THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
No. 1
STOCK SUBSCRIPTION WARRANT
(SUBSTITUTE WARRANT)
To Purchase Common Stock of
International Telecommunication Data Systems, Inc. (the "Company")
DATE OF INITIAL ISSUANCE: July 21, 1992
THIS CERTIFIES THAT for value received, CONNECTICUT INNOVATIONS,
INCORPORATED or its registered assigns (hereinafter called the "Holder") is
entitled to purchase from the Company, at any time during the Term of this
Warrant, Two Hundred Thirty Three (233) shares of common stock, without par
value, of the Company (the "Common Stock"), at the Warrant Price, payable in
lawful money of the United States of America to be paid upon the exercise
hereof. The exercise of this Warrant shall be subject to the provisions,
limitations and restrictions herein contained, and may be exercised in whole or
in part. The number of shares of Common Stock issuable upon exercise of this
Warrant and the Warrant Price set forth herein reflect (i) all adjustments
required through the date of execution of this Warrant in accordance with the
terms of a warrant dated as of July 21, 1992 (the "Original Warrant") being
surrendered by the Holder in exchange for this Warrant, and (ii) the correction
of an error in the number of shares made the subject of the Original Warrant.
SECTION 1. Definitions.
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For all purposes of this Warrant, the following terms shall have the
meanings indicated:
Common Stock -- shall mean and include the Company's authorized Common
Stock, without par value, as constituted at the date hereof, and shall also
include any capital stock of any class or series of the Company hereafter
authorized which shall not be limited to a fixed sum or percentage of par value
or of the purchase price of such stock in respect of the rights of the holders
thereof to participate in dividends and/or in the distribution of assets upon
the voluntary or involuntary liquidation, dissolution or winding up of the
Company. Notwithstanding the foregoing, for purposes of determining the
class or series of the Company's capital stock which the Holder is entitled to
purchase pursuant hereto, the term "common stock" shall mean the Company's
authorized Common Stock, without par value, as constituted at the date hereof.
Securities Act -- the Securities Act of 1933, as amended.
Term of this Warrant -- shall mean the period beginning on the date of
initial issuance hereof and ending on August 1, 1999.
Warrant Price -- $1,879.65 per share, subject to adjustment in
accordance with Section 5 hereof.
Warrants -- this Warrant and any other Warrant or Warrants issued in
exchange or substitution for the Original Warrant pursuant to the Exchange
Agreement between the Company and Connecticut Innovations, Incorporated made
effective as of December 28, 1994 (the "Exchange Agreement") to the original
holder of this Warrant, or any transferees from such original holder or this
Holder.
Warrant Shares -- shares of Common Stock purchased or purchasable by
the Holder of this Warrant upon the exercise hereof.
SECTION 2. Exercise of Warrant.
-------------------
2.1. Procedure for Exercise of Warrant. To exercise this Warrant in
whole or in part (but not as to any fractional share of Common Stock), the
Holder shall deliver to the Company at its office referred to in Section 13
hereof at any time and from time to time during the Term of this Warrant: (i)
the Notice of Exercise in the form attached hereto, (ii) cash, certified or
Official bank check payable to the order of the Company, wire transfer of funds
to the Company's account, or evidence of any indebtedness of the Company to the
Holder (or any combination of any of the foregoing) in the amount of the Warrant
Price for each share being purchased, and (iii) this Warrant. In the event of
any exercise of the rights represented by this Warrant, a certificate or
certificates for the shares of Common Stock so purchased, registered in the name
of the Holder or such other name or names as may be designated by the Holder,
shall be delivered to the Holder hereof within a reasonable time, not exceeding
fifteen (15) days, after the rights represented by this Warrant shall have been
so exercised; and, unless this Warrant has expired, a new Warrant representing
the number of shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the Holder hereof within such time.
The person in whose name any certificate for shares of Common Stock is issued
upon exercise of this Warrant shall for all purposes be deemed to have become
the holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price and any applicable taxes was made,
irrespective of the date of
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delivery of such certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer books are open.
2.2. Transfer Restriction Legend. Each certificate for Warrant Shares
shall bear the following legend (and any additional legend required by (i) any
applicable state securities laws and (ii) any securities exchange upon which
such Warrant Shares may, at the time of such exercise, be listed) on the face
thereof unless at the time of exercise such Warrant Shares shall be registered
under the Securities Act:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution under a registration statement of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the holder thereof (which counsel shall be reasonably satisfactory
to counsel for the Company) the securities represented thereby are not, at such
time, required by law to bear such legend.
2.3. Exercise Period. The Holder may exercise this Warrant in whole or
in part at any time (and from time to time) commencing on the date of initial
issuance and continuing throughout the Term of this Warrant.
SECTION 3. Covenants as to Common Stock. The Company covenants and agrees that
all shares of Common Stock that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof. The Company further covenants and agrees that it will pay
when due and payable any and all federal and state taxes which may be payable in
respect of the issue of this Warrant or any Common Stock or certificates
therefor issuable upon the exercise of this Warrant. The Company further
covenants and agrees that the Company will at all times have authorized and
reserved, free from preemptive rights, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant. The
Company further covenants and agrees that if any shares of capital stock to be
reserved for the purpose of the issuance of shares upon the exercise of this
Warrant require registration with or approval of any governmental authority
under any federal or state law before such shares may be validly issued or
delivered upon exercise, then the Company will in good faith
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and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be. If and so long as the Common Stock issuable upon
the exercise of this Warrant is listed on any national securities exchange, the
Company will, if permitted by the rules of such exchange, list and keep listed
on such exchange, upon official notice of issuance, all shares of such Common
Stock issuable upon exercise of this Warrant.
SECTION 4. Adjustment of Number of Shares. Upon each adjustment of the Warrant
Price as provided in Section 5, the Holder shall thereafter be entitled to
purchase, at the Warrant Price resulting from such adjustment, the number of
shares (calculated to the nearest tenth of a share) obtained by multiplying the
Warrant Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Price resulting from such
adjustment.
SECTION 5. Adjustment of Warrant Price. The Warrant Price shall be subject to
adjustment from time to time as follows:
(i) If the Company shall at any time or from time to time
during the Term of this Warrant issue shares of Common Stock other than
Excluded Stock (as hereinafter defined), the Warrant Price in effect
immediately prior to each such issuance or adjustment shall forthwith
(except as provided in this clause (i)) be adjusted to a price equal to
the product of (A) the Warrant Price in effect immediately prior to
adjustment, multiplied by (B) the number of shares of Common Stock
issued and outstanding immediately prior to such issuance, divided by
(C) the number of shares of Common Stock issued and outstanding
immediately subsequent to such issuance.
For the purposes of any adjustment of the Warrant Price pursuant to
this clause (i), the following provisions shall be applicable:
1. [Omitted].
2. [Omitted].
3. In the case of the issuance of (i) options to purchase or
rights to subscribe for Common Stock, (ii) securities by
their terms convertible into or exchangeable for Common
Stock or (iii) options to purchase or rights to subscribe
for such convertible or exchangeable securities:
(A) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of
such options to purchase or rights to
subscribe for Common Stock shall be deemed
to have been
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issued at the time such options
or rights were issued and for a
consideration equal to the consideration
(determined in the manner provided in
subdivisions (1) and (2) above with the
proviso in subdivision (2) being applied to
the number of shares of Common Stock
deliverable upon such exercise), if any,
received by the Company upon the issuance of
such options or rights plus the minimum
purchase price provided in such options or
rights for the Common Stock covered thereby;
(B) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of
or in exchange for any such convertible or
exchangeable securities or upon the exercise
of options to purchase or rights to
subscribe for such convertible or
exchangeable securities and subsequent
conversions or exchanges thereof shall be
deemed to have been issued at the time such
securities were issued or such options or
rights were issued and for a consideration
equal to the consideration received by the
Company for any such securities and related
options or rights (excluding any cash
received on account of accrued interest or
accrued dividends), plus the additional
consideration, if any, to be received by the
Company upon the conversion or exchange of
such securities or the exercise of any
related options or rights (the consideration
in each case to be determined in the manner
provided in subdivisions (1) and (2) above
with the proviso in subdivision (2) being
applied to the number of shares of Common
Stock deliverable upon such conversion,
exchange or exercise);
(C) on any change in the number of shares of
Common Stock deliverable upon exercise of
any such options or rights or conversion of
or exchange for such convertible or
exchangeable securities, other than a change
resulting from the antidilution provisions
thereof, the Warrant Price shall forthwith
be readjusted to such Warrant Price as would
have obtained had the adjustment that was
made upon the issuance of such options,
rights or securities made upon the basis of
such changed number of shares, but not
including any securities that were convened
before such change was made; and
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(D) on the expiration of any such options or
rights, the termination of any such rights
to convert or exchange or the expiration of
any options or rights related to such
convertible or exchangeable securities, the
Warrant Price shall forthwith be readjusted
to such Warrant Price as would have obtained
had the adjustment made upon the issuance of
such options, rights, securities or options
or rights related to such securities being
made upon the basis of the issuance of only
the number of shares of Common Stock
actually issued upon the conversion or
exchange of such securities or upon the
exercise of the options or rights related to
such securities.
(ii) "Excluded Stock" shall mean shares of Common Stock issued by
the Company as a stock dividend payable in shares of Common Stock or
upon any subdivision or split-up of the outstanding shares of Common
Stock.
(iii) If, at any time during the Term of this Warrant, the number of
shares of Common Stock outstanding is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of
shares of Common Stock, then, following the record date fixed for the
determination of holders of Common Stock entitled to receive such stock
dividend, subdivision or split-up, the Warrant Price shall be
appropriately decreased so that the number of shares of Common Stock
issuable upon the exercise hereof shall be increased in proportion to
such increase in outstanding shares.
(iv) If, at any time during the Term of this Warrant, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date for
such combination, the Warrant Price shall appropriately increase so that
the number of shares of Common Stock issuable upon the exercise hereof
shall be decreased in proportion to such decrease in outstanding shares.
(v) [Omitted].
(vi) All calculations under this Section 5 shall be made to the
nearest cent or to the nearest one-tenth (1/10) of a share, as the case
may be.
(vii) [Omitted].
(viii) Whenever the Warrant Price shall be adjusted as provided in
Section 5, the Company shall prepare a statement showing the facts
requiring such adjustment and the Warrant Price that shall be in effect
after such adjustment. The
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Company shall cause a copy of such statement to be sent by mail,
first class postage prepaid, to each Holder of this Warrant at his
address appearing on the Company's records. Where appropriate, such copy
may be given in advance and may be included as part of the notice
required to be mailed under the provisions of subsection (x) of this
Section 5.
(ix) Adjustments made pursuant to clauses (iii), (iv) and (v) above
shall be made on the date such dividend, subdivision, split-up,
combination or distribution, as the case may be, is made, and shall
become effective at the opening of business on the business day next
following the record date for the determination of stockholders entitled
to such dividend, subdivision, split-up, combination or distribution.
(x) In the event the Company shall propose to take any action of the
types described in clauses (iii), (iv), or (v) of this Section 5, the
Company shall forward, at the same time and in the same manner, to the
Holder of this Warrant such notice, if any, which the Company shall give
to the holders of capital stock of the Company.
(xi) In any case in which the provisions of this Section 5 shall
require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of
such event issuing to the Holder of all or any part of this Warrant
which is exercised after such record date and before the occurrence of
such event the additional shares of capital stock issuable upon such
exercise by reason of the adjustment required by such event over and
above the shares of capital stock issuable upon such exercise before
giving effect to such adjustment exercise; provided, however, that the
Company shall deliver to such Holder a due bill or other appropriate
instrument evidencing such Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(xii) The sale or other disposition of any Common Stock theretofore
held in the treasury of the Company shall be deemed to be an issuance
thereof.
SECTION 6. Ownership.
---------
6.1. Ownership of This Warrant. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Section 6.
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6.2. Transfer and Replacement. This Warrant and all rights hereunder
are transferable in whole or in part upon the books of the Company by the Holder
hereof in person or by duly authorized attorney, and a new Warrant or Warrants,
of the same tenor as this Warrant but registered in the name of the transferee
or transferees (and in the name of the Holder, if a partial transfer is
effected) shall be made and delivered by the Company upon surrender of this
Warrant duly endorsed, at the office of the Company referred to in Section 13
hereof. Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft or destruction, and, in such case, of indemnity or security
reasonably satisfactory to it, and upon surrender of this Warrant if mutilated,
the Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant; provided that if the Holder hereof is an instrumentality of a state or
local government or an institutional holder or a nominee for such an
instrumentality or institutional holder an irrevocable agreement of indemnity by
such Holder shall be sufficient for all purposes of this Section 6, and no
evidence of loss or theft or destruction shall be necessary. This Warrant shall
be promptly cancelled by the Company upon the surrender hereof in connection
with any transfer or replacement. Except as otherwise provided above, in the
case of the loss, theft or destruction of a Warrant, the Company shall pay all
expenses, taxes and other charges payable in connection with any transfer or
replacement of this Warrant, other than stock transfer taxes (if any) payable in
connection with a transfer of this Warrant, which shall be payable by the
Holder. Holder will not transfer this Warrant and the rights hereunder except in
compliance with federal and state securities laws.
SECTION 7. Mergers, Consolidation, Sales. In the case of any proposed
consolidation or merger of the Company with another entity, or the proposed sale
of all or substantially all of its assets to another person or entity, or any
proposed reorganization or reclassification of the capital stock of the Company,
then, as a condition of such consolidation, merger, sale, reorganization or
reclassification, lawful and adequate provision shall be made whereby the Holder
of this Warrant shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein, in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable hereunder, such
shares of stock, securities or assets as may (by virtue of such consolidation,
merger, sale, reorganization or reclassification) be issued or payable with
respect to or in exchange for the number of shares of such Common Stock
purchasable hereunder immediately before such consolidation, merger, sale,
reorganization or reclassification. In any such case appropriate provision shall
be made with respect to the rights and interests of the Holder of this Warrant
to the end that the provisions hereof shall thereafter be applicable as nearly
as may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of this Warrant. The Company shall not effect any
such consolidation, merger or sale unless (i) either (A) the
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Holder shall have given its written consent thereto, or (B) the other
party to the consolidation, merger or sale is not controlled by, does not
control, and is not under common control with, the Company and the transaction
is not being undertaken with the purpose of diminishing, defeating or avoiding
the Holder's rights hereunder, and (ii) prior to or simultaneously with the
consummation thereof the successor corporation or purchaser, as the case may be,
shall assume by written instrument the obligation to deliver to the Holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, the Holder is entitled to receive.
SECTION 8. Notice of Dissolution or Liquidation. In case of any distribution of
the assets of the Company in dissolution or liquidation (except under
circumstances when the foregoing Section 7 shall be applicable), the Company
shall give notice thereof to the Holder hereof and shall make no distribution to
shareholders until the expiration of thirty (30) days from the date of mailing
of the aforesaid notice and, in any case, the Holder hereof may exercise this
Warrant within thirty (30) days from the date of the giving of such notice, and
all rights herein granted not so exercised within such thirty-day period shall
thereafter become null and void.
SECTION 9. Notice of Dividends. If the Board of Directors of the Company shall
declare any dividend or other distribution on its Common Stock, the Company
shall mail notice thereof to the Holder hereof not less than thirty (30) days
prior to the record date fixed for determining shareholders entitled to
participate in such dividend or other distribution, and the Holder hereof shall
not participate in such dividend or other distribution unless this Warrant is
exercised prior to such record date. The provisions of this Section 9 shall not
apply to distributions made in connection with transactions covered by Section
7.
SECTION 10. Fractional Shares. Fractional shares shall not be issued upon the
exercise of this Warrant but in any case where the Holder would, except for the
provisions of this Section 10, be entitled under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant, the Company shall,
upon the exercise of this Warrant for the largest number of whole shares then
called for, pay a sum in cash equal to the excess of the value of such
fractional share (determined in such reasonable manner as may be prescribed in
good faith by the Board of Directors of the Company) over the Warrant Price for
such fractional share.
SECTION 11. Special Arrangements of the Company. The Company covenants and
agrees that during the Term of this Warrant, unless otherwise approved by the
Holder of this Warrant:
11.1. Will Reserve Shares. The Company will reserve and set apart and
have available for issuance at all times, free from preemptive or other
preferential rights, the number of shares of
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authorized but unissued Common Stock deliverable upon the exercise of this
Warrant.
11.2. Will Not Issue Certain Stock. The Company will not issue any
capital stock of any class which has rights to be preferred as to dividends
and/or as to the distribution of assets upon voluntary or involuntary
liquidation, dissolution or winding-up, unless (a) such rights shall be limited
to a fixed sum or percentage of par value in respect of participation in
dividends and in the distribution of assets, and (b) such stock is non-voting.
The Company will be deemed to have issued stock which is preferred as to
dividends or as to distribution of assets only if either (i) the right to
preferred dividends exceeds the amount of fifteen percent (15%) per annum of par
value or of the purchase price of such shares or (ii) the right to preferred
distribution of assets exceeds the amount of one hundred percent (100%) of par
value or of the purchase price of such shares for the first year after issuance
of such stock or one hundred and twenty-five percent (125%) thereafter.
11.3. Will Not Declare Dividends. The Company will not pay any dividend
or other distribution on any of its capital stock unless such dividend or other
distribution on such share of capital stock and all other dividends or
distributions paid during the prior one year period on such shares of capital
stock are paid out of earned surplus and the aggregate amount thereof is less
than fifteen percent (15%) of the fair market value of the shares of capital
stock (if then ascertainable) on the date of declaration of such dividend or
other distribution.
11.4. Will Not Amend Certificate. The Company will not amend its
Certificate of Incorporation to eliminate as an authorized class of capital
stock that class denominated as "Common Stock" on the date hereof.
11.5. Will Bind Successors. This Warrant shall be binding upon any
corporation or other person or entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
SECTION 12. Registration Rights; etc.
------------------------
12.1. Certain Definitions. As used in this Section 12, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Registrable Securities" shall mean the Warrant Shares less any Warrant
Shares theretofore sold to the public or in a private placement.
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The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company
in compliance with Section 12.2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company, which shall be paid in any
event by the Company).
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all fees and
disbursements of counsel for any Holder and any blue sky fees and expenses
excluded from the definition of "Registration Expenses."
"Holder" shall mean any holder of outstanding Warrant Shares or
Registrable Securities which (except for purposes of determining "Holders" under
Section 12.7 hereof) have not been sold to the public.
"Other Shareholders" shall mean holders of securities of the Company
who are entitled by contract with the Company or who are permitted by the
Company to have securities included in a registration of the Company's
securities.
12.2. Company Registration.
--------------------
(a) Notice of Registration. If the Company shall determine to register
any of its securities either for its own account or the account of a security
holder or holders, other than a registration relating solely to employee benefit
plans, or a registration relating solely to a Commission Rule 145 transaction,
or a registration on any registration form which does not permit secondary
sales, the Company will:
(i) promptly give to each Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or
other state securities laws); and
(ii) include in such registration (and any related qualification under blue
sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request
or requests, made by any Holder within fifteen (15) days after receipt
of the written notice from the Company described in clause (i) above,
subject to any limitations on the number of shares as set forth in
Section 12.2(b) below.
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(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Holders as part of the written notice given pursuant to Section
12.2(a)(i). In such event, the right of any Holder to registration pursuant to
Section 12.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company,
directors and officers and the Other Shareholders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for underwriting by the
Company.
Notwithstanding any other provision of this Section 12.2, if the
underwriter determines that marketing factors require a limitation on the number
of shares to be underwritten, the underwriter may (subject to the allocation
priority set forth below) exclude from such registration and underwriting some
or all of the Registrable Securities which would otherwise be underwritten
pursuant hereto. The Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner. The number of shares that may be included in the
registration and underwriting on behalf of such Holders, directors and officers
and Other Shareholders shall be allocated among such Holders, directors and
officers and Other Shareholders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities and other securities which they had
requested to be included in such registration at the time of filing the
registration statement.
If any Holder of Registrable Securities or any officer, director or
Other Shareholder disapproves of the terms of any such underwriting, he may
elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
12.3. Registration Rights. In the event that the Company grants
registration rights, including demand registration rights, to any other holder
of securities of the Company, the Company will promptly give to the Holder
written notice thereof and, if in the opinion of the Holder such registration
rights are more favorable than the registration rights provided under this
Warrant, the Holder shall so notify the Company within thirty (30) days of
receipt of the foregoing notice from the Company, whereupon such registration
rights shall automatically be deemed to be incorporated in this Warrant.
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12.4. Expenses of Registration. The Company shall bear all Registration
Expenses incurred in connection with any registration, qualification and
compliance by the Company pursuant to Section 12.2 hereof. All Selling Expenses
shall be borne by the holders of the securities so registered pro rata on the
basis of the number of their shares so registered.
12.5. Registration Procedures. In the case of each registration
effected by the Company pursuant to this Section 12, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. The Company will, at its expense:
(a) keep such registration effective for a period of one hundred twenty
(120) days or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs;
(b) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request; and
(c) use its best efforts to register or qualify the Registrable
Securities under the securities laws or blue-sky laws of such jurisdictions as
any Holder may request; provided, however, that the Company shall not be
obligated to register or qualify such Registrable Securities in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in order to effect such registration, qualification or
compliance, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act or applicable
rules or regulations thereunder.
12.6. Indemnification.
---------------
(a) The Company, with respect to each registration, qualification and
compliance effected pursuant to this Section 12, will indemnify and hold
harmless each Holder, each of its officers, directors, partners, and agents, and
each party controlling such Holder, and each underwriter, if any, and each party
who controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or
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compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any rule or regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each such Holder,
each of its officers, directors, partners, and agents, and each party
controlling such Holder, each such underwriter and each party who controls any
such underwriter, for any legal and any other expenses incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based solely upon written
information furnished to the Company by such Holder or underwriter, as the case
may be, and stated to be specifically for use in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance.
(b) Each Holder and Other Shareholder will, if Registrable Securities
held by him are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify and hold harmless the
Company, each of its directors and officers and each underwriter, if any, of the
Company's securities covered by such a registration statement, each party who
controls the Company or such underwriter, each other such Holder and Other
Shareholder and each of their respective officers, directors, partners, and
agents, and each party controlling such Holder or Other Shareholder, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and such
Holders, Other Shareholders, directors, officers, partners, agents, parties,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document solely in reliance upon and in conformity with written
information furnished to the Company by such Holder or Other Shareholder and
stated to be specifically for use in any prospectus, offering circular or other
document (including any related registration statement, notification or the
like) incident to any such registration, qualification or compliance; provided,
however, that the obligations of such Holders and Other Shareholders hereunder
shall be limited to an amount equal to the proceeds to each such Holder or Other
Shareholder of securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 12.6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying
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Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's expense
(unless the Indemnified Party shall have been advised by counsel that actual or
potential differing interests or defenses exist or may exist between the
Indemnifying Party and the Indemnified Party, in which case such expense shall
be paid by the Indemnifying Party), and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 12. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. Each Indemnified Party
shall provide such information as may be reasonably requested by an Indemnifying
Party in order to enable such Indemnifying Party to defend a claim as to which
indemnity is sought.
12.7. Information by Holder. Each Holder of Registrable Securities, and
each Other Shareholder holding securities included in any registration, shall
furnish to the Company such information regarding such Holder or Other
Shareholder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Section l2.
12.8. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may permit the sale of
the Registrable Securities to the public without registration, the Company
agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times from
and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") at any time after it has
become subject to such reporting requirements; and
(c) So long as the Holder owns any Registrable Securities, furnish to
the Holder forthwith upon request a written statement
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by the Company as to its compliance with the reporting requirements of Rule 144
(at any time from and after ninety (90) days following the effective date of the
first registration statement in connection with an offering of its Securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as the Holder may reasonably request in availing itself of
any rule or regulation of the Commission allowing the Holder to sell any such
securities without registration.
SECTION 13. Notices. Any notice or other document required or permitted to be
given or delivered to the Holder shall be delivered at, or sent by certified or
registered mail to, the Holder at 40 Cold Spring Road, Rocky Hill, CT 06067 or
to such other address as shall have been furnished to the Company in writing by
the Holder. Any notice or other document required or permitted to be given or
delivered to the Company shall be delivered at, or sent by certified or
registered mail to, the Company at 969 High Ridge Road, Stamford, Connecticut
06905 or to such other address as shall have been furnished in writing to the
Holder by the Company. Any notice so addressed and mailed by registered or
certified mail shall be deemed to be given when so mailed. Any notice so
addressed and otherwise delivered shall be deemed to be given when actually
received by the addressee.
SECTION 14. No Rights as Stockholder: Limitation of Liability. This Warrant
shall not entitle the Holder to any of the rights of a shareholder of the
Company. No provision hereof, in the absence of affirmative action by the Holder
to purchase shares of Common Stock, and no mere enumeration herein of the rights
or privileges of the Holder, shall give rise to any liability of the Holder for
the Warrant Price hereunder or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
SECTION 15. Law Governing. This Warrant shall be governed by, and construed and
enforced in accordance with, the laws of the State of Connecticut.
SECTION 16. Miscellaneous.
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(a) This Warrant and any provision hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
(or any predecessor in interest thereof) against which enforcement of the same
is sought. The headings in this Warrant are for purposes of reference only and
shall not affect the meaning or construction of any of the provisions hereof;
and
(b) All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Exchange Agreement.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer this 28th day of December, 1994.
INTERNATIONAL TELECOMMUNICATION
DATA SYSTEMS, INC.
By: ________________________________
Name:________________________________
Title: _____________________________
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