrants") to
purchase shares of Common Stock, par value $0.01 per share (the "Common Stock"),
of WAM!NET INC., a Minnesota corporation (the "Company," which term includes its
successors and assigns). Each Warrant entitles the holder to purchase from the
Company at any time from 9:00 a.m. New York City time on or after the
Exercisability Date until 5:00 p.m., New York City time, on March 1, 2005 (the
"Expiration Date"), 2.01 fully paid, registered and non-assessable shares of
Common Stock, subject to adjustment as provided in Article V of the Warrant
Agreement (the "Exercise Rate"), at the exercise price of $0.01 for each share
purchased (the "Exercise Price") (the shares of Common Stock purchasable upon
exercise of a Warrant being herein referred to as the "Shares" and, unless the
context otherwise requires, such term shall also mean all other securities or
property purchasable and deliverable upon exercise of a Warrant as provided in
the Warrant Agreement), upon surrender of this Warrant Certificate and payment
of the Exercise Price (i) in United States dollars or by certified check or
official bank check, (ii) pursuant to the next sentence or (iii) in any
combination of (i) and (ii), 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. In addition to payment by cash or check, a
Warrant may be exercised solely by the surrender of the Warrant, and without the
payment of the Exercise Price in cash, for such number of Shares equal to the
product of (1) the number of Shares for which such Warrant is exercisable with
payment of the Exercise Price as in cash of the date of exercise and (2) the
Cashless Exercise Ratio. For purposes of this Warrant, the "Cashless Exercise
Ratio" shall equal a fraction, the numerator of which is the excess of the
Current Market Value per share of the Common Stock on the date of exercise over
the Exercise Price per share as of the date of exercise and the denominator of
which is the Current Market Value per share of the Common Stock on the date of
exercise. An exercise of a Warrant in accordance with the immediately preceding
sentences is herein called a "Cashless Exercise." Upon surrender of a Warrant
Certificate representing more than one Warrant in connection with the Holder's
option to elect a Cashless Exercise, the number of Shares deliverable upon a
Cashless Exercise shall be equal to the Cashless Exercise Ratio multiplied by
the product of (a) the number of Warrants that the holder specifies is to be
exercised pursuant to a Cashless Exercise and (b) the aggregate number of Shares
for which such Warrants are then exercisable (without giving effect to the
Cashless Exercise option). If the Company has not effected the registration
under the Securities Act of the offer and sale of the Shares by the Company to
the holders of the Warrants upon the exercise thereof, the Company may elect to
require that holders of the Warrants effect the exercise of the Warrants solely
pursuant to the
A-2
Cashless Exercise option and may also amend the Warrants to eliminate the
requirements for payment of the Exercise Price with respect tp such Cashless
Exercise option. A Warrant may not be exercised in part. All provisions of the
Warrant Agreement shall be applicable with respect to an exercise of a Warrant
Certificate pursuant to a Cashless Exercise for less than the full number of
Warrants represented thereby. Capitalized terms used herein without being
defined herein shall have the definitions ascribed to such terms in the Warrant
Agreement.
This Warrant has initially been issued as part of a unit ("Unit"), each
Unit consisting of three Warrants and $1,000 principal amount at maturity of the
Company's 13 1/4% Senior Discount Notes due 2005 (the "Notes"). As set forth in
the Warrant Agreement and the Indenture, dated as of March 5, 1998 (the
"Indenture"), between the Company and First Trust National Association, as
Trustee, pursuant to which the Notes have been issued, the Warrants and the
Notes will not be separately transferable until the "Separability Date", which
means the earliest to occur of: (i) September 1, 1998, (ii) the occurrence of an
Exercise Event (as defined herein), (iii) the occurrence of an Event of Default
(as defined in the Indenture), (iv) the date on which a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to a registered exchange offer for the Notes or covering the sale by
holders of the Notes is declared effective under the Securities Act, (v)
immediately prior to any redemption of Notes by the Company from the net
proceeds of an Initial Public Equity Offering (as defined in the Indenture),
(vi) immediately prior to the occurrence of a Warrant Change of Control (as
defined in the Warrant Agreement) or (v) such earlier date as determined by
Merrill Lynch & Co. in its sole discretion.
"Current Market Value" per share of Common Stock or any other security at
any date of determination means (i) if the security is not traded on a national
or regional securities exchange, The Nasdaq Stock Market or in a recognized
over-the-counter market (a "Quoted Security"), (a) the fair market value of the
security, as determined in good faith by the Board of Directors of the Company
and certified in a board resolution delivered to the Warrant Agent, which shall
be based on the most recently completed arms-length transaction between the
Company and a person other than an Affiliate of the Company, the closing of
which shall have occurred within the six-month period preceding such
determination, or (b) if no such transaction shall have occurred within such
six-month period, the fair market value of the security as determined by a
nationally or regionally recognized independent financial expert (provided that,
in the case of the calculation of Current Market Value solely for determining
the cash value of fractional shares, the last determination of Current Market
Value pursuant to this clause (i), if made within the preceding six months, may
be utilized), which determination shall be set forth in an officers' certificate
delivered to the Warrant Agent, or (ii) (a) if the security is a Quoted
Security, the average of the daily closing sales prices of such security for the
20 consecutive trading days immediately preceding such date, or (b) if the
security has been a Quoted Security for less than 20 consecutive trading days
before such date, then the average of the daily closing sales prices for all of
the trading days before such date for which closing sales prices are available.
The closing sales price of a security for each such trading day shall be: (A) in
the case of a security listed or admitted to trading on any United States
national or regional securities exchange or on The Nasdaq Stock Market, the
closing sales price, regular way, on such day, or if no sale takes place on such
day, the average of the closing bid and asked prices
A-3
on such day or (B) in the case of a security not then listed or admitted to
trading on any national or regional securities exchange or The Nasdaq Stock
Market, the average of the closing bid and asked prices on such day, as reported
by a reputable quotation source designated by the Company, or in the case of a
security as to which no such reported bid and asked prices are available on such
day, the average of the reported high bid and low asked prices on such day, as
reported by a reputable quotation service, or a newspaper of general circulation
in the Borough of Manhattan, City and State of New York, customarily published
on each business day, designated by the Company, or, if there shall be no bid
and asked prices on such day, the average of the high bid and low asked prices,
as so reported, on the most recent day (not more than two days prior to the date
in question) for which prices have been so reported; provided, however, that if
there are no bid and asked prices reported for such security during such two-day
period, Current Market Value shall be determined as if the security were not a
Quoted Security.
"Exercisability Date" means, with respect to each Warrant, the date as of
which both of the following shall have occurred (whether before or on such
date): (i) the Separability Date and (ii) an Exercise Event.
"Exercise Event" means, with respect to each Warrant, the date of the
occurrence of the earliest of: (1) immediately prior to the occurrence of a
Warrant Change of Control, (2 )(a) the 90th day (or such earlier date as
determined by the Company in its sole discretion) following an Initial Public
Equity Offering (as defined in the Warrant Agreement) or (b) upon the closing of
the Initial Public Equity Offering but only in respect of Warrants, if any,
required to be exercised to permit the holders thereof to sell Shares pursuant
to their registration rights, (3) a class of equity securities of the Company is
listed on a national securities exchange or authorized for quotation on The
Nasdaq Stock Market or is otherwise registered under the Exchange Act, or (4)
September 1, 2000.
"Independent Financial Expert" means a United States investment banking
firm of national or regional standing in the United States (i) which does not,
and whose directors and executive officers or Affiliates (as defined in the
Warrant Agreement) do not, have a direct or indirect material financial interest
for its or their proprietary account in the Company or any of its Affiliates and
(ii) which, in the judgment of the Board of Directors of the Company, is
otherwise independent with respect to the Company and its Affiliates and
qualified to perform the task for which it is to be engaged.
The Company has initially designated the principal corporate trust office
of the Warrant Agent in the Borough of Manhattan, The City of New York, as the
initial Warrant Agent Office.
Any Warrants not exercised on or prior to 5:00 p.m., New York City time, on
March 1, 2005 shall thereafter be void.
A-4
If the Company merges, amalgamates or consolidates with or into, or sells
all or substantially all of its property and assets to, another Person solely
for cash, the holders of Warrants shall be entitled to such cash on the date of
consummation of such transaction on an equal basis with holders of Shares (or
other securities issuable upon exercise of the Warrants) as if the Warrants had
been exercised immediately prior to such event, less the Exercise Price. Upon
receipt of such cash the rights of a holder of a Warrant shall terminate and
cease and such holder's Warrants shall expire.
Reference is hereby made to the further provisions on the reverse hereof
which provisions shall for all purposes have the same effect as though fully set
forth at this place.
This Warrant Certificate shall not be valid unless authenticated by the
Warrant Agent, as such term is used in the 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.
A-5
WITNESS the signatures of the Company's duly authorized officers.
Dated:
WAM!NET INC.
By:
----------------------------
Name:
Title:
Attest:
By:
-------------------------
Name:
Title:
Certificate of Authentication:
This is one of the Warrants referred to in the within-mentioned Warrant
Agreement:
FIRST TRUST NATIONAL ASSOCIATION,
as Warrant Agent
By:
------------------------------
Authorized Signatory
A-6
[REVERSE]
WAM!NET INC.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m., New York City time, on the
Expiration Date, each of which represents the right to purchase, at any time on
or after the Exercisability Date and on or prior to the Expiration Date, 2.01
shares of Common Stock, subject to adjustment as set forth in the Warrant
Agreement. The Warrants are issued pursuant to a Warrant Agreement dated as of
March 5, 1998 (as amended from time to time, the "Warrant Agreement"), duly
executed and delivered by the Company to First Trust National Association, 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.
Warrants may be exercised by (i) surrendering at any Warrant Agent Office
this Warrant Certificate with the form of Election to Exercise set forth hereon
duly completed and executed and (ii) to the extent such exercise is not being
effected through a Cashless Exercise, by paying in full the Exercise Price for
each Warrant exercised and any other amounts required to be paid pursuant to the
Warrant Agreement.
If all of the items referred to in the preceding paragraph are received by
the Warrant Agent at or prior to 11:00 a.m., New York City time, on a Business
Day, the exercise of the Warrant to which such items relate will be effective on
such Business Day. If all items referred to in the preceding paragraph are not
received until after 11:00 a.m., New York City time, on a Business Day, the
exercise of the Warrants to which such items relate will be deemed to be
effective on the next succeeding Business Day. Notwithstanding the foregoing, in
the case of an exercise of Warrants on the Expiration Date, if all of the items
referred to in the preceding paragraph are received by the Warrant Agent at or
prior to 5:00 p.m., New York City time, on the Expiration Date, the exercise of
the Warrant to which such items relate will be effective on the Expiration Date
and prior to the expiration of such Warrant.
As soon as practicable after the exercise of any Warrant or Warrants, the
Company shall issue or cause to be issued to or upon the written order of the
registered holder of this Warrant Certificate, a certificate or certificates
evidencing the Share or Shares to which such holder is entitled, in fully
registered form, registered in such name or names as may be directed by such
holder pursuant to the form of Election to Exercise, as set forth hereon. Such
certificate or certificates evidencing the Share or Shares shall be deemed to
have been issued and any persons who are designated to be named therein shall be
deemed to have become the holder of record of such Share or Shares as of the
close of business on the date upon which the exercise of this Warrant was deemed
to be effective as provided in the preceding paragraph.
A-7
The Company will not be required to issue fractional shares of Common Stock
upon exercise of Warrants or distribute Share certificates that evidence
fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
there shall be paid to the holder of this Warrant Certificate at the time such
Warrant Certificate is exercised an amount in cash equal to the same fraction of
the Current Market Value per share of Common Stock on the Business Day preceding
the date this Warrant Certificate is surrendered for exercise.
Warrant Certificates, when surrendered at any office or agency maintained
by the Company for that purpose by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may be exchanged
for a new Warrant Certificate or new Warrant Certificates evidencing in the
aggregate a like number of Warrants, in the manner and subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith as set forth in the
Warrant Agreement.
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 U.S. securities exchange or market, if any, on which
the Common Stock is listed or admitted to trading and (iii) the principal U.S.
securities exchange or market, if any, on which any other securities underlying
the Warrants are listed or admitted to trading are open for business.
The Warrants and the Shares issuable upon exercise thereof are entitled to
the benefits of a registration rights agreement (as amended from time to time,
the "Registration Rights Agreement"), pursuant to which the holders representing
not less than a majority of Registrable Securities (as defined in the
Registration Rights Agreement) have the right under certain circumstances to
require the Company to effect one demand registration of the Registrable
Securities. The Registration Rights Agreement also provides the holders of
Registrable Securities with the right, subject to the conditions and limitations
contained therein, to include the Registrable Securities in certain registration
statements filed by the Company for its account or for the account of any of its
other securityholders. The Registration Rights Agreement further provides, among
other things, that (i) prior to the Triggering Date (as defined in the
Registration Rights Agreement), if WorldCom Inc, a Georgia corporation
("WorldCom") or its Affiliates (as defined in the Registration Rights Agreement)
effect a direct or indirect sale or other disposition of capital stock of the
Company to any proposed purchaser in any transaction or a series of related
transactions resulting
A-8
in a Warrant Change of Control, the holders of Warrants and Shares will have the
right to sell all of such securities to the proposed purchaser at the same price
as received by WorldCom or its Affiliates and (ii) prior to an Initial Public
Equity Offering, WorldCom or its Affiliates may require the holders of Warrants
and Shares to sell such securities to any person to whom WorldCom and such
Affiliates sell all of their capital stock in the Company in a transaction that
results in a Warrant Change of Control, at the same price as that received by
WorldCom and such Affiliates.
The Company will furnish to any holder of a Warrant upon written request
and without charge a copy of the Warrant Agreement and the Registration Rights
Agreement. Requests may be made to: WAM!NET Inc., 6100 West 110th Street,
Minneapolis, Minnesota 55438; Attention: Secretary.
A-9
(ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise this Warrant
Certificate as to ____ Warrants and to purchase the whole number of Shares
issuable upon exercise thereof and herewith tenders payment for such Shares as
follows:
$ __________________ in cash or by certified or official bank check; or by
surrender of _____ Warrants pursuant to a Cashless Exercise at the current
Cashless Exercise Ratio.
The undersigned requests that a certificate representing such Shares be
registered in the name of ________________________ whose address is
___________________________________________ and that such Shares be delivered to
_________________________ whose address is
___________________________________________. Any cash payments to be paid in
lieu of a fractional Share should be made to _____________________________ whose
address is ___________________________ and the check epresenting payment thereof
should be delivered to _________________________________________ whose address
is ___________________________________________________.
Dated __________________________,
Name of holder of
Warrant Certificate:
------------------------------------
(Please Print)
Tax Identification or
Social Security Number:
----------------------------------
Address:
-------------------------------------------------
-------------------------------------------------
Signature:
-----------------------------------------------
Note: The above signature must correspond with the
name as written upon the face of this Warrant
Certificate in every particular, without
alteration or enlargement or any change
whatever and if the certificate representing
the Shares is to be registered in a name other
than that in which this Warrant Certificate is
registered, or if any cash payment to be paid
in lieu of a fractional share is to be made to
a person other than the registered holder of
this Warrant Certificate, the signature of the
holder hereof must be guaranteed.
A-10
Dated
-----------------------------
Signature:
-------------------------------------------
Note: The above signature must correspond
with the name as written upon the
face of this Warrant Certificate in
every particular, without alteration
or enlargement or any change whatever.
Signature Guaranteed:
--------------------------------
[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 , 199
------------ --
Signature:
-------------------------------------------
Note: The above signature must correspond
with the name as written upon the
face of this Warrant Certificate in
every particular, without alteration
or enlargement or any change whatever.
Signature Guaranteed:
--------------------------------
In connection with any transfer of Warrants represented by this Warrant
Certificate occurring prior to the date which is the earlier of (i) the date of
the declaration by the Securities and Exchange Commission of the effectiveness
of a registration statement under the Securities Act of 1933, as amended (the
"Securities Act") covering resales of the Warrants (which effectiveness shall
not have been suspended or terminated at the date of the transfer) and (ii) the
Resale Restriction Termination Date, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that:
A-11
[CHECK ONE]
[ ] (a) the Warrants are being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule 144A
thereunder.
OR
[ ] (b) this Warrant Certificate is being transferred other than in accordance
with (a) above and documents are being furnished which comply with the
conditions of transfer set forth in Section 1.08 of the Warrant
Agreement.
If none of the foregoing boxes is checked, the Unit Agent shall not be obligated
to register this Warrant Certificate in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth Section 1.08 of the Warrant Agreement shall have been
satisfied.
Date: Your signature:
---------------- ---------------------------
---------------------------
(Sign exactly as your
name appears on the
other side of this
Security)
Signature Guarantee:
-------------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing the Warrants
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:
---------------- --------------------------------
--------------------------------
NOTICE: To be executed by
an executive officer
A-12
SCHEDULE OF EXCHANGES OF DEFINITIVE AND GLOBAL WARRANTS
The following exchanges made in respect of certified Warrants or another
Global Warrant have been made:
AMOUNT OF DECREASE IN AMOUNT OF INCREASE IN
NUMBER OF WARRANTS NUMBER OF WARRANTS NUMBER OF WARRANTS OF THIS
SUBJECT TO THIS GLOBAL SUBJECT TO THIS GLOBAL GLOBAL WARRANT FOLLOWING SIGNATURE OF AUTHORIZED
DATE OF EXCHANGE WARRANT WARRANT SUCH DECREASE (OR INCREASE) OFFICER OF WARRANT AGENT
- ---------------- ---------------------- ---------------------- --------------------------- ------------------------
A-13
EXHIBIT B
FORM OF LEGEND FOR GLOBAL WARRANT
Any Global Warrant authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT AGREEMENT
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
WARRANT AGREEMENT, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY
A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE WARRANT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OF
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
B-14
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of WAM!NET INC.
THIS CERTIFICATE relates to __________________ Warrants held in [ ]*
book-entry or [ ]* certificated form by the undersigned transferor (the
"Transferor").
The Transferor:*
[ ] has requested the Warrant Agent by written order to deliver in exchange
for its beneficial interest in the Global Warrant held by the Depositary a
Warrant or Warrants in definitive, registered form of authorized denominations
and an aggregate number equal to its beneficial interest in such Global Warrant
(or the portion thereof indicated above); or
[ ] has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such Warrant, the
Transferor does hereby certify that Transferor is familiar with the Warrant
Agreement relating to the above captioned Warrants and the restrictions on
transfers thereof as provided in Section 1.08 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 (in satisfaction of Section 1.08(a)(y)(A) or Section
1.08(d)(i)(A) of the Warrant Agreement).
[ ] Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Act), in reliance on Rule 144A.
[ ] Such Warrant is being transferred in reliance on Regulation S under the
Act.
[ ] Such Warrant is being transferred in accordance with Rule 144 under the
Act.
C-1
[ ] Such Warrant is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Act.
----------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------
Date:
--------------------
*Check applicable box.
C-2
EXHIBIT D
------------, ------
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION
WITH REGULATION S TRANSFERS
First Trust National Association
Suite 200
100 Wall Street
New York, NY 10005
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with our proposed sale of Warrants of WAM!NET Inc. (the
"Company"), we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, we represent that:
(1) the offer of the Warrants was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer restrictions
applicable to the Warrants; and
D-1
(6) if the circumstance set forth in Rule 904(c) under the Securities
Act are applicable, we have complied with the additional conditions
therein, including (if applicable) sending a confirmation or other notice
stating that the Warrants may be offered and sold during the restricted
period specified in Rule 903(c)(2) or (3), as applicable, in accordance
with the provisions of Regulation S; pursuant to registration of the
Warrants under the Securities Act; or pursuant to an available exemption
from the registration requirements under the Act.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S under the
Securities Act.
Very truly yours,
[Name of Transferor]
By:
-------------------------------
[Authorized Signature]
Upon transfer the Warrants would be registered in the name of the new
beneficial owner as follows:
Name:
-------------------------------
Address:
----------------------------
Taxpayer ID Number:
-----------------
D-2