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EXHIBIT 4.5
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WARRANT AGREEMENT
Dated as of
July 24, 1998
between
SPLITROCK SERVICES, INC.
and
BANK OF MONTREAL TRUST COMPANY,
as Warrant Agent
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Warrants for
Common Stock of
Splitrock Services, Inc.
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.03. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
Warrant Certificates
SECTION 2.01. Form and Dating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.02. Execution and Countersignature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.03. Warrant Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.04. Warrantholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.05. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.06. Replacement Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.07. Outstanding Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.08. Temporary Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.09. Cancelation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.10. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.02. Exercise Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.03. Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.04. Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.05. Issuance of Warrant Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.06. Fractional Warrant Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.07. Reservation of Warrant Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.08. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.02. Cash Dividends and Other
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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SECTION 4.03. Common Stock Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.04. Issuance of Rights or Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.05. Combination; Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.06. Other Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.07. Superseding Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.08. Minimum Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.09. Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.10. Notice of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.11. Adjustment to Warrant Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.02. Suspension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.03. Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.04. Accuracy of Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.06. Additional Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.07. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.02. Rights and Duties of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.03. Individual Rights of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.04. Warrant Agent's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.05. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.06. Successor Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII
Miscellaneous
SECTION 7.01. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.02. Persons Benefitting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.03. Rights of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.04. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.06. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.07. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.08. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.09. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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APPENDIX PROVISIONS RELATING TO WARRANTS
EXHIBIT A Form of Face of Warrant Certificate
EXHIBIT B Form of Transferee Letter of Representation
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WARRANT AGREEMENT dated as of July 24, 1998 (this
"Warrant Agreement"), between SPLITROCK SERVICES, INC., a
Delaware corporation (the "Company"), and the BANK OF MONTREAL
TRUST COMPANY, a New York banking corporation, as warrant
agent (the "Warrant Agent").
The Company desires to issue the warrants described herein. The
warrants will initially entitle the holders thereof (the "Holders") to
purchase, in the aggregate, 2,642,613 shares of Common Stock, par value $.001
per share, of the Company ("Common Stock") in connection with an offering (the
"Offering") by the Company of 261,000 units (the "Units"). Each Unit consists
of (i) $1,000 principal amount of the Company's 11 3/4% Senior Note due 2008 (a
"Note") and (ii) one warrant (each, a "Warrant") to purchase 10.124954 shares
of Common Stock.
The Warrants will not trade separately from the Notes until the
earliest date (the "Separation Date") to occur of: (i) 90 days after the date
hereof, (ii) a Change of Control, (iii) the occurrence of an Event of Default,
(iv) the date on which a registration statement with respect to the Notes, a
Registered Exchange Offer for the Notes or the Warrants is declared effective
and (v) such earlier date as determined by the Initial Purchaser in its sole
discretion.
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 specified Person means (i) any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person or (ii) any other Person who
is a director or executive officer (A) of such specified Person,
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(B) of any subsidiary of such specified Person or (C) of any Person described
in clause (i) above. 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; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. "Affiliate" shall
also mean any beneficial owner of shares representing 5% or more of the total
voting power of all classes of Capital Stock of such Person entitled to vote in
the election of directors, managers or trustees ("Voting Stock") (on a fully
diluted basis) or of rights or warrants to purchase such Voting Stock (whether
or not currently exercisable) and any Person who would be an Affiliate of any
such beneficial owner pursuant to the first sentence hereof.
"Board of Directors" or "Board" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such
Board.
"Business Day" means each day that is not a Saturday, Sunday or other
day on which banking institutions in New York State are authorized or required
by law to close.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of
or interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"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.
"Certificated Warrants" means certificated Warrants in fully
registered definitive form.
"Change of Control" shall have the meaning assigned to it in the
Indenture.
"Combination" means an event in which the Company consolidates with,
merges with or into, or conveys, transfers or leases all or substantially all
of its assets to, another Person.
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"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 of
Directors and certified in a board resolution, based 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 occurs on such date or shall
have occurred 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 a nationally recognized
investment banking firm or (ii) if the security is registered under the
Exchange Act, the average of the daily closing bid prices (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 ten 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.
"Event of Default" shall have the meaning assigned to it in the
Indenture.
"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.
"Extraordinary Cash Dividend" means that portion, if any, of the
aggregate amount of all dividends paid by the Company on the Common Stock in
any fiscal year that exceeds $5 million.
"Holder" or "Warrantholder" means the Person in whose name a Warrant
is registered on the Warrant Registrar's books.
"Indenture" means the Indenture dated as of July 24, 1998, between the
Company and the Trustee, with respect to the Notes, as it may be amended or
supplemented from time to time.
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"Initial Purchaser" means Chase Securities Inc.
"Issue Date" means the date on which the Warrants are initially
issued.
"Offering Memorandum" means the Offering Memorandum dated July 21,
1998, of the Company.
"Officer" means the Chairman of the Board of Directors, the Chief
Executive Officer, the Chief Financial Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Warrant Agent. Such counsel may be an employee of or counsel
to the Company or the Warrant Agent.
"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.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"Registered Exchange Offer" shall have the meaning assigned to it in
the Indenture.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Separation Date" has the meaning assigned to it in the recitals
hereto.
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"Trustee" means Bank of Montreal Trust Company, or any successor
trustee under the Indenture.
"Uniform Commercial Code" shall have the meaning assigned to it in the
Indenture.
"Warrant Agent" means the party named as such in this Warrant
Agreement until a successor replaces it and, thereafter, means the successor.
"Warrant Agreement" means this Warrant Agreement as amended or
supplemented from time to time.
"Warrant Certificates" mean the registered certificates (including the
Global Warrants) issued by the Company under this Warrant Agreement
representing the Warrants.
"Warrant Officer" means the Chairman of the Board, the President or
any other officer or assistant officer of the Warrant Agent assigned by the
Warrant Agent to administer its corporate trust matters.
"Warrant Shares" mean the shares of Common Stock (and any other
securities) for which the Warrants are exercisable or which have been issued
upon exercise of Warrants.
"Wholly Owned Subsidiaries" shall have the meaning assigned to it in
the Indenture.
SECTION 1.02. Other Definitions.
Defined in
Term Section
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"Advice" . . . . . . . . . . . . . . . . . . . . 5.01
"Cashless Exercise" . . . . . . . . . . . . . . . 3.04
"Common Shelf Registration Statement" . . . . . . 5.01
"Effectiveness Period" . . . . . . . . . . . . . 5.01
"Exercise Price" . . . . . . . . . . . . . . . . 3.01
"Expiration Date" . . . . . . . . . . . . . . . . 3.02(b)
"Holders' Information" . . . . . . . . . . . . . 5.01
"Registration Statement" . . . . . . . . . . . . 5.01
"Stock Registrar" . . . . . . . . . . . . . . . . 3.07
"Stock Transfer Agent" . . . . . . . . . . . . . 3.05
"Successor Company" . . . . . . . . . . . . . . . 4.05(a)
"Warrant Registrar" . . . . . . . . . . . . . . . 2.03
"Warrant Shelf Registration Statement" . . . . . 5.01
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SECTION 1.03. Rules of Construction. Unless the context 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 II
Warrant Certificates
SECTION 2.01. Form and Dating. Provisions relating to Warrants are
set forth in the Appendix, which is hereby incorporated in and expressly made a
part of this Warrant Agreement. The Warrant Certificates shall each be
substantially in the form of Exhibit A hereto, which is hereby incorporated in
and expressly made a part of this Warrant 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). Each Warrant Certificate shall be dated the date that it is executed
by the Company and countersigned by the Warrant Agent.
SECTION 2.02. 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 be valid nevertheless.
A Warrant shall not be valid until an authorized signatory of the
Warrant Agent manually countersigns the Warrant Certificate. The signature
shall be conclusive
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evidence that the Warrant has been authenticated under this Warrant Agreement.
The Warrant Agent shall countersign and make available for delivery
Warrant Certificates as set forth in the Appendix.
The Warrant Agent may appoint an agent reasonably acceptable to the
Company to countersign the Warrants. Any such appointment shall be evidenced
by an instrument signed by a Warrant Officer, a copy of which shall be
furnished to the Company. Unless limited by the terms of such appointment, an
agent of the Warrant Agent may countersign Warrants whenever the Warrant Agent
may do so. Each reference in this Warrant Agreement to countersigning by the
Warrant Agent includes countersigning by such agent.
SECTION 2.03. Warrant Registrar. The Company shall maintain an office
or agency where Warrants may be presented for registration of transfer,
exchange or exercise (the "Warrant Registrar"). The Warrant Registrar shall
keep a register of the Warrants and of their transfer, exchange or exercise.
The Company may have one or more co- registrars. The term Warrant Registrar
includes any co-registrars. The Company initially appoints the Warrant Agent
as (i) Warrant Registrar in connection with the Warrants and (ii) the Warrant
Custodian (as defined in the Appendix) with respect to the Global Warrants.
The Company shall enter into an appropriate agency agreement with any
Warrant Registrar not a party to this Warrant Agreement. The agreement shall
implement the provisions of this Warrant Agreement that relate to such agent.
The Company shall notify the Warrant Agent of the name and address of any such
agent. If the Company fails to maintain a Warrant Registrar, the Warrant Agent
shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 6.05. The Company or any of its domestically organized
Wholly Owned Subsidiaries may act as Warrant Registrar.
The Company may remove any Warrant Registrar upon written notice to
such Warrant Registrar and to the Warrant Agent; provided, however, that no
such removal shall become effective until (1) acceptance of an appointment by a
successor as evidenced by an appropriate agreement entered into by the Company
and such successor Warrant Registrar and delivered to the Warrant Agent or (2)
notification to the Warrant Agent that the Warrant Agent shall serve as Warrant
Registrar until the appointment of a successor in accordance with clause (1)
above. The Warrant Registrar may resign at
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any time upon written notice; provided, however, that the Warrant Agent may
resign as Warrant Registrar only if the Warrant Agent also resigns as Warrant
Agent in accordance with Section 6.06. The Company and the Warrant Agent may
deem and treat the Person in whose name a Warrant Certificate is 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 2.04. Warrantholder Lists. The Warrant Agent shall preserve
in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Warrantholders. If the Warrant
Agent is not the Warrant Registrar, the Company shall furnish, or cause the
Warrant Registrar to furnish, to the Warrant Agent, at such times as the
Warrant Agent may request in writing, a list in such form and as of such date
as the Warrant Agent may reasonably require of the names and addresses of
Warrantholders.
SECTION 2.05. Transfer and Exchange. The Warrants shall be issued in
registered form and shall be transferable only upon the surrender of a Warrant
Certificate for registration of transfer and in compliance with the Appendix.
When a Warrant is presented to the Warrant Registrar with a request to register
a transfer, the Warrant Registrar shall register the transfer as requested if
the requirements of Section 8-401(a) of the Uniform Commercial Code are met.
When Warrants are presented to the Warrant Registrar with a request to exchange
them for an equal number of Warrants of other denominations, the Warrant
Registrar shall make the exchange as requested if the requirements of Section
8-401(a)(1) and (2) of the Uniform Commercial Code are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Warrant Agent shall countersign Warrant Certificates at the Warrant Registrar's
request. The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer,
exchange or exercise pursuant to this Section 2.05.
Any Holder of a Global Warrant (as defined in the Appendix) shall, by
acceptance of such Global Warrant, agree that transfers of beneficial interests
in such Global Warrant may be effected only through a book-entry system
maintained by (i) the Holder of such Global Warrant (or its agent) or (ii) any
Holder of a beneficial interest in such Global Warrant, and that ownership of a
beneficial interest in such Global Warrant shall be required to be reflected in
a book entry.
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All Warrants issued upon any transfer or exchange pursuant to the
terms of this Warrant Agreement will evidence the same Warrants as the Warrants
surrendered upon such transfer or exchange.
SECTION 2.06. Replacement Certificate. If a mutilated Warrant is
surrendered to the Warrant Agent or if the Holder of a Warrant claims that the
Warrant Certificate has been lost, destroyed or wrongfully taken, the Company
shall execute and the Warrant Agent shall countersign a replacement Warrant
Certificate if the requirements of Section 8-405 of the Uniform Commercial Code
are met, such that the Holder (i) notifies the Company or the Warrant Agent
within a reasonable time after he has notice of such loss, destruction or
wrongful taking and the Warrant Agent does not register a transfer prior to
receiving such notification, (ii) makes such request to the Company or the
Warrant Agent prior to the Warrant being acquired by a protected purchaser as
defined in Section 8-303 of the Uniform Commercial Code (a "protected
purchaser") and (iii) satisfies any other reasonable requirements of the
Warrant Agent. If required by the Warrant Agent or the Company, such Holder
shall furnish an indemnity bond sufficient in the judgment of the Warrant Agent
to protect the Company and the Warrant Agent from any loss that either of them
may suffer if a Warrant is replaced. The Company and the Warrant Agent may
charge the Holder for their expenses in replacing a Warrant Certificate. Every
replacement Warrant is an additional obligation of the Company.
The provisions of this Section 2.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement of mutilated, lost, destroyed or wrongfully taken Securities.
SECTION 2.07. Outstanding Warrants. Warrants outstanding at any time
are all Warrant Certificates executed by the Company and countersigned by the
Warrant Agent except for those canceled by it, those delivered to it for
cancelation and those described in this Section 2.07 as not outstanding. A
Warrant does not cease to be outstanding because an Affiliate of the Company
holds the Warrant. A Warrant ceases to be outstanding if the Company holds the
Warrant.
If a Warrant Certificate is replaced pursuant to Section 2.06, it
ceases to be outstanding unless the Warrant Agent and the Company receive proof
satisfactory to them that the replaced Warrant Certificate is held by a
protected purchaser.
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SECTION 2.08. Temporary Warrants. In the event that Definitive
Warrants (as defined in the Appendix) are to be issued under the terms of this
Warrant Agreement, until such Definitive Warrants 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
form of Definitive Warrants but may have variations that the Company considers
appropriate for temporary Warrants. Without unreasonable delay, the Company
shall prepare and the Warrant Agent shall countersign Definitive Warrants and
deliver them in exchange for temporary Warrant Certificates upon surrender of
such temporary Warrant Certificates.
SECTION 2.09. Cancelation. The Company at any time may deliver
Warrant Certificates to the Warrant Agent for cancelation. The Warrant Agent
and no one else shall cancel all Warrant Certificates surrendered for
registration of transfer, exchange, exercise or cancelation and deliver
canceled Warrant Certificates to the Company pursuant to written direction by
an Officer. The Company may not issue new Warrant Certificates to replace
Warrants Certificates that have been exercised or Warrants which the Company
has purchased or otherwise acquired. The Warrant Agent shall not countersign
Warrant Certificates to replace canceled Warrant Certificates other than
pursuant to the terms of this Warrant Agreement.
SECTION 2.10. CUSIP Numbers. The Company in issuing the Warrants may
use "CUSIP" numbers (if then generally in use) and, if so, the Warrant Agent
shall also use "CUSIP" numbers in notices to Holders; provided, however, that
any such notice may state that no representation is made as to the correctness
of such numbers either as printed on the Warrant Certificates or as contained
in any notice and that reliance may be placed only on the other identification
numbers printed on the Warrant Certificates, and any such notice shall not be
affected by any defect in or omission of such numbers.
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise. Each Warrant shall initially entitle the
Holder thereof, subject to adjustment pursuant to the terms of this Warrant
Agreement, to purchase 10.124954 shares of Common Stock. The exercise price
(the "Exercise Price") of each Warrant is $.01 per share.
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SECTION 3.02. Exercise Periods. (a) Subject to the terms and
conditions set forth herein, the Warrants shall be exercisable at any time and
from time to time on any Business Day after the first anniversary of the Issue
Date; 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) No Warrant shall be exercisable after July 15, 2008 (the
"Expiration Date").
SECTION 3.03. Expiration. A 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 office of the Warrant Agent of the
related Warrant Certificate, together with the form of election attached
thereto 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 or other
security 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 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 (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 clause (ii) is herein
called a "Cashless Exercise". Upon surrender
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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 Warrant 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.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.06,
upon the surrender of Warrant Certificates and payment of the per share
Exercise Price or election of a Cashless Exercise, as set forth in Section
3.04, the Warrant Agent shall requisition from the Company, and the Company
shall issue and, if appointed, cause the transfer agent for the Common Stock
("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 to which it
is entitled, registered or otherwise, to the Person or Persons entitled to
receive the same (including any depositary institution so designated by a
Holder), 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 or election of a
Cashless Exercise, 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
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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 which may be purchasable pursuant thereto. If any fraction of a Warrant
Share would, except for the provisions of this Section 3.06, be issuable upon
the exercise of any Warrant (or specified portion thereof), the Company shall
pay 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 presented
for exercise, 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 "Stock
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 Warrant Agreement on file with the Stock Transfer Agent if such
Stock Transfer Agent is appointed. The Company will supply such Stock Transfer
Agent, if appointed, 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 Stock Transfer
Agent, if appointed, a copy of all notices of adjustments (and certificates
related thereto) transmitted to each Holder.
Before taking any action which would cause an adjustment pursuant to
Article IV 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 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.
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The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants shall, upon issue, be fully paid, nonassessable, free of
preemptive rights, free from all taxes and free from all liens, charges and
security interests with respect to the issue thereof.
SECTION 3.08. Compliance with Law. (a) Notwithstanding anything in
this Warrant 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 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.
(b) If any shares of Common Stock required to be reserved for
purposes of the exercise of Warrants require, under any other Federal or state
law or applicable governing rule or regulation of any national securities
exchange, registration with or approval of any governmental authority, or
listing on any such national securities exchange before such shares may be
issued upon exercise, the Company will use its best efforts to cause such
shares to be duly registered or approved by such governmental authority or
listed on the relevant national securities exchange, as the case may be.
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at any time
and from time to time the Company shall (i) pay a dividend or make a
distribution on the Common Stock in shares of Common Stock or other shares of
Capital Stock, (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 so that, after giving effect to such adjustment, the
Holder of each Warrant shall be entitled to receive the number of shares of
Common Stock upon exercise of such Warrant that such Holder would have owned or
have been
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entitled to receive 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, immediately prior to the record date therefor).
An adjustment made pursuant to this Section 4.01 shall become effective
immediately after the distribution date, retroactive to the record date
therefor in the case of a dividend or distribution in shares of Common Stock or
other shares of Capital Stock, and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
SECTION 4.02. Cash Dividends and Other Distributions. In the event
that at any time and from time to time the Company shall distribute to all
holders of Common Stock (i) any dividend or other distribution (including any
dividend or distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of cash, evidences of its
indebtedness, shares of its Capital Stock or any other properties or securities
or (ii) any options, warrants or other rights to subscribe for, purchase, or
which are convertible into, any of the foregoing (other than, in the case of
clause (i) and (ii) above, (A) any dividend or distribution described in
Section 4.01, (B) any rights, options, warrants or securities described in
Section 4.03 or Section 4.04 and (C) any cash dividends or other cash
distributions from current or retained earnings other than Extraordinary Cash
Dividends), then the number of shares of Common Stock issuable upon the
exercise of each Warrant immediately prior to such record date for any such
dividend or distribution 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 such 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 less the sum of (x) the amount of cash, if any,
distributed per share of Common Stock and (y) the then fair value (as
determined in good faith by the Board of Directors, 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 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
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date by the above fraction. Such adjustments shall be made, and shall only
become effective, whenever any dividend or distribution to which this Section
4.02 applies is made; 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. Common Stock Issue. In the event that at any time or
from time to time the Company shall issue shares of Common Stock for a
consideration per share that is less than the Current Market Value per share of
Common Stock as of the issuance date of such shares, the number of shares of
Common Stock issuable upon the exercise of each Warrant immediately after such
issuance date shall be determined by multiplying the number of shares of Common
Stock issuable upon exercise of each Warrant immediately prior to such issuance
date by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately preceding the issuance of such shares plus
the number of additional shares of Common Stock to be issued in such
transaction, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately preceding the date for the issuance of
such shares plus the total number of shares of Common Stock which the aggregate
consideration expected to be received by the Company upon the issuance of such
shares (as determined in good faith by the Board of Directors, 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) would purchase at
the Current Market Value per share of Common Stock as of the date of such
issuance; and, 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; 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 in bona fide
public offerings that are underwritten or in which a placement agent is
retained by the Company, (ii) the issuance of shares of Common Stock (including
upon exercise of options) pursuant to the terms of and in order to give effect
to the
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1997 Incentive Share Plan (as defined in the Offering Memorandum) as in effect
on the date hereof and (iii) the issuance of shares of Common Stock in
connection with acquisitions of products and businesses other than to
Affiliates of the Company. Such adjustment shall be made, and shall only
become effective, whenever such shares are issued. 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 issuable upon exercise of each Warrant or
increasing the Exercise Price.
SECTION 4.04. Issuance of Rights or Options. In the event that at
any time or from time to time the Company shall issue to holders of Common
Stock (i) rights, options or warrants to acquire (provided, however, that no
adjustment shall be made under Section 4.03 or 4.04 upon the exercise of such
rights, options or warrants), or (ii) securities convertible or exchangeable
into (provided, however, that no adjustment shall be made under Section 4.03 or
4.04 upon the conversion or exchange of such securities (other than issuances
specified in (i) or (ii) which are made as the result of anti-dilution
adjustments in such securities)), Common Stock entitling the holders thereof to
subscribe for or purchase shares of Common Stock at a price per share that is
less than the Current Market Value per share of Common Stock in effect
immediately prior to such issuance other than in connection with the adoption
of a shareholder rights plan by the Company, the number of shares of Common
Stock issuable upon the exercise of each Warrant immediately after such
issuance shall be determined by multiplying the number of shares of Common
Stock issuable upon exercise of each Warrant immediately prior to such issuance
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to the issuance of such rights, options,
warrants or securities plus the number of additional shares of Common Stock
offered for subscription or purchase or into which such securities are
convertible or exchangeable, and the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to the 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 upon the exercise, conversion or exchange of such rights, options,
warrants or securities (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) would purchase at
the Current Market Value per share of Common Stock as of the record date; and,
subject to Section 4.08, in the event of any such adjustment, the Exercise
Price shall be adjusted to
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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 the issuance of
options to acquire additional shares of Common Stock pursuant to the terms of
and in order to give effect to the 1997 Incentive Share Plan (as defined in the
Offering Memorandum) as in effect on the date hereof. Such adjustment shall be
made, and shall only become effective, whenever such rights, options, warrants
or 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 increasing the Exercise Price.
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 completion of or as a result of such Combination had
such Warrant been exercised immediately prior to such event or to the relevant
record date for any such entitlement. Unless paragraph (b) is applicable to a
Combination, the Company shall provide, and deliver to the Warrant Agent, an
Opinion of Counsel to the effect 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 IV. The provisions
of this Section 4.05(a) shall similarly apply to successive Combinations
involving any Successor Company.
(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, such cash 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 the event of any Combination described in this Section 4.05(b), the
surviving or acquiring Person and, in
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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 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 shall make payment to the Holders
by delivering 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 IV are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors, fairly and adequately protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then
such Board of Directors 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 of Directors,
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 the Warrants.
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 IV, 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 IV as
if (i) 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 (ii) 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 (except by reason of an intervening
adjustment under Section 4.01) shall have the effect of decreasing the number
of Warrant Shares issuable upon the exercise of each
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Warrant or increasing 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.
SECTION 4.08. Minimum Adjustment. The adjustments required by the
preceding sections of this Article IV 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 the 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 the 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 IV 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 IV, 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 of Directors (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 of Directors determined the
then 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 Stock issuable upon exercise of the 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
7.05. 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
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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 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 five days after any such action or offer send
to the Warrant Agent a notice and the Warrant Agent shall within five days
after receipt thereof send the Holders 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 books of the Warrant Registrar, 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, if any, 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 IV which will be
required as a result of such action. Such notice shall be given as promptly as
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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 IV, 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 Warrant 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.
ARTICLE V
Registration Rights; Indemnification
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 not later than 45 days after the
Issue Date, a shelf registration statement relating to the offer and sale of
the Warrants by the Holders from time to time in accordance with the methods of
distribution elected by such holders and set forth in such registration
statement (the "Warrant Shelf Registration Statement"), and shall use its best
efforts to cause the Warrant Shelf Registration Statement to be declared
effective under the Securities Act on or before 105 days after the Issue Date,
and shall cause to be filed 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 together with
the Warrant Shelf Registration Statement, the "Registration Statements") and
shall use its best efforts to cause the Common Shelf Registration Statement to
be declared effective on or before 365 days after the Issue Date. The Company
shall use its best efforts to cause (a) the Warrant Shelf Registration
Statement to remain
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continuously effective until the earliest of (i) such time as all Warrants have
been sold thereunder, (ii) two years after its effective date and (iii) until
all Warrants can be sold without restriction under the Securities Act and (b)
the Common Shelf Registration Statement to remain continuously effective until
the earlier of (i) such time as all Warrants have been exercised and (ii) the
Expiration Date. In connection with any Registration Statement, (i) the
Company shall furnish to the Warrant Agent and the Initial Purchaser, prior to
the filing with the Commission, a copy of any 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 or the Initial Purchaser may reasonably propose, (ii) the Company shall
furnish to each Holder, without charge, at least one conformed copy of any
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 any Registration Statement is effective, deliver
to each Holder and the Initial Purchaser, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in such
Registration Statement and any amendment or supplement thereto as such Holder
or Initial Purchaser 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
Warrants or the exercise, offering or sale of Warrant Shares, as the case may
be, covered by such prospectus and any amendment or supplement thereto, (iv)
the Company may require each Holder of Warrants to be sold pursuant to the
Warrant Shelf Registration Statement or 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 such
Registration Statement (the "Holders' Information"), and the Company may
exclude from such registration the Transfer Restricted Warrants (as defined in
the Appendix) of any Holder that fails to furnish such information within a
reasonable time after receiving such request, (v) the Company shall, if
requested, promptly incorporate in a prospectus supplement or post-effective
amendment to such 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
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amendment as soon as practicable following notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment, (vi)
the Company shall enter into such agreements (including underwriting
agreements) as are appropriate, customary and reasonably necessary in
connection with any such Registration Statement and (vii) the Company shall (A)
make reasonably available for inspection by a representative of, and counsel
acting for Holders of a majority of the Warrants and any underwriter
participating in any disposition of Warrants, all relevant financial and other
records, pertinent corporate documents and properties of the Company, (B) use
its reasonable best efforts to have its officers, directors, employees,
accountants and counsel supply all relevant information reasonably requested by
such representative, counsel or any such underwriter in connection with such
Registration Statement, and (C) if requested by Holders of a majority of
Warrants, their counsel or the managing underwriters (if any) in connection
with such Registration Statement, use its reasonable best efforts to cause (x)
its counsel to deliver an opinion relating to the Registration Statement and
the Warrants or Warrant Shares, as the case may be, in customary form, (y) its
officers to execute and deliver all customary documents and certificates
requested by Holders of a majority of the Warrants, their counsel or the
managing underwriters (if any) and (z) its independent public accountants to
provide a comfort letter or letters in customary form, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(b) The Company shall notify Holders and, if requested, confirm in
writing (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied
by an instruction to suspend the use of the prospectus until the requisite
changes have been made): (i) when any Registration Statement and any amendment
thereto has been filed with the Commission and when such Registration Statement
or any post-effective amendment thereto has become effective; (ii) of any
request by the Commission for amendments or supplements to any Registration
Statement or the prospectus included therein or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Warrants or the Warrant Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and (v) of the happening of
any event that requires the making of any changes in any
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Registration Statement or the prospectus included therein in order that the
statements therein are not misleading and do not omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement. If any event contemplated by
clauses (ii) through (v) occurs during the period for which the Company is
required to maintain an effective Registration Statement, the Company shall
promptly prepare and file with the Commission a post-effective amendment to the
Registration Statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered, the prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Each Holder agrees
that, upon receipt of any notice from the Company pursuant to clauses (ii)
through (v), such Holder shall discontinue disposition of such Warrants or
Warrant Shares until such Holder's receipt of copies of a supplemental or
amended prospectus or until advised in writing (the "Advice") by the Company
that the use of the applicable prospectus may be resumed. If the Company shall
give any notice under clauses (ii) through (v) during the period that the
Company is required to maintain an effective Registration Statement (the
"Effectiveness Period"), such Effectiveness Period, in the case of the Warrant
Shelf Registration Statement, shall be extended by the number of days during
such period from and including the date of the giving of such notice to and
including the date when each seller of Warrants or Warrant Shares covered by
such Registration Statement shall have received (x) the copies of a
supplemental or amended prospectus (if an amended or supplemental prospectus is
required) or (y) the Advice (if no amended or supplemental prospectus is
required).
SECTION 5.02. Suspension. During any consecutive 365-day period, the
Company shall be entitled to suspend the availability of each of the Warrant
Shelf Registration Statement and the Common Shelf Registration Statement for up
to two 45 consecutive-day periods (except for the 45 consecutive-day period
immediately prior to the Expiration Date) if the Company's Board determines in
the exercise of its reasonable judgment that there is a valid business purpose
for such suspension and provides notice that such determination was made to the
Holders of the Warrants; provided, however, that in no event shall the Company
be required to disclose the business purpose for such
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26
suspension if the Company determines in good faith that such business purpose
must remain confidential.
SECTION 5.03. Blue Sky. The Company shall use its best efforts to
register or qualify the Warrants and 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 of Warrants may or may be deemed
to purchase Warrants or Warrant Shares upon the exercise of Warrants and shall
use its best efforts to maintain such registration or qualification for so long
as it is required to cause the Warrant Shelf Registration Statement (in the
case of the Warrants) and the Common Shelf Registration Statement (in the case
of the Warrant Shares) to remain effective under the Securities Act pursuant to
Section 5.01; 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 5.03 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 5.04. Accuracy of Disclosure. The Company represents and
warrants to each Holder and agrees for the benefit of each Holder that (i) each
of the Warrant Shelf Registration Statement and the Common Shelf 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
sale of Warrants and the prospectus delivered to such Holder upon the exercise
of Warrants 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 clauses (i) or (ii) of this Section 5.04 with respect to any such untrue
statement or omission made in any 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 5.05. Indemnification. (a) In connection with any
Registration Statement, the Company shall indemnify and hold harmless each
Holder (including, without limitation, the Initial Purchaser), its affiliates,
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their respective officers, directors, employees, representatives and agents,
and each person, if any, who controls such Holder within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 5.05 as a Holder) from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of Warrants or Warrant Shares), to which that Holder may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
any prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Holder promptly upon demand for any legal
or other expenses reasonably incurred by that Holder in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with any Holders'
Information; and provided, further, that with respect to any such untrue
statement in or omission from any related preliminary prospectus, the indemnity
agreement contained in this Section 5.05(a) shall not inure to the benefit of
any Holder from whom the person asserting any such loss, claim, damage,
liability or action received Warrants or Warrant Shares to the extent that such
loss, claim, damage, liability or action of or with respect to such Holder
results from the fact that both (A) a copy of the final prospectus was not sent
or given to such person at or prior to the written confirmation of the sale of
such Warrants (in the case of the sale of Warrants), to such person and (B) the
untrue statement in or omission from the related preliminary prospectus was
corrected in the final prospectus unless, in either case, such failure to
deliver the final prospectus was a result of noncompliance by the Company with
Section 5.01. This indemnity agreement will be in addition to any liability
which the Company may otherwise
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have to a Holder. The Company shall also indemnify underwriters, selling
brokers, dealer-managers and similar securities industry professionals
participating in the distribution (in each case as described in the
Registration Statement), their officers and directors and each person who
controls such persons within the meaning of the Securities Act or the Exchange
Act to the same extent as provided above with respect to the indemnification of
the Holders of the Securities if requested by such Holders.
(b) In connection with any Registration Statement each Holder,
severally and not jointly, shall indemnify and hold harmless the Company, its
affiliates, their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act (collectively referred to for
purposes of this Section 5.05 as the Company), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to made the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with any Holders'
Information furnished to the Company by such Holder, and shall reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that no such Holder shall be liable for any indemnity claims hereunder in
excess of the amount of net proceeds received by such Holder from the sale of
Warrants, in the case of the Warrant Shelf Registration Statement, or the
Current Market Value of Warrant Shares at the time they were received in the
case of the Common Stock Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this Section
5.05 of notice of any claim or the
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commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party pursuant to Section
5.05(a) or 5.05(b), notify the indemnifying party in writing of the claim or
the commencement of that action; provided, however, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may
have under this Section 5.05 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 5.05. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 5.05 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there
may be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
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related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm of
attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 5.05(a) and 5.05(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of
the indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for above is unavailable or
insufficient to hold harmless an indemnified party under Section 5.05(a) or
5.05(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in
respect thereof, (i) in such proportion as shall be appropriate to reflect the
relative benefits received by the Company, on the one hand, and a Holder, on
the other, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, on the one hand, and such Holder, on the other,
with respect to the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to the Company or information supplied by the Company, on
the one hand, or to any Holders' Information supplied by such Holder, on the
other, the intent of the parties and their relative knowledge, access
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to information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 5.05(d) were to be determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section
5.05(d) shall be deemed to include, for purposes of this Section 5.05(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 5.05(d), an
indemnifying party that is a Holder shall not be required to contribute any
amount in excess of the amount by which the total price at which the Warrants
sold, in the case of the Warrant Shelf Registration Statement, and the Current
Market Value of the Warrant Shares at the time they were received, in the case
of the Common Stock Registration Statement, by such indemnifying party to any
purchaser exceeds the amount of any damages which such indemnifying party has
otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The agreements contained in this Section 5.05 shall survive the
sale of the Securities pursuant to the Registration Statements and shall remain
in full force and effect, regardless of any termination or cancelation of this
Warrant Agreement or any investigation made by or on behalf of any indemnified
party.
SECTION 5.06. Additional Acts. If the sale of Warrants or 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 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 its reasonable best
efforts to secure and maintain such registration or approval or to take such
other action, as the case may be. The Company shall promptly notify the
Warrant Agent in writing when (i) the
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Company has obtained all such governmental approvals and authorizations and
(ii) such approvals and authorizations thereafter cease to be in effect.
SECTION 5.07. Expenses. All expenses incident to the Company's
performance of or compliance with its obligations under this Article V will be
borne by the Company, including without limitation: (i) all SEC, stock
exchange or National Association of Securities Dealers, Inc. registration and
filing fees, (ii) all reasonable fees and expenses incurred in connection with
the compliance with state securities or blue sky laws, (iii) all expenses of
any Persons incurred by or on behalf of the Company in preparing or assisting
in preparing, printing and distributing the Warrant Shelf Registration
Statement, the Common Shelf 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 V,
(iv) the fees and disbursements of the Warrant Agent as agreed, (v) the fees
and disbursements of counsel for the Company and the Warrant Agent as agreed,
(vi) the fees and disbursements of one firm of attorneys (in addition to any
local counsel) chosen by a majority of the Holders of Warrants in the case of
each of the Warrant Shelf Registration Statement and the Common Stock
Registration Statement and (vii) 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.
ARTICLE VI
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 provisions of this Warrant Agreement and the Warrant Agent hereby accepts
such appointment.
SECTION 6.02. Rights 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 of 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 (and may require an Opinion of
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Counsel before it acts or refrains from acting), 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 or 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 Warrant Agreement or the Warrant Certificates against
the Warrant Agent. 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 Warrant 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 herein or in any
supplemental agreement provided to be employed, 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
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upon any adjustment pursuant to Article IV, 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 IV, or to comply with any of the covenants of the Company contained in
Article IV.
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 and may otherwise deal with the Company or its affiliates with
the same rights it would have if it were not Warrant Agent. 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 Warrant Agreement or the Warrant Certificates and it shall not
be responsible for any statement in this Warrant Agreement or the Warrant
Certificates other than its countersignature thereon.
SECTION 6.05. Compensation and Indemnity. The Company agrees to pay
the Warrant Agent from time to time reasonable compensation for its services as
agreed 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 as agreed. The Company
shall indemnify the Warrant Agent against any loss, liability or expense
(including reasonable agents' and attorneys' fees and expenses) incurred by it
without negligence or bad faith on its part arising out of or in connection
with the acceptance or performance of its duties under this Warrant 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 Warrant
Agreement.
To secure the Company's payment obligations under this Warrant
Agreement, the Warrant Agent shall have a lien
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prior to the Holders on all money or property held or collected by the Warrant
Agent.
SECTION 6.06. Successor Warrant Agent. (a) The Company To Provide
and Maintain 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. At any time
that the Warrant Agent is also acting as Trustee under the Indenture and
holders of the Notes remove the Trustee pursuant to Section 7.08 of the
Indenture, the Company shall remove the Warrant Agent pursuant to this Section
6.06(b).
(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 be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the 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
or 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
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constituted, or any other applicable Federal or state bankruptcy, insolvency or
similar law, or a decree or 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 Warrant Agent hereunder; provided, however, that in the event of the
resignation of the Warrant Agent under this subsection (c), 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. If the Warrant Agent consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be
the successor Warrant Agent.
ARTICLE VII
Miscellaneous
SECTION 7.01. SEC Reports. Notwithstanding that the Company may not
be subject to the reporting requirements
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of Section 13 or 15(d) of the Exchange Act the Company shall file with the SEC
and provide the Warrant Agent and Holders within 15 days after it files them
with the SEC, copies of its annual report and the information, documents and
other reports that are specified in Sections 13 and 15(d) of the Exchange Act.
In addition, following a public offering of the common stock of the Company,
the Company shall furnish to the Warrant Agent and the Holders, promptly upon
their becoming available, copies of the annual report to stockholders and any
other information provided by the Company to its public stockholders generally.
SECTION 7.02. Persons Benefitting. Nothing in this Warrant Agreement
is intended or shall be construed to confer upon any Person other than the
Company, the Warrant Agent and the Holders any right, remedy or claim under or
by reason of this Warrant Agreement or any part hereof.
SECTION 7.03. 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 of any other proceedings of the
Company, (v) exercise any preemptive right or (vi) exercise any other rights
whatsoever as stockholders of the Company.
SECTION 7.04. Amendment. This Warrant 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 Warrant 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 Warrant 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, the number of Warrant Shares issuable upon exercise
of Warrants would be decreased (other than pursuant to adjustments provided
herein) or the antidilution provisions in Article IV are altered in a manner
which adversely affects the Holders. In determining whether the Holders of the
required number of Warrants have concurred in any direction, waiver or consent,
Warrants
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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 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 7.05. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Splitrock Services, Inc.
0000 Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention of: Vice President and General Counsel
if to the Warrant Agent:
Bank of Montreal Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention of: Corporate Trust Department
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 records of the Warrant
Agent 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 7.06. Governing Law. THIS WARRANT AGREEMENT AND THE WARRANTS
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF
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NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 7.07. Successors. All agreements of the Company in this
Warrant Agreement and the Warrant Certificates shall bind its successors. All
agreements of the Warrant Agent in this Agreement shall bind its successors.
SECTION 7.08. Multiple Originals. The parties may sign any number of
copies of this Warrant 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 Warrant Agreement.
SECTION 7.09. Table of Contents. The table of contents and headings
of the Articles and Sections of this Warrant 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 7.10. Severability. The provisions of this Warrant 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
Warrant Agreement in any jurisdiction.
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IN WITNESS WHEREOF, the parties have caused this Warrant Agreement to
be duly executed as of the date first written above.
SPLITROCK SERVICES, INC.,
by /s/ XXXXXXX X. XXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
BANK OF MONTREAL TRUST
COMPANY, as Warrant Agent,
by /s/ XXX XXXXXXX
-------------------------------
Name: Xxx Xxxxxxx
Title: Vice-President
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APPENDIX
PROVISIONS RELATING TO WARRANTS
1. Definitions
1.1 Definitions
For the purposes of this Appendix A the following additional terms
shall have the meanings indicated below:
"Definitive Warrant" means a certificated Warrant (bearing the
Restricted Warrant Legend if the transfer of such Warrant is restricted by
applicable law) that does not include the Global Warrant Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Global Warrant Legend" means the legend set forth under that caption
in Exhibit A to this Warrant Agreement.
"IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Purchase Agreement" means the Purchase Agreement dated July 21, 1998,
between the Company and the Initial Purchaser.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Restricted Warrant Legend" means the legend set forth in Section
2.3(d)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Warrant" means all Warrants offered and sold to QIBs in
reliance on Rule 144A.
"Separability Legend" means the separability legend set forth in
Section 2.3(d)(i).
"Transfer Restricted Warrants" means Global Warrants, Definitive
Warrants and any other Warrants that bear or are required to bear the
Restricted Warrant Legend.
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"Warrant Custodian" means the custodian with respect to a Global
Warrant (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Warrant Agent.
1.2 Other Definitions.
Term: Defined in Section:
---- ------------------
"Agent Members" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
"IAI Global Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
"Global Units" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Global Warrant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
"Notes Transfer Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Rule 144A Global Warrant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
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2. The Securities
2.1 Form and Dating
Each Warrant shall initially be issued as part of a Unit consisting of
one Note and one Warrant. The Units issued on the date hereof (the "Global
Units") (i) will be offered and sold by the Company pursuant to the Purchase
Agreement and (ii) except for 11,000 Units which will be resold to Linsang
Partners LLC in reliance upon another exemption from registration under the
Securities Act, will be resold, initially, to QIBs in reliance on Rule 144A.
Prior to the Separation Date, the Warrants may not be transferred or exchanged
separately from, but may be transferred or exchanged only together with, the
Notes attached to such Warrants. Prior to the Separation Date, the registrar
for the Notes shall act as transfer agent ("Notes Transfer Agent") for both
the Warrants and the Notes. Any request for transfer of a Warrant prior to the
Separation Date made to the Note Transfer Agent shall be accompanied by the
Note attached thereto and the Note Transfer Agent will not execute any such
transfer without such Note attached thereto. Such Note will be duly endorsed
and accompanied by a written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder thereof or the Holder's attorneys duly
authorized in writing. All such transfers shall meet the requirements set
forth in the Indenture and the Global Units. In the event of (i) the
commencement of a registered exchange offer for the Notes or the effectiveness
of a shelf registration statement with respect to the Notes or the Warrants,
(ii) a Change of Control or (iii) an Event of Default the Company shall provide
notice to the Note Transfer Agent and the Warrant Agent of the Separation Date
not less than two Business Days prior to such date and the Company will cause
the Note Transfer Agent to notify the Depositary of such date. In the event of
a determination by the Initial Purchaser to separate the Warrants and the
Notes, the Company shall promptly, but in no event later than the next
following Business Day after receiving notice of such determination, provide
notice to the Note Transfer Agent and the Warrant Agent of the Separation Date
and cause the Note Transfer Agent to notify the Depositary of such date. If
the Separation Date has not otherwise occurred prior to the 90th day after the
date hereof, the Separation Date shall occur on such day and the Company shall
provide notice of the Separation Date to the Note Transfer Agent and the
Warrant Agent and the Company will cause the Note Transfer Agent to notify the
Depositary of such date. In acting as the transfer agent for the Warrants
prior to the Separation Date, the Note Transfer Agent shall be entitled to all
the rights, privileges and immunities to which the Warrant Agent is entitled in
performing such role pursuant
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to the terms of this Warrant Agreement. After the Separation Date the Warrants
may only be sold or transferred in accordance with this Appendix.
(a) Global Warrants. Rule 144A Warrants shall be issued initially in
the form of one or more permanent global Warrants in definitive, fully
registered form (collectively, the "Rule 144A Global Warrant"), without
interest coupons and bearing the Global Warrant Legend, the Restricted Warrant
Legend and the Separability Legend, which shall be deposited on behalf of the
purchasers of the Warrants represented thereby with the Warrant Custodian, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and countersigned by the Warrant Agent as provided in
this Warrant Agreement. One or more global Warrants in definitive, fully
registered form bearing the Global Warrant Legend, the Restricted Warrant
Legend and the Separability Legend (collectively, the "IAI Global Warrant")
shall also be issued on the Closing Date and deposited on behalf of the
purchasers of the Warrants represented thereby with the Warrant Custodian, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and countersigned by the Warrant Agent as provided in
this Warrant Agreement. The Rule 144A Global Warrant and the IAI Global
Warrant are each referred to herein as a "Global Warrant" and are collectively
referred to herein as "Global Warrants." The number of Warrants represented by
the Global Warrants may from time to time be increased or decreased by
adjustments made on the records of the Warrant Agent and the Depositary or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Warrant deposited with or on behalf of the Depositary.
The Company shall execute and the Warrant Agent shall, in accordance
with this Section 2.1(b) and pursuant to an order of the Company, countersign
and deliver initially one or more Global Warrants that (a) shall be registered
in the name of the Depositary for such Global Warrant or Global Warrants or the
nominee of such Depositary and (b) shall be delivered by the Warrant Agent to
such Depositary or pursuant to such Depositary's instructions or held by the
Warrant Agent as Warrant Custodian.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Warrant Agreement with respect to any Global Warrants
held on their behalf by the Depositary or by the Warrant Agent as Warrant
Custodian or under such Global Warrant, and the Depositary may
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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 Warrants 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 the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depositary
governing the exercise of the rights of a holder of a beneficial interest in
any Global Warrants.
(c) Definitive Warrants. Except as provided in Section 2.3 or 2.4,
owners of beneficial interests in Global Warrants will not be entitled to
receive physical delivery of certificated Warrants.
2.2 Countersignature. The Warrant Agent shall countersign and make
available for delivery upon a written order of the Company, signed by an
Officer, Warrant Certificates entitling the Holders therefor to purchase in the
aggregate not more than 2,642,613 Warrant Shares.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Warrants. When Definitive Warrants are presented to the Warrant Registrar with
a request:
(x) to register the transfer of such Definitive Warrants; or
(y) to exchange such Definitive Warrants for an equal principal
amount of Definitive Warrants of other authorized denominations,
the Warrant Registrar shall register the transfer if the requirements of
Section 8-401(a) of the Uniform Commercial Code are met or make the exchange as
requested if the requirements of Section 8-401(a)(1) and (2) of the Uniform
Commercial Code are met; provided, however, that the Definitive Warrants
surrendered for transfer or exchange are accompanied by the following
additional information and documents, as applicable:
(i) if such Definitive Warrants are being delivered to the Warrant
Registrar by a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect (in the form set
forth on the reverse side of the Warrant Certificate); or
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(ii) if such Definitive Warrants are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse side of the Warrant Certificate); or
(iii) if such Definitive Warrants are being transferred pursuant to
an exemption from registration in accordance with Rule 144 under the
Securities Act or in reliance upon another exemption from the registration
requirements of the Securities Act, (i) a certification to that effect (in
the form set forth on the reverse side of the Warrant Certificate) and (ii)
if the Company so requests, an Opinion of Counsel or other evidence
reasonably satisfactory to it as to the compliance with the restrictions
set forth in the legend set forth in Section 2.3(c)(i).
(b) Restrictions on Transfer of a Definitive Warrant for a Beneficial
Interest in a Global Warrant. A Definitive Warrant may not be exchanged for a
beneficial interest in a Global Warrant except upon satisfaction of the
requirements set forth below. Upon receipt by the Warrant Agent of a
Definitive Warrant, duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Warrant
Registrar, together with:
(i) certification (in the form set forth on the reverse side of the
Warrant Certificate) that such Definitive Warrant is being transferred (A)
to a QIB in accordance with Rule 144A or (B) to an IAI that has furnished
to the Warrant Agent a signed letter substantially in the form of Exhibit
B; and
(ii) written instructions directing the Warrant Agent to make, or to
direct the Warrant Custodian to make, an adjustment on its books and
records with respect to such Global Warrant to reflect an increase in the
aggregate amount of the Warrants represented by the Global Warrant, such
instructions to contain information regarding the Depositary account to be
credited with such increase,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or
direct the Warrant Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Warrant
Custodian, the aggregate amount of Warrants represented by the Global Warrant
to be increased by the aggregate amount of the Definitive Warrant to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such
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instructions a beneficial interest in the Global Warrant equal to the amount of
the Definitive Security so canceled. If no Global Warrants are then
outstanding and the Global Warrant has not been previously exchanged for
certificated Warrants pursuant to Section 2.4, the Company shall issue and the
Warrant Agent shall countersign, upon written order of the Company in the form
of an Officers' Certificate, a new Global Warrant in the appropriate amount.
(c) Transfer and Exchange of Global Warrants. (i) The transfer and
exchange of a Global Warrant or beneficial interests therein shall be effected
through the Depositary, in accordance with this Warrant Agreement (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor. A transferor of a beneficial interest
in a Global Warrant shall deliver a written order given in accordance with the
Depositary's procedures containing information regarding the participant
account of the Depositary to be credited with a beneficial interest in such
Global Warrant or another Global Warrant and such account shall be credited in
accordance with such order with a beneficial interest in the applicable Global
Warrant and the account of the Person making the transfer shall be debited by
an amount equal to the beneficial interest in the Global Warrant being
transferred. In the case of a transfer of a beneficial interest in the Rule
144A Global Warrant for an interest in the IAI Global Warrant, the transferee
must furnish a signed letter substantially in the form of Exhibit B to the
Warrant Agent.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Warrant to a beneficial interest in another Global Warrant,
the Warrant Registrar shall reflect on its books and records the date and
an increase in the amount of the Global Warrant to which such interest is
being transferred in an amount equal to the amount of the interest to be so
transferred, and the Warrant Registrar shall reflect on its books and
records the date and a corresponding decrease in the amount of Global
Warrant from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Warrant may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
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(iv) In the event that a Global Warrant is exchanged for Definitive
Warrants pursuant to Section 2.4 prior to the effectiveness of a Warrant
Shelf Registration Statement with respect to such Warrants, such Warrants
may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of this Section 2.3 (including
the certification requirements set forth on the reverse of the Warrant
Certificate intended to ensure that such transfers comply with Rule 144A or
such other applicable exemption from registration under the Securities Act,
as the case may be) and such other procedures as may from time to time be
adopted by the Company.
(d) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii) or
(iv), each Warrant Certificate evidencing the Global Warrants and the
Definitive Warrants (and all Warrants issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the following
form (each defined term in the legend being defined as such for purposes of
the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE WARRANTS ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
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RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
A MINIMUM NUMBER OF WARRANTS OF (I) 250 PRIOR TO THE SEPARATION OF THE
WARRANTS FROM THE NOTES AND (II) 25,000 AFTER SUCH SEPARATION, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), SUBJECT TO THE COMPANY'S AND THE WARRANT AGENT'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON
THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
Each Definitive Security will also bear the following additional
legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
WARRANT AGENT AND THE WARRANT REGISTRAR SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH WARRANT AGENT MAY REASONABLY REQUIRE TO CONFIRM
THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
Each Warrant Certificate issued prior to the Separation Date will also
bear the following Separability Legend:
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS
PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 11 3/4%
SENIOR NOTE DUE 2008 OF SPLITROCK SERVICES, INC. WITH A PRINCIPAL
AMOUNT AT MATURITY OF $1,000 (A "NOTE") AND ONE WARRANT. THE NOTES
AND WARRANTS WILL NOT TRADE SEPARATELY UNTIL THE EARLIEST OF (I) 90
DAYS AFTER THE DATE OF THE WARRANT AGREEMENT, (II) A CHANGE OF
CONTROL, (III) THE OCCURRENCE OF AN EVENT OF DEFAULT, (IV) THE DATE ON
WHICH A REGISTRATION STATEMENT WITH RESPECT TO THE NOTES, A REGISTERED
EXCHANGE OFFER FOR THE NOTES OR THE WARRANTS IS DECLARED EFFECTIVE AND
(V) SUCH EARLIER DATE AS DETERMINED BY THE INITIAL PURCHASER IN ITS
SOLE DISCRETION."
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(ii) Upon any sale or transfer of a Transfer Restricted Warrant that
is a Definitive Warrant, the Warrant Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Warrant for a Definitive
Warrant that does not bear the legends set forth above and rescind any
restriction on the transfer of such Transfer Restricted Warrant if the
Holder certifies in writing to the Warrant Registrar that its request for
such exchange was made in reliance on Rule 144 (such certification to be in
the form set forth on the reverse of the Warrant Certificate).
(iii) After a transfer of any Warrant during the period of the
effectiveness of a Warrant Shelf Registration Statement with respect to
such Warrant all requirements pertaining to the Restricted Warrant Legend
on such Warrant shall cease to apply and the requirements that any such
Warrant be issued in global form shall continue to apply.
(iv) 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.
(e) Cancelation or Adjustment of Global Warrant. At such time as all
beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, transferred, redeemed, repurchased, canceled or exercised
such Global Warrant shall be returned by the Depositary to the Warrant Agent
for cancelation or retained and canceled by the Warrant Agent. At any time
prior to such cancelation, if any beneficial interest in a Global Warrant is
exchanged for Definitive Warrants, transferred in exchange for an interest in
another Global Warrant, redeemed, repurchased, canceled or exercised the number
of Warrants represented by such Global Warrant shall be reduced and an
adjustment shall be made on the books and records of the Warrant Agent (if it
is then the Warrant Custodian for such Global Warrant) with respect to such
Global Warrant, by the Warrant Agent or the Warrant Custodian, to reflect such
reduction.
(f) Obligations with Respect to Transfers and Exchanges of Warrants.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Warrant Agent shall countersign, Definitive Warrants
and Global Warrants at the Warrant Registrar's request.
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(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith.
(iii) Prior to the due presentation for registration of transfer of
any Warrant, the Company, the Warrant Agent and the Warrant Registrar may
deem and treat the person in whose name a Warrant is registered as the
absolute owner of such Warrant for all purposes whatsoever, and neither the
Company nor the Warrant Agent shall be affected by notice to the contrary.
(iv) All Warrants issued upon any transfer or exchange pursuant to
the terms of this Warrant Agreement shall evidence the same terms and shall
be entitled to the same benefits under this Warrant Agreement as the
Warrants surrendered upon such transfer or exchange.
(g) No Obligation of the Warrant Agent.
(i) The Warrant Agent shall have no responsibility or obligation to
any beneficial owner of a Global Warrant, a member of, or a participant in
the Depositary or any other Person with respect to the accuracy of the
records of the Depositary or its nominee or of any participant or member
thereof, with respect to any ownership interest in the Warrants or with
respect to the delivery to any participant, member, beneficial owner or
other Person (other than the Depositary) of any notice or the payment of
any amount, under or with respect to such Warrants. All notices and
communications to be given to the Holders under the Warrants shall be given
only to the registered Holders (which shall be the Depositary or its
nominee in the case of a Global Warrant). The rights of beneficial owners
in any Global Warrant shall be exercised only through the Depositary
subject to the applicable rules and procedures of the Depositary. The
Warrant Agent may rely and shall be fully protected in relying upon
information furnished by the Depositary with respect to its members,
participants and any beneficial owners.
(ii) The Warrant Agent shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Warrant Agreement or under applicable law with respect
to any transfer of any interest in any Warrant (including any transfers
between or among Depositary participants, members or beneficial owners in
any Global Warrant) other
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than to require delivery of such certificates and other documentation
or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Warrant Agreement, and to
examine the same to determine substantial compliance as to form with
the express requirements hereof.
2.4 Definitive Warrants. (a) A Global Warrant deposited with the
Depositary or with the Warrant Agent as Warrant Custodian pursuant to Section
2.1 shall be transferred to the beneficial owners thereof in the form of
Definitive Warrants in an aggregate amount equal to the amount of such Global
Warrant, in exchange for such Global Warrant, only if such transfer complies
with Section 2.3 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as a Depositary for such Global Warrant or if
at any time the Depositary ceases to be a "clearing agency" registered under
the Exchange Act, and a successor depositary is not appointed by the Company
within 90 days of such notice, or (ii) an Event of Default has occurred and is
continuing or (iii) the Company, in its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement.
(b) Any Global Warrant that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depositary to the Warrant Agent, to be so transferred, in whole or from time to
time in part, without charge, and the Warrant Agent shall countersign and
deliver, upon such transfer of each portion of such Global Warrant, an equal
number of Definitive Warrants. Any certificated Warrant in the form of a
Definitive Warrant delivered in exchange for an interest in the Global Warrant
shall, except as otherwise provided by Section 2.3(d), bear the Restricted
Warrant Legend.
(c) Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Warrant may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Warrant Agreement or the Warrants.
(d) In the event of the occurrence of any of the events specified
in Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available
to the Warrant Agent a reasonable supply of Definitive Warrants in fully
registered form.
