Draft
WARRANT AGREEMENT
Dated as of
July __, 1997
between
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
and
FIRST UNION NATIONAL BANK OF VIRGINIA
as the Warrant Agent
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Warrants for
Common Stock of
Primus Telecommunications Group, Incorporated
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TABLE OF CONTENTS
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ARTICLE I
Definitions
SECTION 1.01. Definitions............................................................................. 1
SECTION 1.02. Other Definitions....................................................................... 4
SECTION 1.03. Rules of Construction................................................................... 5
ARTICLE 2
Warrant Certificates
SECTION 2.01. Form and Dating......................................................................... 5
SECTION 2.02. Legends................................................................................. 6
SECTION 2.03. Execution and Countersignature.......................................................... 7
SECTION 2.04. Certificate Register................................................................... . 7
SECTION 2.05. Separation of Warrants and Notes........................................................ 8
SECTION 2.06. Transfer and Exchange................................................................... 8
SECTION 2.07. Replacement Certificates................................................................ 9
SECTION 2.08. Temporary Certificates.................................................................. 9
SECTION 2.09. Cancellation............................................................................ 10
ARTICLE 3
Exercise Terms
SECTION 3.01. Exercise Price.......................................................................... 10
SECTION 3.02. Exercise Periods; Restrictions on Exercise.............................................. 10
SECTION 3.03. Expiration.............................................................................. 11
SECTION 3.04. Manner of Exercise...................................................................... 11
SECTION 3.05. Issuance of Warrant Shares.............................................................. 11
SECTION 3.06. Fractional Warrant Shares............................................................... 12
SECTION 3.07. Reservation of Warrant Shares........................................................... 12
SECTION 3.08. Compliance with Law..................................................................... 13
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ARTICLE 4
Antidilution Provisions
SECTION 4.01. Changes in Common Stock................................................................. 13
SECTION 4.02. Cash Dividends and Other Distributions.................................................. 14
SECTION 4.03. Rights Issue to All Holders of Common Stock............................................. 14
SECTION 4.04. Other Issuances of Common Stock or Rights............................................... 15
SECTION 4.05. Combination; Liquidation................................................................ 16
SECTION 4.06. Other Events............................................................................ 17
SECTION 4.07. Superseding Adjustment.................................................................. 17
SECTION 4.08. Minimum Adjustment...................................................................... 17
SECTION 4.09. Notice of Adjustment.................................................................... 18
SECTION 4.10. Notice of Certain Transactions.......................................................... 18
SECTION 4.11. Adjustment to Warrant Certificate....................................................... 19
SECTION 4.12. Exceptions to Antidilution Provisions................................................... 19
ARTICLE 5
Registration Rights
SECTION 5.01. Effectiveness of Registration Statement................................................. 20
SECTION 5.02. Suspension.............................................................................. 21
SECTION 5.03. Demand Registration; Repurchase of Warrants............................................. 21
SECTION 5.04. Blue Sky................................................................................ 23
SECTION 5.05. Accuracy of Disclosure.................................................................. 24
SECTION 5.06. Indemnification......................................................................... 24
SECTION 5.07. Additional Acts......................................................................... 25
SECTION 5.08. Expenses................................................................................ 25
SECTION 5.09 Listing of Warrant Shares................................................................26
ARTICLE 6
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent............................................................ 26
SECTION 6.02. Right and Duties of Warrant Agent....................................................... 26
SECTION 6.03. Individual Rights of Warrant Agent...................................................... 27
SECTION 6.04. Warrant Agent's Disclaimer.............................................................. 27
SECTION 6.05. Compensation and Indemnity.............................................................. 27
SECTION 6.06. Successor Warrant Agent................................................................. 28
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ARTICLE 7
Remedies
SECTION 7.01 Defaults................................................................................ 29
SECTION 7.02 Payment Obligations..................................................................... 30
SECTION 7.03 Remedies................................................................................ 30
ARTICLE 8
Miscellaneous
SECTION 8.01. Financial Statements and Reports of the Company......................................... 30
SECTION 8.02. Persons Benefitting..................................................................... 30
SECTION 8.03. Rights of Holders....................................................................... 30
SECTION 8.04. Amendment............................................................................... 31
SECTION 8.05. Notices................................................................................. 31
SECTION 8.06. Governing Law........................................................................... 32
SECTION 8.07. Successors.............................................................................. 32
SECTION 8.08. Multiple Originals...................................................................... 32
SECTION 8.09. Table of Contents....................................................................... 32
SECTION 8.10. Severability............................................................................ 32
EXHIBIT A Form of Face of Warrant Certificate
APPENDIX A List of Financial Experts
WARRANT AGREEMENT dated as of July __, 1997 (this
"Agreement"), between PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED, a Delaware
corporation (the"Company"), and First Union National Bank of Virginia, as
Warrant Agent (the "Warrant Agent").
The Company desires to issue the warrants (the "Warrants") described
herein which will initially entitle the holders thereof (the "Holders") to
purchase in the aggregate _________ shares of common stock, par value $0.01 per
share (the "Common Stock"), of the Company at a purchase price of $____ per
share in connection with an offering of _______ units (the "Units"). Each Unit
will consist of (i) $_____ aggregate principal amount of ____% Senior Notes due
2004 (collectively, the "Notes") issued by the Company pursuant to the
provisions of an Indenture (as defined below), and (ii) ___ Warrants issued by
the Company. Each Warrant will entitle the Holder to purchase _____ shares of
Common Stock, subject to adjustment as provided herein. In connection with the
sale of the Units, _______ Warrants will be issued to the purchasers of the
Units.
The Notes and Warrants included in each Unit will not become
separately transferable until the earliest of (i) _________, 1998, (ii) an
Exercise Event or (iii) such other date, as Xxxxxx Brothers Inc. shall determine
(the "Separation Date").
The Company further desires the Warrant Agent to act on behalf of the
Company in connection with the issuance of the Warrants as provided herein and
the Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of Warrants:
ARTICLE I
Definitions
SECTION 1.01. Definitions.
"Affiliate" of any Person means any other Person, directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the 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; provided, however, that
beneficial ownership of 10% or more of the voting securities of a Person shall
be decreed to be control of such Person. The terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means each day that is not a Saturday, a Sunday or a
day on which banking institutions are not required to be open in the State of
New York.
"Cashless Exercise Ratio" means a fraction, the numerator of which is
the excess of the Current Market Value per share of Common Stock on the Exercise
Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
"Change of Control" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes
the ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) of more than 50% of the total voting power of the then outstanding Voting
Stock of the Company on a fully diluted basis; (ii) individuals who at the
beginning of any period of two consecutive calendar years constituted the Board
of Directors (together with any directors who are members of the Board of
Directors on the date hereof and any new directors whose election by the Board
of Directors or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the members of the Board of
Directors then still in office who either were members of the Board of Directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of such board of directors then in office; (iii) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any such "person" or "group" (other than to the Company or a Restricted
Subsidiary); (iv) the merger or consolidation of the Company with or into
another corporation or the merger of another corporation with or into the
Company with the effect that immediately after such transaction any such
"person" or "group" of persons or entities shall have become the beneficial
owner of securities of the surviving corporation of such merger or consolidation
representing a majority of the total voting power of the then outstanding Voting
Stock of the surviving corporation; or (v) the adoption of a plan relating to
the liquidation or dissolution of the Company.
"Combination" means an event in which the Company consolidates with,
merges with or into, or sells all or substantially all of its assets to another
Person.
"Commission" means the Securities and Exchange Commission, or any
successor agency or body performing substantially similar functions.
"Current Market Value" per share of Common Stock or any other security
at any date means: (i) if the security is not registered under the Exchange Act,
(a) the value of the security, determined in good faith by the Board and
certified in a board resolution, based
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on the most recently completed arm's-length transaction between the Company and
a Person other than an Affiliate of the Company, the closing of which occurred
on such date or within the six-month period preceding such date, or (b) if no
such transaction shall have occurred on such date or within such six-month
period, the value of the security as determined by an independent financial
expert; or (ii) if the security is registered under the Exchange Act, the
average of the last reported sale price of the Common Stock (or the equivalent
in an over-the-counter market) for each Business Day during the period
commencing 15 Business Days before such date and ending on the date one day
prior to such date, or if the security has been registered under the Exchange
Act for less than 15 consecutive Business Days before such date, the average of
the daily closing bid prices (or such equivalent) for all of the Business Days
before such date for which daily closing bid prices are available (provided,
however, that if the closing bid price is not determinable for at least 10
Business Days in such period, the "Current Market Value" of the security shall
be determined as if the security were not registered under the Exchange Act).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Date" means, for a given Warrant, the day on which such
Warrant is exercised pursuant to Section 3.04.
"Exercise Event" means, with respect to each Warrant as to which such
event is applicable, the earlier of: (i) a Change of Control and (ii) any date
when the Company (A) consolidates or merges into or with another Person (but
only where holders of Common Stock receive consideration in exchange for all or
part of such Common Stock other than common stock in the surviving Person) if
the Common Stock (or other securities) thereafter issuable upon exercise of the
Warrants will not be registered under the Exchange Act or (B) sells all or
substantially all of its assets to another Person if the Common Stock (or other
securities) thereafter issuable upon exercise of the Warrants will not be
registered under the Exchange Act; provided, that the events in (A) and (B) will
not be deemed to have occurred if the consideration for the Common Stock in
either such transaction consists solely of cash.
"Financial Expert" means one of the Persons listed in Appendix A
hereto.
"Indenture" means the Indenture dated as of July __, 1997, between the
Company, and the Trustee, with respect to the Notes, as it may be amended or
supplemented from time to time.
"Independent Financial Expert" means a Financial Expert that does not,
and whose directors, executive officers and 5% stockholders do not, have a
direct or indirect financial interest in the Company or any of its subsidiaries
or Affiliates, which has not been for at least five years and, at the time it is
called upon to give independent financial advice to the Company, is not (and
none of its directors, executive officers or 5% stockholders is) a promoter,
director, or officer of the Company or any of its subsidiaries or Affiliates.
The
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Independent Financial Expert may be compensated and indemnified by the Company
for opinions or services it provides as an Independent Financial Expert.
"Issue Date" means the date on which Warrants are initially issued.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Company.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Trustee" means First Union National Bank of Virginia, or any
successor trustee under the Indenture.
"Voting Stock" is defined to mean with respect to any Person, Capital
Stock of any class or kind ordinarily having the power to vote for the election
of directors, managers or other voting members of the governing body of such
Person.
"Warrant Certificates" mean the registered certificates (including
without limitation, the global certificates) issued by the Company under this
Agreement representing the Warrants.
"Warrant Shares" mean the shares of Common Stock (and any other
securities) for which the Warrants are exercisable.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Agreement"....................................... Recitals
"Cashless Exercise"............................... 3.04
"Certificate Registrar............................ 2.04
"Common Shelf Registration Statement"............. 5.01
"Common Stock".................................... Recitals
"Company"......................................... Recitals
"Demand Registration"............................. 5.03
"DTC"............................................. 2.02(b)
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"Exercise Price".................................. 3.01
"Expiration Date"................................. 3.02(b)
"Holders"......................................... Recitals
"Notes"........................................... Recitals
"Registrar"....................................... 3.07
"Separability Legend"............................. 2.02(a)
"Separation Date"................................. Recitals
"Successor Company"............................... 4.05(a)
"Transfer Agent".................................. 3.05
"Units"........................................... Recitals
"Warrant Agent"................................... Recitals
"Warrants"........................................ Recitals
SECTION 1.03. Rules of Construction. Unless the text otherwise
requires:
(i) a defined term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
ARTICLE 2
Warrant Certificates
SECTION 2.01. Form and Dating. Each Warrant Certificate shall be
issued in registered form only substantially in the form of Exhibit A, which is
hereby incorporated in and expressly made a part of this Agreement. The Warrant
Certificates may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company) and shall bear the legends required by Section 2.02. Each
Warrant Certificate shall be dated the date of its countersignature. The terms
of the Warrant Certificate set forth in Exhibit A are part of the terms of this
Agreement.
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The Warrants shall be issued initially in the form of one or more
permanent global Warrant Certificates in definitive, fully registered form,
substantially in the form set forth in Exhibit A (the "Global Warrant"),
deposited with the Warrant Agent, as custodian for DTC, duly executed by the
Company and countersigned by the Warrant Agent as hereinafter provided.
The definitive Warrant Certificates shall be typed, printed,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Warrants may be listed, all as determined by the officers
executing such Warrant Certificates, as evidenced by their execution of such
Warrant Certificates.
SECTION 2.02. Legends. (a) Each Warrant Certificate issued prior to
the Separation Date shall bear the following legend (the "Separability Legend"):
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART
OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ______ AGGREGATE
PRINCIPAL AMOUNT OF ___ % SENIOR NOTES DUE 2004 OF PRIMUS
TELECOMMUNICATIONS GROUP, INCORPORATED (THE "NOTES") AND A WARRANT. THE
WARRANTS AND THE NOTES WILL NOT BE SEPARATELY TRANSFERABLE UNTIL THE
EARLIEST OF (I) ____, 1998, (II) AN EXERCISE EVENT AND (III) SUCH OTHER
DATE AS XXXXXX BROTHERS INC. MAY DETERMINE.
(b) Each Global Warrant issued in global form and deposited with DTC
shall bear the following legend:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS 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 OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS
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OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE WARRANT AGREEMENT
REFERRED TO HEREIN.
(c) Each Warrant Certificate shall bear the following legend:
THE EXERCISE OF THIS WARRANT (AND THE OWNERSHIP OF COMMON STOCK
ISSUABLE UPON THE EXERCISE THEREOF) MAY BE LIMITED BY PRIMUS
TELECOMMUNICATIONS GROUP, INCORPORATED IN ORDER TO ENSURE COMPLIANCE WITH
THE RULES, REGULATIONS AND POLICIES OF THE FEDERAL COMMUNICATIONS
COMMISSION, AND THIS WARRANT WILL NOT BE EXERCISABLE BY ANY HOLDER IF SUCH
EXERCISE WOULD CAUSE PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED TO BE IN
VIOLATION OF THE COMMUNICATIONS ACT OF 1934 OR THE RULES, REGULATIONS AND
POLICIES OF THE FEDERAL COMMUNICATIONS COMMISSION.
SECTION 2.03. Execution and Countersignature. Two Officers shall sign
the Warrant Certificates for the Company by manual or facsimile signature. If an
Officer whose signature is on a Warrant Certificate no longer holds that office
at the time the Warrant Agent countersigns the Warrant Certificate, the Warrant
Certificate shall nevertheless be valid. A Warrant Certificate shall not be
valid until an authorized signatory of the Warrant Agent manually countersigns
the Warrant Certificate. Such authorized signature shall be conclusive evidence
that the Warrant Certificate has been countersigned under this Agreement.
The Warrant Agent shall initially countersign and deliver Warrant
Certificates entitling the Holders thereof to purchase in the aggregate not more
than ___________ Warrant Shares upon a written order of the Company signed by
two Officers or by an Officer and either an Assistant Treasurer or an Assistant
Secretary of the Company.
The Warrant Agent may appoint an agent reasonably acceptable to the
Company to countersign the Warrant Certificates. Unless limited by the terms of
such appointment, such agent may countersign Warrant Certificates whenever the
Warrant Agent may do so. Each reference in this Agreement to countersignature by
the Warrant Agent includes countersignature by such agent. Such agent will have
the same rights as the Warrant Agent for service of notices and demands.
SECTION 2.04. Certificate Register. The Warrant Agent shall keep a
register ("Certificate Register") of the Warrant Certificates and of their
transfer and exchange. The Certificate Registers shall show the names and
addresses of the respective Holders and the date and number of Warrants
represented on the face of each Warrant Certificate. The Company and the Warrant
Agent may deem and treat the Person in whose name a Warrant Certificate is
7
registered as the absolute owner of such Warrant Certificate for all purposes
whatsoever and neither the Company nor the Warrant Agent shall be affected by
notice to the contrary.
SECTION 2.05. Separation of Warrants and Notes. (a) Prior to the
Separation Date no Warrant may be sold, assigned or otherwise transferred to any
Person unless, simultaneously with such transfer, the Warrant Agent receives
confirmation from the Trustee for the Notes that the Holder thereof has
requested a transfer of the related Notes to the same transferee.
(b) On or after the Separation Date, the holder of a Warrant
Certificate containing a Separability Legend may surrender such Warrant
Certificate accompanied by a written application to the Warrant Agent, duly
executed by the Holder thereof, for a new Warrant Certificate or certificates
not containing the Separability Legend.
SECTION 2.06. Transfer and Exchange. (a) The Warrant Certificates
shall be issued in registered form only and shall be transferable only upon the
surrender of such Warrant Certificate for registration of transfer. When a
Warrant Certificate is presented to the Warrant Agent with a request to register
a transfer, the Warrant Agent shall register the transfer as requested if the
reasonable requirements of the Warrant Agent and of Section 8-401(1) of the
Uniform Commercial Code as in effect in the State of New York are met; provided,
however, that prior to the Separation Date the Warrant Agent shall not register
a transfer of a Warrant Certificate and such transfer will be void and of no
effect unless the Notes that are a part of the same Unit as the Warrants
represented by the Warrant Certificate to be transferred are simultaneously
transferred to the same transferee. To permit the registration of transfers and
exchanges, the Company shall execute and the Warrant Agent shall countersign
Warrant Certificates at the Warrant Agent's request. All Warrant Certificates
issued upon any registration of transfer or exchange of Warrant Certificates
shall be valid obligations of the Company, entitled to the same benefits under
this Agreement as the Warrant Certificates surrendered upon such registration of
transfer or exchange. No service charge will be made to a Holder for any
registration of transfer or exchange upon surrender of any Warrant Certificate
at the office of the Warrant Agent maintained for that purpose. However, the
Company may require payment of a sum sufficient to cover any tax, assessment or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Warrant Certificates but not for any
exchange or original issuance (not involving a transfer) pursuant to Section
2.08, 3.04 or 3.05.
(b) Notwithstanding any other provisions of this Section 2.06,
unless and until it is exchanged in whole or in part for Warrants in definitive
registered form, the Global Warrant may not be transferred except as a whole by
DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC
or by DTC or any such nominee to a successor depositary or a nominee of such
successor depositary. Interests of beneficial owners in the Global Warrant may
be transferred in accordance with the rules and procedures of DTC. Members of,
or participants in, DTC ("Participants") shall have no rights under this
8
Agreement with respect to the Global Warrant held on their behalf by DTC or the
Warrant Agent as its custodian, and DTC may be treated by the Company, the
Warrant Agent and any agent of the Company or the Warrant Agent as the absolute
owner of such Global Warrant for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Warrant Agent or any
agent of the Company or the Warrant Agent from giving effect to any written
certification, proxy or other authorization furnished by DTC or impair, as
between DTC and its Participants, the operation of customary practices governing
the exercise of the rights of a Holder of any Warrants. The registered holder of
the Global Warrant may grant proxies and otherwise authorize any person,
including Participants and persons that may hold interests through Participants,
to take any action which a Holder is entitled to take under this Agreement or
the Warrants.
If DTC notifies the Company that it is unwilling or unable to continue
as depositary for the Global Warrant or Warrants or if at any time DTC shall no
longer be eligible under the next sentence of this paragraph, the Company shall
appoint a successor depositary with respect to the Warrants. Each depositary
appointed pursuant to this Section 2.06 must, at the time of its appointment and
at all times while it serves as depositary, be a clearing agency registered
under the Exchange Act and any other applicable statute or regulation. The
Company will execute, and the Warrant Agent, upon receipt of written
instructions from the Company, will countersign and deliver, Warrants in
definitive registered form in any authorized denominations, in an aggregate
amount equal to the amount of the Global Warrant or Warrants representing such
Warrants in exchange for such Global Warrant or Warrants if DTC notifies the
Company that it is unwilling or unable to continue as depositary for the Global
Warrant or Warrants or if at any time DTC shall no longer be eligible to serve
as depositary and a successor depositary for the Warrants is not appointed by
the Company within 60 days after the Company receives such notice or becomes
aware of such ineligibility.
SECTION 2.07. Replacement Certificates. If a mutilated Warrant
Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue and the Warrant Agent shall
countersign a replacement Warrant Certificate if the reasonable requirements of
the Warrant Agent and of Section 8-405 of the Uniform Commercial Code as in
effect in the State of New York are met. Such Holder shall furnish an indemnity
bond sufficient in the judgment of the Company and the Warrant Agent to protect
the Company and the Warrant Agent from any loss which either of them may suffer
if a Warrant Certificate is replaced. the Company and the Warrant Agent may
charge the Holder for their expenses in replacing a Warrant Certificate. Every
replacement Warrant Certificate is an additional obligation of the Company.
SECTION 2.08. Temporary Certificates. Until definitive Warrant
Certificates are ready for delivery, the Company may prepare and the Warrant
Agent shall countersign temporary Warrant Certificates. Temporary Warrant
Certificates shall be substantially in the
9
form of definitive Warrant Certificates but may have variations that the Company
considers appropriate for temporary Warrant Certificates. Without unreasonable
delay, the Company shall prepare and the Warrant Agent shall countersign
definitive Warrant Certificates and deliver them in exchange for temporary
Warrant Certificates.
SECTION 2.09. Cancellation. (a) In the event the Company shall
purchase or otherwise acquire Warrant Certificates, the same shall thereupon be
delivered to the Warrant Agent for cancellation.
(b) The Warrant Agent and no one else shall cancel and may, but shall
not be required to, destroy all Warrant Certificates surrendered for transfer,
exchange, replacement, exercise or cancellation unless the Company directs the
Warrant Agent to deliver canceled Warrant Certificates to the Company. The
Company may not issue new Warrant Certificates to replace Warrant Certificates
to the extent they represent Warrants which have been exercised or Warrants
which the Company has purchased or otherwise acquired.
ARTICLE 3
Exercise Terms
SECTION 3.01. Exercise Price. Each Warrant shall initially entitle the
Holder thereof, subject to adjustment pursuant to the terms of this Agreement,
to purchase ________ shares of Common Stock for a per share exercise price (the
"Exercise Price") of $________.
SECTION 3.02. Exercise Periods; Restrictions on Exercise. (a) Subject
to the terms and conditions set forth herein, the Warrants shall be exercisable
at any time or from time to time after __________, 1998; provided, however, that
holders of Warrants will be able to exercise their Warrants only if (i) the
Common Shelf Registration Statement relating to the Warrant Shares is effective,
or (ii) the exercise of such Warrants is exempt from the registration
requirements of the Securities Act, and the Warrant Shares are qualified for
sale or exempt from qualification under the applicable securities laws of the
states or other jurisdictions in which such holders reside.
(b) Notwithstanding anything to the contrary in this Agreement
or the Warrants, the Company shall have the right not to allow an exercise of
the Warrants (or any portion thereof) to the extent necessary in order to ensure
compliance with the rules, regulations and policies of the Federal
Communications Commission ("FCC Rules"), and Warrants will not be exercisable by
any Holder if such exercise would cause the Company to be in violation of the
Communications Act of 1934 (the "Communications Act") or FCC Rules. The Company
will have the right prior to the exercise of any Warrant to require the Holder
thereof to furnish the Company with such certificates or other information as it
may reasonably
10
require to confirm that such exercise would not cause the Company to be in
violation of the Communications Act or FCC Rules.
(c) No Warrant shall be exercisable after __________, 2004 (the
"Expiration Date").
SECTION 3.03. Expiration. Each Warrant shall terminate and become void
as of the earlier of (i) the close of business on the Expiration Date or (ii)
the date such Warrant is exercised. The Company shall give notice not less than
90 and not more than 120 days prior to the Expiration Date to the Holders of all
then outstanding Warrants to the effect that the Warrants will terminate and
become void as of the close of business on the Expiration Date; provided,
however, that if the Company fails to give notice as provided in this Section
3.03, the Warrants will nevertheless expire and become void on the Expiration
Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised upon (i)
surrender to the Warrant Agent at the principal corporate trust office of the
Warrant Agent of the related Warrant Certificate, together with the form of
election to purchase Common Stock on the reverse thereof duly filled in and
signed by the Holder thereof, and (ii) payment to the Warrant Agent, for the
account of the Company, of the Exercise Price for each Warrant Share issuable
upon the exercise of such Warrants then exercised. Such payment shall be made
(i) in cash or by certified or official bank check payable to the order of the
Company or by wire transfer of funds to an account designated by the Company for
such purpose or (ii) without the payment of cash, by reducing the number of
shares of Common Stock obtainable upon the exercise of a Warrant so as to yield
a number of shares of Common Stock upon the exercise of such Warrant equal to
the product of (a) the number of shares of Common Stock issuable as of the
Exercise Date upon the exercise of such Warrant (if payment of the Exercise
Price were being made in cash) and (b) the Cashless Exercise Ratio. An exercise
of a Warrant in accordance with the immediately preceding sentence 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 of Common Stock deliverable upon
a Cashless Exercise shall be equal to the number of shares of Common Stock
issuable upon the exercise of Warrants that the Holder specifies are to be
exercised pursuant to a Cashless Exercise multiplied by the Cashless Exercise
Ratio. All provisions of this Agreement shall be applicable with respect to a
surrender of a Warrant Certificate pursuant to a Cashless Exercise for less than
the full number of Warrants represented thereby. Subject to Section 3.02, the
rights represented by the Warrants shall be exercisable at the election of the
Holders thereof either in full at any time or from time to time in part and in
the event that a Warrant Certificate is surrendered for exercise of less than
all the Warrants represented by such Warrant Certificate at any time prior to
the Expiration Date, a new Warrant Certificate representing the remaining
Warrants shall be issued. The Warrant Agent shall countersign and deliver the
required new Warrant Certificates, and the Company, at the Warrant Agent's
request, shall supply the Warrant Agent with Warrant Certificates duly signed on
behalf of the Company for such purpose.
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SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.07,
upon the surrender of Warrant Certificates and payment of the per share Exercise
Price, as set forth in Section 3.04, the Company shall issue and cause the
Warrant Agent or, if appointed, a transfer agent for the Common Stock ("Transfer
Agent") to countersign and deliver to or upon the written order of the Holder
and in such name or names as the Holder may designate a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property or which it is
entitled, registered or otherwise, to the Person or Persons entitled to receive
the same, together with cash as provided in Section 3.06 in respect of any
fractional Warrant Shares otherwise issuable upon such exercise. Such
certificate or certificates shall be deemed to have been issued and any Person
so designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the per share Exercise Price, as aforesaid;
provided, however, that if, at such date, the transfer books for the Warrant
Shares shall be closed, the certificates for the Warrant Shares in respect of
which such Warrants are then exercised shall be issuable as of the date on which
such books shall next be opened and until such date the Company shall be under
no duty to deliver any certificates for such Warrant Shares; provided further,
however, that such transfer books, unless otherwise required by law, shall not
be closed at any one time for a period longer than 20 calendar days.
SECTION 3.06. Fractional Warrant Shares. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be exercised in full at the same time by the same Holder,
the number of full Warrant Shares which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable pursuant thereto. If any fraction of a Warrant Share would, except
for the provisions of this Section 3.06, be issuable on the exercise of any
Warrant (or specified portion thereof), the Company shall pay at the time of
exercise an amount in cash equal to the Current Market Value per Warrant Share,
as determined on the day immediately preceding the date the Warrant is
exercised, multiplied by such fraction, computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. The Company shall at all
times keep reserved out of its authorized shares of Common Stock a number of
shares of Common Stock sufficient to provide for the exercise of all outstanding
Warrants. The registrar for the Common Stock (the "Registrar") shall at all
times until the Expiration Date reserve such number of authorized shares as
shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent. All Warrant Shares which may be
issued upon exercise of Warrants shall, upon issue, be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issue thereof. The Company will
supply such Transfer Agent with duly executed stock certificates for such
purpose and will itself provide or otherwise make available any cash which may
be payable as provided in Section 3.06. The Company will furnish to such
Transfer Agent a copy of all notices of adjustments (and certificates related
thereto) transmitted to each Holder.
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Before taking any action which would cause an adjustment pursuant to
Article 4 to reduce the Exercise Price below the then par value (if any) of the
Common Stock, the Company shall take any and all corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock at the
Exercise Price as so adjusted.
The Company covenants that all shares of Common Stock which may be
issued upon exercise of Warrants will, upon issue, be fully paid, nonassessable,
free of preemptive rights, free from all taxes and free from all liens, charges
and security interests, created by or through the Company, with respect to the
issue thereof.
SECTION 3.08. Compliance with Law. Notwithstanding anything in this
Agreement to the contrary, in no event shall a Holder be entitled to exercise a
Warrant unless (i) a registration statement filed under the Securities Act in
respect of the issuance of the Warrant Shares is then effective or (ii) in the
opinion of counsel to the Company addressed to the Warrant Agent the exercise of
such Warrants is exempt from the registration requirements of the Securities Act
and such securities are qualified for sale or exempt from qualification under
the applicable securities laws of the States or other jurisdictions in which
such holders reside.
ARTICLE 4
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at any time
or from time to time the Company shall (i) pay a dividend or make a distribution
on its Common Stock payable in shares of its Common Stock or other equity
interests of the Company, (ii) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or (iv)
increase or decrease the number of shares of Common Stock outstanding by
reclassification of its Common Stock, then the number of shares of Common Stock
issuable upon exercise of each Warrant immediately after the happening of such
event shall be adjusted to a number determined by multiplying the number of
shares of Common Stock that such holder would have owned or have been entitled
to receive upon exercise had such Warrants been exercised immediately prior to
the happening of the events described above (or, in the case of a dividend or
distribution of Common Stock or other shares of capital stock, immediately prior
to the record date therefor) by a fraction, the numerator of which shall be the
total number of shares of Common Stock outstanding immediately after the
happening of the events described above and the denominator of which shall be
the total number of shares of Common Stock outstanding immediately prior to the
happening of the events described above; and subject to Section 4.08, the
Exercise Price for each Warrant shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such
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event by the aforementioned fraction. An adjustment made pursuant to this
Section 4.01 shall become effective immediately after the effective date of such
event, retroactive to the record date therefor in the case of a dividend or
distribution in shares of Common Stock or other shares of the Company's capital
stock.
SECTION 4.02. Cash Dividends and Other Distributions. In the event
that at any time or from time to time the Company shall distribute to all
holders of Common Stock (i) any dividend or other distribution of cash,
evidences of its indebtedness, shares of its capital stock or any other assets,
properties or debt securities or (ii) any options, warrants or other rights to
subscribed for or purchase any of the foregoing (other than, in each case, (w)
the issuance of any rights under a shareholder rights plan, (x) any dividend or
distribution described in Section 4.01, (y) any rights, options, warrants or
securities described in Section 4.03 and (z) any cash dividends or other cash
distributions from current or retained earnings), then the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be increased to a
number determined by multiplying the number of shares of Common Stock issuable
upon the exercise of such Warrant immediately prior to the record date for any
such dividend or distribution by a fraction, the numerator of which shall be the
Current Market Value per share of Common Stock on the record date for such
dividend or distribution and the denominator of which shall be such Current
Market Value per share of Common Stock on the record date for such dividend or
distribution less the sum of (x) the amount of cash, if any, distributed per
share of Common Stock and (y) the fair value (as determined in good faith by the
Board, whose determination shall be evidenced by a board resolution filed with
the Warrant Agent, a copy of which will be sent to Holders upon request) of the
portion, if any, of the distribution applicable to one share of Common Stock
consisting of evidences of indebtedness, shares of stock, securities, other
assets or property, warrants, options or subscription or purchase rights; and,
subject to Section 4.08, the Exercise Price shall be adjusted to a number
determined by dividing the Exercise Price immediately prior to such record date
by the aforementioned fraction. Such adjustments shall be made whenever any
distribution is made and shall become effective as of the date of distribution,
retroactive to the record date for any such distribution; provided, however,
that the Company is not required to make an adjustment pursuant to this Section
4.02 if at the time of such distribution the Company makes the same distribution
to Holders of Warrants as it makes to holders of Common Stock pro rata based on
the number of shares of Common Stock for which such Warrants are exercisable
(whether or not currently exercisable). No adjustment shall be made pursuant to
this Section 4.02 which shall have the effect of decreasing the number of shares
of Common Stock issuable upon exercise of each Warrant or increasing the
Exercise Price.
SECTION 4.03. Rights Issue to All Holders of Common Stock. In the
event that at any time or from time to time the Company shall issue to all
holders of Common Stock without any charge, rights, options or warrants
entitling the holders thereof to subscribe for shares of Common Stock, or
securities convertible into or exchangeable or exercisable for Common Stock,
entitling such holders to subscribe for or purchase shares of Common Stock at a
price per share that is lower at the record date for such issuance than the then
Current Market
14
Value per share of Common Stock other than in connection with the adoption of a
shareholder rights plan by the Company, then the number of shares of Common
Stock issuable upon the exercise of each Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock theretofore
issuable upon exercise of each Warrant by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights, options, warrants or securities plus the number of
additional shares of Common Stock offered for subscription or purchase or into
or for which such securities that are issued are convertible, exchangeable or
exercisable, and the denominator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights, options,
warrants or securities plus the total number of shares of Common Stock which the
aggregate consideration expected to be received by the Company (assuming the
exercise or conversion of all such rights, options, warrants or securities)
would purchase at the then Current Market Value per share of Common Stock.
Subject to Section 4.08, in the event of any such adjustment, the Exercise Price
shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such date of issuance by the aforementioned fraction. Such
adjustment shall be made immediately after such rights, options or warrants are
issued and shall become effective, retroactive to the record date for the
determination of stockholders entitled to receive such rights, options, warrants
or securities. Notwithstanding anything to the contrary in this Article IV, no
adjustment to the number of Warrant Shares issuable upon exercise of the
Warrants or to the Exercise Price shall be made as a result of the offering by
the Company to all holders of its Common Stock of the Company Rights (or as a
result of any exercise of the Company Rights), including as a result of the
issuance of additional shares of Common Stock, or securities convertible into or
exchangeable or exercisable for shares of Common Stock, resulting from the
operation of any anti-dilution provision in any warrant or other security of the
Company convertible into, exercisable or exchangeable for Common Stock of the
Company, which such warrant or security is outstanding on the date of this
Agreement. No adjustment shall be made pursuant to this Section 4.03 which shall
have the effect of decreasing the number of shares of Common Stock purchasable
upon exercise of each Warrant or of increasing the Exercise Price.
SECTION 4.04. Other Issuances of Common Stock or Rights. In the event
that at any time or from time to time the Company shall issue (i) shares of
Common Stock (subject to the provisions below), (ii) rights, options or warrants
entitling the holder thereof to subscribe for shares of Common Stock (provided,
however, that no adjustment shall be made upon the exercise of such rights,
options or warrants), or (iii) securities convertible into or exchangeable or
exercisable for Common Stock (provided, however, that no adjustment shall be
made upon the conversion, exchange or exercise of such securities (other than
issuances specified in (i), (ii) or (iii) which are made as the result of anti-
dilution adjustments in such securities)), at a price per share at the record
date of such issuance that is less than the then Current Market Value per share
of Common Stock, then the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock theretofore issuable upon
exercise of each Warrant by a fraction, the numerator of which shall be the
number of shares of Common Stock
15
outstanding immediately after such sale or issuance plus the number of
additional shares of Common Stock offered for subscription or purchase or into
or for which such securities that are issued are convertible, exchangeable or
exercisable, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such sale or issuance plus the
total number of shares of Common Stock which the aggregate consideration
expected to be received by the Company (assuming the exercise or conversion of
all such rights, options, warrants or securities, if any) would purchase at the
then Current Market Value per share of Common Stock, and subject to Section 4.08
the Exercise Price shall be adjusted to a number determined by dividing the
Exercise Price immediately prior to such date of issuance by the aforementioned
fraction; provided, however, that no adjustment to the number of Warrant Shares
issuable upon the exercise of the Warrants or to the Exercise Price shall be
made as a result of (i) the issuance of shares of Common Stock under any
warrants, options or other rights existing on the date hereof, (ii) the issuance
of shares of Common Stock in bona fide public offerings that are underwritten or
in which a placement agent is retained by the Company or (iii) the issuance of
options, or shares of Common Stock pursuant to any option, under any employee
benefit plans approved by the Board of Directors. Such adjustments shall be made
whenever such rights, options or warrants or convertible securities are issued.
No adjustment shall be made pursuant to this Section 4.04 which shall have the
effect of decreasing the number of shares of Common Stock issuable upon exercise
of each warrant or of increasing the Exercise Price. For purposes of Section
4.04 only, any issuance of Common Stock, or rights, options or warrants to
subscribe for, or other securities convertible into or exercisable or
exchangeable for, Common Stock, which issuance (or agreement to issue) (A) is in
exchange for or otherwise in connection with the acquisition of the property
(excluding any such exchange exclusively for cash) of any Person and (B) is at a
price per share equal to the lower of the Current Market Value at the time an
agreement in principle is reached or at the time a definitive agreement is
entered into, shall be deemed to have been made at a price per share equal to
the Current Market Value per share at the record date with respect to such
issuance (the time of closing or consummation of such exchange or acquisition)
if such definitive agreement is entered into within 90 days of the date of such
agreement in principle.
SECTION 4.05. Combination; Liquidation. (a) Except as provided in
Section 4.05(b), in the event of a Combination, each Holder shall have the right
to receive upon exercise of the Warrants the kind and amount of shares of
capital stock or other securities or property which such Holder would have been
entitled to receive upon or as a result of such Combination had such Warrant
been exercised immediately prior to such event. Unless paragraph (b) is
applicable to a Combination, the Company shall provide that the surviving or
acquiring Person (the "Successor Company") in such Combination will enter into
an agreement with the Warrant Agent confirming the Holders' rights pursuant to
this Section 4.05(a) and providing for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
4. The provisions of this Section 4.05(a) shall similarly apply to successive
Combinations involving any Successor Company.
16
(b) In the event of (i) a Combination where consideration to the
holders of Common Stock in exchange for their shares is payable solely in cash
or (ii) the dissolution, liquidation or winding-up of the Company, the holders
of the Warrants shall be entitled to receive, upon surrender of their Warrant
Certificates, distributions on an equal basis with the holders of Common Stock
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.
In case of any Combination described in this Section 4.05(b), the
surviving or acquiring Person and, in the event of any dissolution, liquidation
or winding-up of the Company, the Company shall deposit promptly with the
Warrant Agent the funds, if any, necessary to pay to the holders of the Warrants
the amounts to which they are entitled as described above. After such funds and
the surrendered Warrant Certificates are received, the Warrant Agent is required
to deliver a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holders
surrendering such Warrants.
SECTION 4.06. Other Events. If any event occurs as to which the
foregoing provisions of this Article 4 are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board, fairly
and adequately protect the purchase rights of the Warrants in accordance with
the essential intent and principles of such provisions, then such Board shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of such Board, to protect such purchase rights as aforesaid,
but in no event shall any such adjustment have the effect of increasing the
Exercise Price or decreasing the number of shares of Common Stock issuable upon
exercise of any Warrant.
SECTION 4.07. Superseding Adjustment. Upon the expiration of any
rights, options, warrants or conversion or exchange privileges which resulted in
adjustments pursuant to this Article 4, if any thereof shall not have been
exercised, the number of Warrant Shares issuable upon the exercise of each
Warrant shall be readjusted pursuant to the applicable section of Article 4 as
if (A) the only shares of Common Stock issuable upon exercise of such rights,
options, warrants, conversion or exchange privileges were the shares of Common
Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (B) shares of Common Stock
actually issued, if any, were issuable for the consideration actually received
by the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange privileges whether or not
exercised and the Exercise Price shall be readjusted inversely; provided,
however, that no such readjustment shall (except by reason of an intervening
adjustment under Section 4.01) have the effect of decreasing the number of
Warrant Shares purchasable upon the exercise of each Warrant or increase the
Exercise Price by an amount in excess of the amount of the adjustment initially
made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion or exchange privileges.
17
SECTION 4.08. Minimum Adjustment. The adjustments required by the
preceding Sections of this Article 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the Exercise Price or the number of shares of Common Stock issuable upon
exercise of Warrants that would otherwise be required shall be made unless and
until such adjustment either by itself or with other adjustments not previously
made increases or decreases by at least 1% the Exercise Price or the number of
shares of Common Stock issuable upon exercise of Warrants immediately prior to
the making of such adjustment. Any adjustment representing a change of less than
such minimum amount shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Article 4 and not
previously made, would result in a minimum adjustment. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence. In computing adjustments under this
Article 4, fractional interests in Common Stock shall be taken into account to
the nearest one-hundredth of a share.
SECTION 4.09. Notice of Adjustment. Whenever the Exercise Price or the
number of shares of Common Stock and other property, if any, issuable upon
exercise of the Warrants is adjusted, as herein provided, the Company shall
deliver to the Warrant Agent a certificate of a firm of independent accountants
selected by the Board (who may be the regular accountants employed by the
Company) setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated (including a description
of the basis on which (i) the Board determined the fair value of any evidences
of indebtedness, other securities or property or warrants, options or other
subscription or purchase rights and (ii) the Current Market Value of the Common
Stock was determined, if either of such determinations were required), and
specifying the Exercise Price and the number of shares of Common Sock issuable
upon exercise of Warrants after giving effect to such adjustment. the Company
shall promptly cause the Warrant Agent to mail a copy of such certificate to
each Holder in accordance with Section 7.06. The Warrant Agent shall be entitled
to rely on such certificate and shall be under no duty or responsibility with
respect to any such certificate, except to exhibit the same from time to time,
to any Holder desiring an inspection thereof during reasonable business hours.
The Warrant Agent shall not at any time be under any duty or responsibility to
any Holder to determine whether any facts exist which may require any adjustment
of the Exercise Price or the number of shares of Common Stock or other stock or
property issuable on exercise of the Warrants, or with respect to the nature or
extent of any such adjustment when made, or with respect to the method employed
in making such adjustment or the validity or value of any shares of Common
Stock, evidences of indebtedness, warrants, options, or other securities or
property.
SECTION 4.10. Notice of Certain Transactions. In the event that the
Company shall propose to (a) pay any dividend payable in securities of any class
to the holders of its Common Stock or to make any other non-cash dividend or
distribution to the holders of its Common Stock, (b) offer the holders of its
Common Stock rights to subscribe for or to purchase any securities convertible
into shares of Common Stock or shares of stock of any
18
class or any other securities, rights or options, (c) issue any (i) shares of
Common Stock, (ii) rights, options or warrants entitling the holders thereof to
subscribe for shares of Common Stock, or (iii) securities convertible into or
exchangeable or exercisable for Common Stock (in the case of (i), (ii) and
(iii), if such issuance or adjustment would result in an adjustment hereunder),
(d) effect any capital reorganization, reclassification, consolidation or
merger, (e) effect the voluntary or involuntary dissolution, liquidation or
winding-up of the Company or (f) make a tender offer or exchange offer with
respect to the Common Stock, the Company shall within 5 days send to the Warrant
Agent and the Warrant Agent shall within 5 days send the Holder a notice (in
such form as shall be furnished to the Warrant Agent by the Company) of such
proposed action or offer. Such notice shall be mailed by the Warrant Agent to
the Holders at their addresses as they appear in the Certificate Register, which
shall specify the record date for the purposes of such dividend, distribution or
rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect of such action on the Common Stock
and on the number and kind of any other shares of stock and on other property,
if any, and the number of shares of Common Stock and other property, if any,
issuable upon exercise of each Warrant and the Exercise Price after giving
effect to any adjustment pursuant to Article 4 which will be required as a
result of such action. Such notice shall be given as promptly as possible and
(x) in the case of any action covered by clause (a) or (b) above, at least 10
days prior to the record date for determining holders of the Common Stock for
purposes of such action or (y) in the case of any other such action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Common Stock, whichever shall be the
earlier.
SECTION 4.11. Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article 4, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock issuable upon
exercise of the Warrants as are stated in the Warrant Certificates initially
issued pursuant to this Agreement. The Company, however, may at any time in its
sole discretion make any change in the form of Warrant Certificate that it may
deem appropriate to give effect to such adjustments and that does not affect the
substance of the Warrant Certificate, and any Warrant Certificate thereafter
issued or countersigned, whether in exchange or substitution for an outstanding
Warrant Certificate or otherwise, may be in the form as so changed.
SECTION 4.12. Exceptions to Antidilution Provisions. Without limiting
any other exception contained in this Article 4, and in addition thereto, no
adjustment need be made for:
(i) grants or exercises of rights granted to employees of the
Company or any of its subsidiaries or shares of Common Stock issued or
granted to such employees under the stock incentive plan or otherwise,
whether or not upon the exercise, exchange or conversion of any such
rights;
19
(ii) options, warrants or other agreements or rights to purchase
capital stock of the Company entered into prior to the date of the issuance
of the Warrants and any issuance of shares of Common Stock in connection
therewith;
(iii) rights to purchase shares of Common Stock pursuant to a Company
plan for reinvestment of dividends or interest;
(iv) a change in the par value of shares of Common Stock (including
a change from par value to no par value or vice versa); and
(v) bona fide public offerings or private placements pursuant
to Section 4(2) of the Securities Act, Regulation D thereunder or
Regulation S of any security trading on any national securities exchange or
in the over the counter market, or of a security directly or indirectly
convertible or exchangeable for any such security (the latter security
being a "Reference Security"), involving at least one investment bank of
national reputation, if such security is sold to investors at a price equal
to the closing sale, bid or ask price (whichever is customary) of such
security or the Reference Security on the date of the public offering or
private placement.
ARTICLE 5
Registration Rights
SECTION 5.01. Effectiveness of Registration Statement. Subject to
Section 5.02, the Company shall cause to be filed pursuant to Rule 415 (or any
successor provision) of the Securities Act a shelf registration statement
covering the issuance of Warrant Shares to the Holders upon exercise of the
Warrants by the Holders thereof (the "Common Shelf Registration Statement") and
shall use its reasonable efforts to cause the Common Shelf Registration
Statement to be declared effective on or before 180 days after the Issue Date.
Subject to Section 5.02, the Company shall cause the Common Shelf Registration
Statement to remain effective until the earlier of (i) such time as all Warrants
have been exercised and (ii) the Expiration Date. In connection the Common Shelf
Registration Statement, (i) the Company shall furnish to the Warrant Agent,
prior to the filing with the Commission, a copy of the Common Shelf Registration
Statement, and each amendment thereof and each amendment or supplement, if any,
to the prospectus included therein and shall use its reasonable best efforts to
reflect in each such document, when filed with the Commission, such comments as
the Warrant Agent may reasonably propose, (ii) the Company shall furnish to each
Holder, without charge, at least one copy of the Common Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
exhibits thereto (including those incorporated by reference), (iii) the Company
shall, for so long as the Common Shelf Registration Statement is effective,
deliver to each Holder, without charge, as many copies of the prospectus
(including each preliminary
20
prospectus) included in the Common Shelf Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request, and the
Company consents to the proper use of the prospectus therein and any amendment
or supplement thereto by each of the selling Holders in connection with the
offering and sale of the Warrant Shares covered by such prospectus and any
amendment or supplement thereto, (iv) the Company may require each Holder of
Warrants to be exercised in connection with the Common Shelf Registration
Statement to furnish to the Company such information regarding the Holder and
the distribution of such Warrants or Warrant Shares as the Company may from time
to time reasonably request for inclusion in the Common Shelf Registration
Statement, (v) the Company shall, if requested, promptly incorporate in a
prospectus supplement or post-effective amendment to the Common Shelf
Registration Statement such information as a majority in interest of the Holders
reasonably agree should be included therein and shall make all required filings
of such prospectus supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment, and (vi) the Company shall enter into such agreements (including
underwriting agreements) as are appropriate, customary and reasonably necessary
in connection with the Common Shelf Registration Statement. The Company will
furnish the Warrant Agent with current prospectuses meeting the requirements of
the Securities Act in sufficient quantity to permit the Warrant Agent to
deliver, at the Company's expense, a prospectus to each holder of a Warrant upon
the exercise thereof. The Company shall promptly inform the Warrant Agent of any
change in the status of the effectiveness or availability of the Common Shelf
Registration Statement.
SECTION 5.02. Suspension. During any consecutive 365-day period, the
Company shall be entitled to suspend the availability of the Common Shelf
Registration Statement for up to two 45 consecutive-day periods (except during
the 45 consecutive-day period immediately prior to the Expiration Date) if the
Company's Board determines in the exercise of its reasonable judgement that
there is a valid business purpose for such suspension and provides notice that
such determination was made by the Company's board to the holders of the
Warrants; provided, however, that in no event shall the Company be required to
disclose the business purpose for such suspension if the Company determines in
good faith that such business purpose must remain confidential.
SECTION 5.03. Demand Registration; Repurchase of Warrants. (a) In
connection with an Exercise Event, the Company will give notice thereof to all
Holders as soon as practicable but in no event later than five Business Days
following such Exercise Event. Upon request from Holders of at least 25% of
Warrants outstanding, the Company shall be required to use its best efforts to
prepare, file and cause to be declared effective on or before 120 days of such
demand a registration statement (the "Demand Registration Statement") covering
the underwritten offer and sale of Warrant Shares, and shall cause the Demand
Registration Statement to remain effective for 180 days or until all Warrant
Shares registered thereunder are sold, whichever shall occur first; provided,
that the Company will
21
use its best efforts to cause such Demand Registration Statement to become
effective prior to the occurrence of the Exercise Event.
(b) The right of any Holder to include its Warrant Shares in
the Demand Registration Statement shall be conditioned upon such Holder's
participation and inclusion of such Holder's Warrant Shares in the underwritten
offering. All Holders proposing to distribute Warrant Shares through such
underwritten offering shall enter into an underwriting agreement in customary
form with the underwriter or underwriters which shall be selected by a majority
in interest of the Holders and shall be approved by the Company, which approval
shall not be unreasonably withheld; provided, (i) that all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of the underwriters shall also be made to and for
the benefit of such Holders, (ii) that any or all of the conditions precedent to
the obligations of the underwriters shall be conditions precedent to the
obligations of such Holders, and (iii) that no Holder shall be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Holder or the Warrant Shares of such Holder and such Holder's intended method of
distribution and any other representations required by law or reasonably
required by the underwriter. If any such Holder disapproves of the terms of the
underwriting, such Holder may elect to withdraw all its Warrant Shares by
written notice to the Company and the managing underwriter. The Warrant Shares
so withdrawn shall also be withdrawn from registration.
(c) In connection with the Demand Registration Statement, (i)
the Company shall furnish to the Holders distributing Warrant Shares pursuant to
the Demand Registration Statement, prior to the filing with the Commission, a
copy of the Demand Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and all exhibits thereto
(including those incorporated by reference), and each amendment or supplement,
if any, to the prospectus included therein and shall use its reasonable best
efforts to reflect in each such document, when filed with the Commission, such
comments as such Holders may reasonably propose, (ii) the Company shall, for so
long as the Demand Registration Statement is effective, deliver to such Holders,
without charge, as many copies of the prospectus (including each preliminary
prospectus) included in the Demand Registration Statement and any amendment or
supplement thereto as such Holders may reasonably request, and the Company
consents to the proper use of the prospectus therein and any amendment or
supplement thereto by the underwriter in connection with the offering and sale
of the Warrant Shares covered by such prospectus and any amendment or supplement
thereto, (iii) the Company may require such Holder to furnish to the Company
such information regarding such Holder and the distribution of such Warrants or
Warrant Shares as the Company may from time to time reasonably request for
inclusion in the Demand Registration Statement, (iv) the Company shall, if
requested, promptly incorporate in a prospectus supplement or post-effective
amendment to the Demand Registration Statement such information as a majority in
interest of such Holders reasonably agree should be included therein and shall
make all required filings of such prospectus supplement or post-effective
22
amendment as soon as notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment, (v) the Company shall enter
into such agreements (including underwriting agreements) as are appropriate,
customary and reasonably necessary in connection with the Demand Registration
Statement and (vi) the Company shall (A) make available all material customary
for reasonable due diligence examinations in connection with such Demand
Registration Statement, (B) make such representations and warranties to such
Holders as are customary and reasonable in connection with the Demand
Registration Statement, (C) obtain such opinions of counsel to the Company
addressed to and reasonably satisfactory to such Holders and the underwriters as
are customary and reasonable in connection with the Demand Registration
Statement and (D) obtain such "comfort" letters and updates thereof from the
independent certified public accountants of the Company addressed to such
Holders and the underwriters as are customary and reasonable in connection with
the Demand Registration Statement. The Company shall promptly inform such
Holders of any change in the status of the effectiveness or availability of the
Demand Registration Statement.
(d) Notwithstanding the foregoing, in lieu of completing the
obligation to file the Demand Registration Statement as set forth in subsection
(a) above, the Company may offer to repurchase for cash all Warrants, at the
Current Market Value per Warrant, of Holders requesting the Demand Registration
Statement.
(e) If the Company elects to repurchase Warrant Shares
pursuant to subsection (d) above, the Company shall give notice of such
repurchase offer to all Holders and to the Warrant Agent. The repurchase offer
shall commence on the date on which the Company gives such notice (the "Notice
Date"), and such repurchase offer shall expire at 5:00 p.m., New York City time,
on a date determined by the Company (the "expiration date") that is at least 30
but not more than 60 calendar days after the Notice Date. The Company shall
offer to repurchase for cash at Current Market Value the Warrant Shares or
Warrants pursuant to subsection (d) above, provided that proper tender must be
made to the Warrant Agent by the Holders prior to the expiration date for such
repurchase offer.
(f) Each Holder may, but shall not be obligated to, accept
the Company's offer to repurchase pursuant to Section 5.03(d), by tendering to
the Warrant Agent, on or prior to the expiration date for such repurchase offer,
the Warrant Shares or Warrant such Holder desires to have repurchased in such
offer, and in the case of Warrants tendered, together with a completed
Certificate for Surrender in substantially the form attached to the Warrant
Certificate. A Holder may withdraw all or a portion of the Warrant Shares or
Warrants tendered to the Warrant Agent at any time prior to the expiration date
for such repurchase offer. If less than all the Warrants represented by a
Warrant Certificate shall be tendered, such Warrant Certificate shall be
surrendered and a new Warrant Certificate of the same tenor and for the number
of Warrants which were not tendered shall be executed by the Company and
delivered to the Warrant Agent and the Warrant Agent shall countersign the new
Warrant Certificate to the Person or Persons entitled to receive the same;
provided that the Holder of
23
such Warrants shall be responsible for the payment of any transfer taxes
required as a result of any change in ownership of such Warrants.
SECTION 5.04. Blue Sky. The Company shall use its reasonable
efforts to register or qualify the Warrant Shares under all applicable
securities laws, blue sky laws or similar laws of all jurisdictions in the
United States and Canada in which any Holder may or may be deemed to purchase
Warrant Shares upon the exercise of Warrants and shall use its reasonable
efforts to maintain such registration or qualification through the earlier of
(i) such time as all Warrants have been exercised and (ii) the Expiration Date
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 5.04 or to take any action which would subject it
to general service of process or to taxation in any such jurisdiction where it
is not then so subject.
SECTION 5.05. Accuracy of Disclosure. The Company represents
and warrants to each Holder and agrees for the benefit of each Holder that (i)
the Common Shelf Registration Statement or the Demand Registration Statement and
any amendment thereto will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading; and (ii) each of the
prospectus furnished to such Holder for delivery in connection with the exercise
of Warrants or in connection with the sale of Warrant Shares, as the case may
be, and the documents incorporated by reference therein will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the Company shall have no liability under clause (i) or (ii) of
this Section 5.05 with respect to any such untrue statement or omission made in
the Common Shelf Registration Statement or the Demand Registration Statement in
reliance upon and in conformity with information furnished to the Company by or
on behalf of the Holders specifically for inclusion therein.
SECTION 5.06. Indemnification. (a) In connection with either
the Common Shelf Registration Statement or the Demand Registration Statement,
the Company agrees to indemnify and hold harmless each Holder of the Warrants
and each person, if any, who controls such Holder within the meaning of the
Securities Act or the Exchange Act (each Holder and such controlling persons
being referred to collectively as the "Indemnified Parties") from and against
any losses, damages or liabilities, joint or several, or any actions in respect
thereof (including but not limited to any losses, claims, damages, liabilities
or actions relating to purchases and sales of the Warrant Shares) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Common Shelf Registration Statement or
Demand Registration Statement or their related prospectuses or in any amendment
or supplement thereto, or arise out of, or are based upon, the omission or
alleged omission to
24
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and shall reimburse, as incurred, the Indemnified Parties
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in the Common Shelf Registration Statement or
the Demand Registration Statement or any preliminary or final prospectus or in
any amendment or supplement thereto in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein, (ii) with respect
to any untrue statement or omission or alleged untrue statement or omission made
in any prospectus relating to the Common Shelf Registration Statement or the
Demand Registration Statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any person as to which there is
a prospectus delivery requirement (a "Delivering Seller") that sold the Warrants
or the Warrant Shares, as the case may be, to the person asserting any such
losses, claims, damages or liabilities to the extent that any such loss, claim,
damage or liability of such Delivering Seller results from the fact that there
was not sent or given to such person, on or prior to the written confirmation of
such sale, a copy of the relevant prospectus, as amended and supplemented,
provided that (I) the Company shall have previously furnished copies thereof to
such Delivering Seller in accordance with this Agreement and (II) such furnished
prospectus, as amended and supplemented, would have corrected any such untrue
statement or omission or alleged untrue statement or omission, and (iii) this
indemnity agreement will be in addition to any liability which the Company may
otherwise have to such Indemnified Party.
(b) The agreements contained in this section shall survive
the exercise of the Warrants pursuant to the Common Shelf Registration Statement
and the sale of the Warrant Shares pursuant to the Demand Registration
Statement, and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any indemnified party.
SECTION 5.07. Additional Acts. If the issuance or sale of any
Common Stock or other securities issuable upon the exercise of the Warrants
requires registration or approval of any governmental authority (other than the
registration requirements under the Securities Act), or the taking of any other
action under the laws of the United States of America or any political
subdivision thereof before such securities may be validly offered or sold in
compliance with such laws, then the Company covenants that it will, in good
faith and as expeditiously as reasonably possible, use all reasonable efforts to
secure and maintain such registration or approval or to take such other action,
as the case may be.
SECTION 5.08. Expenses. All expenses incident to the Company's
performance of or compliance with its obligations under this Article 5 will be
borne by the
25
Company, including, without limitation: (i) all Commission, stock exchange or
National Association of Securities Dealers, Inc. registration and filing fees,
(ii) all reasonable fees and expenses incurred in connection with compliance
with state securities or blue sky laws, (iii) all reasonable expenses of any
Persons incurred by or on behalf of the Company in preparing or assisting in
preparing, printing and distributing the Common Shelf Registration Statement,
the Demand Registration Statement or any other registration statement,
prospectus, any amendments or supplements thereto and other documents relating
to the performance of and compliance with this Article 5, (iv) the fees and
disbursements of the Warrant Agent, (v) the fees and disbursements of counsel
for the Company and the Warrant Agent and, in the case of a Demand Registration
Statement, of counsel for the underwriters (vi) the fees and disbursements of
the independent public accountants of the Company, including the expenses of any
special audits or comfort letters required by or incident to such performance
and compliance. The Holders selling Warrant Shares pursuant to the Demand
Registration Statement shall be responsible for any expenses customarily borne
by selling securityholders, including underwriting discounts and commissions and
fees and expenses of counsel to the selling securityholders.
SECTION 5.09. Listing of Warrant Shares. The Company shall use
its best efforts to register the Warrant Shares on the Nasdaq National Market by
_________, 1997.
ARTICLE 6
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the express provisions of this Agreement and the Warrant Agent hereby accepts
such appointment.
SECTION 6.02. Right and Duties of Warrant Agent. (a) Agent for
the Company. In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent for the
Company and does not assume any obligation or relationship or agency or trust
for or with any of the holders of Warrant Certificates or beneficial owners of
Warrants.
(b) Counsel. The Warrant Agent may consult with counsel
satisfactory to it (who may be counsel to the Company), and the advice 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 the advice of such counsel.
(c) Documents. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing suffered by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement, opinion or
26
other paper or document reasonably believed by it to be genuine and to have been
presented or signed by the proper parties.
(d) No Implied Obligations. The Warrant Agent shall be
obligated to perform only such duties as are specifically set forth herein and
in the Warrant Certificates, and no implied duties or obligations of the Warrant
Agent shall be read into this Agreement or the Warrant Certificates. The Warrant
Agent shall not be under any obligation to take any action hereunder which may
tend to involve it in any expense or liability for which it does not receive
indemnity if such indemnity is reasonably requested. 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 countersigned by the Warrant Agent and delivered
by it to the Holders or on behalf of the Holders pursuant to this Agreement or
for the application by the Company of the proceeds of the Warrants. 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 herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.
(e) Not Responsible for Adjustments or Validity of Stock. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist that may require an adjustment of
the number of shares of Common Stock issuable upon exercise of each Warrant or
the Exercise Price, or with respect to the nature or extent of any adjustment
when made or with respect to the method employed or provided to be employed
herein or in any supplemental agreement in making the same. The Warrant Agent
shall not be accountable with respect to the validity or value of any shares of
Common Stock or of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant or upon any adjustment pursuant to
Article 4, and it makes no representation with respect thereto. The Warrant
Agent shall not be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of Common Stock or stock
certificates upon the surrender of any Warrant Certificate for the purpose of
exercise or upon any adjustment pursuant to Article 4, or to comply with any of
the covenants of the Company contained in Article 4.
SECTION 6.03. Individual Rights of Warrant Agent. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities of the Company
or its affiliates or become pecuniarily interested in transactions in which the
Company or its affiliates may be interested, or contract with or lend money to
the Company or its affiliates or otherwise act as fully and freely as though it
were not the Warrant Agent under this Agreement. Nothing herein shall preclude
the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent
shall not be responsible for and makes no representation as to the validity or
adequacy of this Agreement or
27
the Warrant Certificates and it shall not be responsible for any statement in
this Agreement or the Warrant Certificates other than its countersignature
thereon.
SECTION 6.05. Compensation and Indemnity. The Company and the
Warrant Agent have entered into an agreement pursuant to which the Company
agrees to pay the Warrant Agent from time to time compensation for its services
and to reimburse the Warrant Agent upon request for all reasonable out-of-pocket
expenses incurred by it, including the reasonable compensation and expenses of
the Warrant Agent's agents and counsel. The Company shall indemnify the Warrant
Agent against any and all loss, liability, damage, claim or expense (including
agents' and attorneys' fees and expenses) incurred by it without gross
negligence, bad faith or wilful misconduct on its part arising out of or in
connection with the acceptance or performance of its duties under this
Agreement. The Warrant Agent shall notify the Company promptly of any claim for
which it may seek indemnity. The Company need not reimburse any expense or
indemnify against any loss or liability incurred by the Warrant Agent through
wilful misconduct, negligence or bad faith. The Company's payment obligations
pursuant to this Section 6.05 shall survive the termination of this Agreement.
To secure the Company's payment obligations under this
Agreement, the Warrant Agent shall have a lien prior to the Holders on all money
or property held or collected by the Warrant Agent.
SECTION 6.06. Successor Warrant Agent. The Company agrees for
the benefit of the Holders that there shall at all times be a Warrant Agent
hereunder until all the Warrants have been exercised or are no longer
exercisable.
(b) Resignation and Removal. The Warrant Agent may at any
time resign 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 not be less than 60 days
after the date on which such notice is given unless the Company otherwise
agrees. The Warrant Agent hereunder may be removed at any time by the filing
with it of an instrument in writing signed by or on behalf of the Company and
specifying such removal and the date when it shall become effective, which date
shall not be less than 60 days after such notice is given unless the Warrant
Agent otherwise agrees. Any removal under this Section 6.06 shall take effect
upon the appointment by the Company as hereinafter provided of a successor
Warrant Agent (which shall be a bank or trust company authorized under the laws
of the jurisdiction of its organization to exercise corporate trust powers) and
the acceptance of such appointment by such successor Warrant Agent. If a
successor Warrant Agent does not take office within 60 days after the retiring
Warrant Agent resigns or is removed, the retiring Warrant Agent or the Holders
of 10% of the Warrants may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor.
(c) The Company to Appoint Successor. In the event that at
any time the Warrant Agent shall resign, or shall be removed, or shall become
incapable of acting, or shall
28
be adjudged a bankrupt or insolvent, or shall commence a voluntary case under
Federal bankruptcy laws, as now or hereafter constituted, or under any other
applicable Federal or state bankruptcy, insolvency or similar law, or shall
consent to the appointment of or taking possession by a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Warrant Agent or its property of affairs, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or shall take corporate action in furtherance of
any such action, or a decree or order for relief by a court having jurisdiction
in the premises shall have been entered in respect of the Warrant Agent in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy, insolvency or
similar law, or a decree order by a court having jurisdiction in the premises
shall have been entered for the appointment of a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or similar official) of the Warrant
Agent or of its property or affairs, or any public officer shall take charge or
control of the Warrant Agent or of its property or affairs for the purpose of
rehabilitation, conservation, winding up or liquidation, a successor Warrant
Agent, qualified as aforesaid, shall be appointed by the Company by an
instrument in writing filed with the successor Warrant Agent. Upon the
appointment as aforesaid of a successor Warrant Agent and acceptance by the
successor Warrant Agent of such appointment, the Warrant Agent shall cease to be
the Warrant Agent hereunder; provided, however, that in the event of the
resignation of the Warrant Agent hereunder, such resignation shall be effective
on the earlier of (i) the date specified in the Warrant Agent's notice of
resignation and (ii) the appointment and acceptance of a successor Warrant Agent
hereunder.
(d) Successor To Expressly Assume Duties. Any successor
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the rights and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such successor Warrant Agent shall be entitled to receive, all monies,
securities and other property on deposit with or held by such predecessor, as
Warrant Agent hereunder.
(e) Successor by Merger. Any corporation into which the
Warrant Agent hereunder may be merged or consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent shall be a
party, or any corporation to which the Warrant Agent shall sell or otherwise
transfer all or substantially all the corporate trust or stock transfer assets
and business of the Warrant Agent, provided that it shall be qualified as
aforesaid, shall be the successor Warrant Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
29
ARTICLE 7
Remedies
SECTION 7.01. Defaults. It shall be deemed a "Default" with
respect to the Company's (or its successor's) obligations under this Agreement
if an Exercise Event occurs and, (i) following the request of at least 25% of
Holders of Warrants outstanding, the Company fails to use its best efforts to
have declared effective and kept effective a Demand Registration Statement as
set forth in Section 5.03(a), or (ii) the Company fails to repurchase the
Warrants in lieu of having a Demand Registration Statement declared effective,
as set forth in Section 5.03(b).
SECTION 7.02. Payment Obligations. In the event of a Default
under this Agreement, the Company shall be obligated to increase the amounts
payable under Section 5.03(b) in respect of which such Default relates by an
amount equal to interest thereon at a rate per annum equal to __% from the date
of the Default to the date of payment, which interest shall compound quarterly
(all such payment obligations in respect of amounts payable under Section 5.03,
together with all such increased amounts, being the "Repurchase Obligations").
SECTION 7.03. Remedies. Notwithstanding any other provision of
this Agreement, if a Default occurs and is continuing, the Holders may pursue
any available remedy to collect the Repurchase Obligations or to enforce the
performance of any provision of this Agreement. A delay or omission by any
Holder of a Warrant in exercising, or a failure to exercise, any right or remedy
arising out of a Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Default. All remedies are cumulative to the
extent permitted by law.
ARTICLE 8
Miscellaneous
SECTION 8.01. Financial Statements and Reports of the Company.
The Company agrees (a) to provide to each Holder, without cost to such Holder,
copies of the annual and quarterly reports and documents that the Company files
with the Commission (to the extent such filings are accepted by the Commission
and whether or not the Company has a class of securities registered under the
Securities Exchange Act of 1934 (the "Exchange Act")) or that the Company would
be required to file were it subject to Section 13 or 15 of the Exchange Act,
within 15 days after the date of such filing or the date on which the Company
would be required to file such reports or documents, and all such annual or
quarterly reports shall include the geographic segment financial information as
has heretofore been disclosed by the Company in its public filings with the
Commission, and (b) if filing such reports and
30
documents is not accepted by the Commission or is prohibited under the Exchange
Act, to supply at the Company's expense copies of such reports and documents to
any prospective Holder promptly upon request.
SECTION 8.02. Third Party Beneficiaries. The Holders shall be
third party beneficiaries to the agreements made hereunder between the Company,
on the one hand, and the Warrant Agent, on the other hand, and each Holder shall
have the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
SECTION 8.03. Rights of Holders. Holders of unexercised
Warrants are not entitled to (i) receive dividends or other distributions, (ii)
receive notice of or vote at any meeting of the stockholders, (iii) consent to
any action of the stockholders, (iv) receive notice as stockholders of any other
proceedings of the Company, (v) exercise any preemptive rights or (vi) exercise
any other rights whatsoever as stockholders of the Company.
SECTION 8.04. Amendment. This Agreement may be amended by the
parties hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as the Company and the Warrant
Agent may deem necessary or desirable (including without limitation any addition
or modification to provide for compliance with the transfer restrictions set
forth herein); provided, however, that such action shall not adversely affect
the rights of any of the Holders. Any amendment or supplement to this Agreement
that has an adverse effect on the interests of the Holders shall require the
written consent of the Holders of a majority of the then outstanding Warrants.
The consent of each Holder affected shall be required for any amendment pursuant
to which the Exercise Price would be increased or the number of Warrant Shares
issuable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided herein) or the exercise period with respect to the Warrants
would be shortened. In determining whether the Holders of the required number of
Warrants have concurred in any direction, waiver or consent, Warrants owned by
the Company or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company shall be disregarded
and deemed not to be outstanding, except that, for the purpose of determining
whether the Warrant Agent shall be protected in relying on any such direction,
waiver or consent, only Warrants which the Warrant Agent actually knows are so
owned shall be so disregarded. Also, subject to the foregoing, only Warrants
outstanding at the time shall be considered in any such determination.
SECTION 8.05. Notices. Any notice or communication shall be
in writing and delivered in Person or mailed by first-class mail addressed as
follows:
31
if to the Company:
0000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: ___
with a copy to:
Pepper, Xxxxxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
if to the Warrant Agent:
First Union National Bank of Virginia
000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: ___
The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to the Holder at the Holder's address as it appears on the Certificate Register
and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 8.06. Governing Law. The laws of the State of New
York shall govern this Agreement and the Warrant Certificates.
SECTION 8.07. Successors. All agreements of the Company in
this Agreement and the Warrant Certificates shall bind its successors. All
agreements of the Warrant Agent in this Agreement shall bind its successors.
SECTION 8.08. Multiple Originals. The parties may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Agreement.
32
SECTION 8.09. Table of Contents. The table of contents and
headings of the Articles and Sections of this Agreement have been inserted for
convenience of reference only, are not intended to be considered a part hereof
and shall not modify or restrict any of the terms or provisions hereof.
SECTION 8.10. Severability. The provisions of this Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
33
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
PRIMUS TELECOMMUNICATIONS GROUP,
INCORPORATED,
by
----------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF
VIRGINIA, as Warrant Agent,
by
----------------------------
Name:
Title:
34
EXHIBIT A
{FORM OF FACE OF WARRANT CERTIFICATE}
[THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS
PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $_______ AGGREGATE
PRINCIPAL AMOUNT OF ___% SENIOR NOTES DUE 2004 OF PRIMUS TELECOMMUNICATIONS
GROUP, INCORPORATED (THE "COMPANY") (THE "NOTES") AND ___ WARRANTS TO PURCHASE
_____ SHARES OF THE COMPANY AT AN EXERCISE PRICE OF $_________. THE WARRANTS AND
THE NOTES WILL NOT BE SEPARATELY TRANSFERABLE UNTIL THE EARLIER OF (I)
_________, 1998, (II) AN EXERCISE EVENT OR (III) SUCH OTHER DATE AS XXXXXX
BROTHERS INC. MAY DETERMINE.]*
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS 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 OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THE EXERCISE OF THIS WARRANT (AND THE OWNERSHIP OF COMMON STOCK
ISSUABLE UPON THE EXERCISE THEREOF) MAY BE LIMITED BY PRIMUS TELECOMMUNICATIONS
GROUP, INCORPORATED IN ORDER TO ENSURE COMPLIANCE WITH THE RULES, REGULATIONS
AND POLICIES OF THE FEDERAL COMMUNICATIONS COMMISSION, AND THIS WARRANT WILL NOT
BE EXERCISABLE BY ANY HOLDER IF SUCH EXERCISE WOULD CAUSE PRIMUS
TELECOMMUNICATIONS GROUP, INCORPORATED TO BE IN VIOLATION OF THE
-----------------
* To be included on Warrants issued prior to the Separation Date.
COMMUNICATIONS ACT OF 1934 OR THE RULES, REGULATIONS AND POLICIES OF THE FEDERAL
COMMUNICATIONS COMMISSION.
2
No. { } Certificate for _____ Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
THIS CERTIFIES THAT __________, or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant entitles the holder thereof (the "Holder"), at its option and
subject to the provisions contained herein and in the Warrant Agreement referred
to below, to purchase from Primus Telecommunications Group, Incorporated, a
Delaware corporation ("the Company"), ______ shares of Common Stock, par value
of $0.01 per share, of the Company (the "Common Stock") at the per share
exercise price of $______ (the "Exercise Price"), or by Cashless Exercise
referred to below. This Warrant Certificate shall terminate and become void as
of the close of business on ________ __, 2004 (the "Expiration Date") or upon
the exercise hereof as to all the shares of Common Stock subject hereto. The
number of shares issuable upon exercise of the Warrants and the Exercise Price
per share shall be subject to adjustment from time to time as set forth in the
Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of July __, 1997 (the "Warrant Agreement"), between
the Company and First Union National Bank of Virginia (the "Warrant Agent",
which term includes any successor Warrant Agent under the Warrant Agreement),
and is subject to the terms and provisions contained in the Warrant Agreement,
to all of which terms and provisions the Holder of this Warrant Certificate
consents by acceptance hereof. The Warrant Agreement is hereby incorporated
herein by reference and made a part hereof. Reference is hereby made to the
Warrant Agreement for a full statement of the respective rights, limitations of
rights, duties and obligations of the Company, the Warrant Agent and the Holders
of the Warrants. Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Warrant Agreement. A copy of the Warrant
Agreement may be obtained for inspection by the Holder hereof upon written
request to the Warrant Agent at [Address].
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part (i) by presentation of this Warrant Certificate
with the Election to Purchase attached hereto duly executed and with the
simultaneous payment of the Exercise Price in cash (subject to adjustment) to
the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose. Payment by Cashless Exercise shall be made without the payment of cash
by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which
such Warrant is exercisable as of the Exercise Date (if the Exercise Price were
being paid in cash) and (2) a fraction, the numerator of which is the excess of
the Current Market Value per share of Common Stock on the Exercise Date over the
Exercise Price per share as of the Exercise Date and the denominator of which is
the Current Market Value per share of the Common Stock on the Exercise Date.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time on
or after ________ __, 1998; provided, however, that Holders of Warrants will be
able to exercise their Warrants only if a shelf registration statement relating
to the Common Stock underlying the Warrants is effective or the exercise of such
Warrants is exempt from the registration requirements of the Securities Act of
1933 and such securities are qualified for sale or exempt from qualification
under the applicable securities laws of the states or other jurisdictions in
which such Holders reside; provided further, however, that no Warrant shall be
exercisable after ________ __, 2004.
In the event the Company enters into a Combination, the Holder hereof
will be entitled to receive upon exercise of the Warrants the kind and amount of
shares of capital stock or other securities or other property of such surviving
entity as the Holder would have been entitled to receive upon or as a result of
the combination had the Holder exercised its Warrants immediately prior to such
Combination; provided, however, that in the event that, in connection with such
Combination, consideration to holders of Common Stock in exchange for their
shares is payable solely in cash or in the event of the dissolution, liquidation
or winding-up of the Company, the Holder hereof will be entitled to receive such
cash distributions as the Holder would have received had the Holder exercised
its Warrants immediately prior to such Combination, less the Exercise Price.
As provided in the Warrant Agreement, the number of shares of Common
Stock issuable upon the exercise of the Warrants and the Exercise Price are
subject to adjustment upon the happening of certain events.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 2.06 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the issuance of the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate
representing those Warrants which were not exercised. This Warrant Certificate
may be exchanged at the office of the Warrant Agent by presenting this Warrant
Certificate properly endorsed with a request to exchange this Warrant
Certificate for other Warrant Certificates evidencing an equal number of
Warrants. No fractional Warrant Shares will be issued upon the exercise of the
Warrants, but the Company shall pay an amount in cash equal to the Current
Market Value per Warrant Share on
2
the day immediately preceding the date the Warrant is exercised, multiplied by
the fraction of a Warrant Share that would be issuable on the exercise of any
Warrant.
All shares of Common Stock issuable by the Company upon the exercise
of the Warrants shall, upon such issue, be duly and validly issued and fully
paid and non-assessable.
The holder in whose name the Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner of
the Warrant Certificate for all purposes whatsoever and neither the Company nor
the Warrant Agent shall be affected by notice to the contrary.
The Warrants do not entitle any holder hereof to any of the rights of
a shareholder of the Company.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
PRIMUS TELECOMMUNICATIONS GROUP,
INCORPORATED
By
--------------------------------
By
--------------------------------
DATED:
Countersigned:
---------------------------
FIRST UNION NATIONAL BANK OF VIRGINIA
as Warrant Agent,
By
---------------------------
Authorized Signatory
3
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED
The undersigned hereby irrevocably elects to exercise Warrants
at an exercise price per Warrant (subject to adjustment) of $______ to acquire
_____ shares of Common Stock, par value $0.01 per share, of Primus
Telecommunications Group, Incorporated on the terms and conditions specified
within the Warrant Certificate and the Warrant Agreement therein referred to,
surrenders this Warrant Certificate and all right, title and interest therein to
Primus Telecommunications Group, Incorporated and directs that the shares of
Common Stock deliverable upon the exercise of such Warrants be registered or
placed in the name and at the address specified below and delivered thereto.
Date: , 19
----------- --
-----------------------------------
(Signature of Owner)
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-----------------------------------
{Signature must be guaranteed by an
eligible Guarantor Institution (banks,
stock brokers, savings and loan
associations and credit unions) with
membership in an approved guarantee
medallion program pursuant to
Securities and Exchange Commission
Rule 17Ad-5}
----------
4
1. The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed.
5
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:____________________________________________
Street Address:__________________________________
City, State and Zip Code:________________________
Any unexercised Warrants represented by the Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:____________________________________________
Street Address:__________________________________
City, State and Zip Code:________________________
6
APPENDIX A
LIST OF FINANCIAL EXPERTS
-------------------------
Xxxx Xxxxx & Sons
Bear, Xxxxxxx & Co., Inc.
Credit Suisse First Boston Corporation
Xxxxxx, Read & Co. Inc.
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxx Xxxx, LLP
Xxxxxxx, Xxxxx & Co.
Lazard Freres & Co.
Xxxxxx Brothers
Merrill Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxxxxx & Co., Inc.
PaineWebber Incorporated
Prudential Securities Inc.
Salomon Brothers Inc
Xxxxx Xxxxxx Inc.
7
