EXHIBIT 1
STOCK PURCHASE AGREEMENT
dated as of
May 28, 2001
between
RCN CORPORATION
and
RED BASIN, LLC, as Buyer
relating to the purchase and sale
of
Common Stock and Warrants
of
RCN CORPORATION
TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS
Section 1.01 Definitions................................................2
ARTICLE 2 PURCHASE AND SALE
Section 2.01 Purchase and Sale..........................................7
Section 2.02 Closing....................................................7
Section 2.03 Certificates for Shares....................................8
Section 2.04 Use of Proceeds............................................9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
Section 3.01 Corporate Existence and Power................................9
Section 3.02 Corporate Authorization......................................9
Section 3.03 Actions or Filings...........................................9
Section 3.04 Non-contravention...........................................10
Section 3.05 Capitalization..............................................10
Section 3.06 Authorization of Common Shares and Warrant Shares...........11
Section 3.07 Finders Fees................................................11
Section 3.08 SEC Reports.................................................12
Section 3.09 [Intentionally Omitted].....................................12
Section 3.10 Financial Statements........................................12
Section 3.11 Absence of Certain Changes..................................12
Section 3.12 Litigation..................................................12
Section 3.13 Offering of Common Shares...................................13
Section 3.14 Governmental Authorizations.................................13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Existence and Power.........................................14
Section 4.02 Authorization...............................................14
Section 4.03 Actions or Filings..........................................14
Section 4.04 Non-contravention...........................................14
Section 4.05 Purchase for Investment.....................................15
Section 4.06 Current Ownership...........................................15
Section 4.07 Voting Arrangements.........................................15
Section 4.08 Litigation..................................................15
Section 4.09 Finders' Fees...............................................15
Section 4.10 HSR.........................................................16
ARTICLE 5 COVENANTS OF THE CORPORATION
Section 5.01 Access to Information.......................................16
Section 5.02 Restrictions Pending the Closing............................16
Section 5.03 Other Transfers of Common Shares or Warrant Shares..........17
Section 5.04 Pro Rata Participation......................................17
Section 5.05 [Intentionally Omitted].....................................18
Section 5.06 Cross Ownership.............................................18
Section 5.07 HMTF Waiver; NSTAR Waiver...................................19
ARTICLE 6 COVENANTS OF BUYER
Section 6.01 Confidentiality.............................................20
Section 6.02 Sale or Transfer of Common Shares or Warrant Shares.........21
Section 6.03 Acquisition of Voting Securities............................22
Section 6.04 Standstill..................................................22
ARTICLE 7 COVENANTS OF BUYER AND THE CORPORATION
Section 7.01 Required Regulatory Approvals; Reasonable
Best Efforts; Further Assurances............................27
Section 7.02 Certain Filings.............................................27
Section 7.03 Public Announcements........................................28
Section 7.04 Registration Rights Agreement; Warrants.....................29
Section 7.05 NASD Filing.................................................29
ARTICLE 8 CONDITIONS TO CLOSING
Section 8.01 Condition to Obligations of Buyer and the Corporation.......29
Section 8.02 Condition to Obligation of Buyer............................30
Section 8.03 Conditions to Obligation of the Corporation.................31
ARTICLE 9 TERMINATION
Section 9.01 Grounds for Termination.....................................31
Section 9.02 Effect of Termination.......................................32
ARTICLE 10 SURVIVAL; INDEMNIFICATION
Section 10.01 Survival of Representation and Warranties..................32
Section 10.02 Indemnification............................................32
Section 10.03 Procedures.................................................33
Section 10.04 Inspection; No Other Representations.......................33
Section 10.05 Exclusivity................................................34
ARTICLE 11 MISCELLANEOUS
Section 11.01 Notices....................................................34
Section 11.02 Amendments and Waivers.....................................36
Section 11.03 Expenses...................................................36
Section 11.04 Assignment.................................................36
Section 11.05 Governing Law..............................................36
Section 11.06 Jurisdiction...............................................37
Section 11.07 Counterparts; Third-Party Beneficiaries....................37
Section 11.08 Entire Agreement...........................................37
Section 11.09 Captions...................................................37
Section 11.10 Severability...............................................37
Section 11.11 Specific Performance.......................................38
Section 11.12 No Recourse................................................38
EXHIBIT A Current Ownership and Ownership Interests in Buyer
EXHIBIT B Registration Rights
EXHIBIT C Form of Warrant
STOCK PURCHASE AGREEMENT
AGREEMENT dated as of May 28, 2001, between RCN Corporation, a Delaware
corporation (the "Corporation"), and Red Basin, LLC, a Nebraska limited
liability company (the "Buyer").
WHEREAS, the Corporation desires to sell to Buyer (i) 7,661,074 shares of
Common Stock (as defined herein) and (ii) 3,830,537 warrants to purchase shares
of Common Stock at an exercise price of $12.928 per share in the form attached
hereto as Exhibit C (the "Warrants") and Buyer desires to purchase such shares
of Common Stock and Warrants from the Corporation, upon the terms and subject
to the conditions hereinafter set forth;
WHEREAS, as soon as reasonably practicable following the execution of this
Agreement, the Corporation shall either (i) commence a tender offer or (ii)
enter into an agreement, pursuant to which, in each case, on the terms and
subject to the conditions contained therein and which shall have been approved
by the Board of Directors of the Corporation (or a committee thereof or duly
authorized officer designated thereby), it will purchase (the "Note Purchase")
for cash $50 million in aggregate of its issued and outstanding (i) 10% Senior
Notes, due 2007, (ii) 11% Senior Discount Notes, due 2007, (iii) 9.8% Senior
Discount Notes, due February 15, 2008, (iv) 11% Senior Discount Notes, due July
1, 2008 and (v) 10.125% Senior Notes, due January 2010 (collectively, the
"Notes");
WHEREAS, it is a condition precedent to the sale of Common Shares (as
defined herein) and the Warrants pursuant to this Agreement that the Note
Purchase is consummated; and
WHEREAS, it is a condition precedent to the Note Purchase that Buyer
purchase the Common Shares and the Warrants pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and undertakings contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. (a) The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any specified Person, any other Person
which, directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "affiliated," "controlling," and "controlled" have meanings
correlative to the foregoing. Solely for purposes of this Agreement, with
respect to Buyer, the term "Affiliate" shall include each Buyer Member and their
respective Affiliates, but shall exclude the Level 3 Holders and Double Eight
Land Corp.; provided, however, that solely for purposes of calculating the Total
Voting Power of Buyer, the Buyer Members and their respective Affiliates, shares
of Common Stock owned (either directly or indirectly) by Double Eight Land Corp.
shall be included in such calculation.
"beneficial owner" has the meaning set forth in Rule 13d-3 under the
Exchange Act, and derivative terms such as "beneficially own" shall be given
corresponding meanings.
"Board of Directors" means the Board of Directors of the Corporation.
"Change of Control" means the occurrence of any of the following events:
(a) any Person or Group is or becomes the beneficial owner (as defined herein,
except that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total Voting Securities of the Corporation;
or (b) the Corporation consolidates with, or merges with or into, another Person
or sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person, or any Person consolidates with,
or merges with or into the Corporation, in any such event pursuant to a
transaction in which the outstanding Voting Securities of the Corporation are
converted into or exchanged for cash, securities or other property, other than
any such transaction where (i) the outstanding Voting Securities of the
Corporation are converted into or exchanged for Voting Securities of the
surviving or transferee corporation or its parent corporation and/or cash,
securities or other property in an amount which could be paid by the Corporation
under the terms of the Corporation's credit and financing agreements and (ii)
immediately after such transaction no Person or Group is the beneficial owner
(as defined herein, except that a Person shall be deemed to have "beneficial
ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 50% of
the total Voting Securities of the surviving or transferee corporation, as
applicable; or (c) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors (together with
any new directors whose election by the Board of Directors or whose nomination
for election by the stockholders of the Corporation was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office.
"Closing Date" means the date of the Closing.
"Commission" means the Securities and Exchange Commission.
"Common Equity" means shares of Common Stock, shares of Class B Stock and
Convertible Securities.
"Common Shares" means the shares of Common Stock to be issued on the
Closing Date.
"Common Stock" means the common stock, par value $1.00 per share, of the
Corporation.
"Controlled Affiliate" means, with respect to any Person, any corporation
or other entity of which 75% or more of the securities or other ownership
interests having ordinary voting power to elect directors to the Board of
Directors (or other governing body) of such corporation or other entity are
directly or indirectly owned by such Person.
"Convertible Securities" means any securities convertible into or
exchangeable or exercisable for Common Stock or Class B Stock.
"Convertible Voting Securities" means securities convertible into or
exchangeable or exercisable for Voting Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Group" means a group within the meaning of Section l3(d)(3) of the
Exchange Act
"Level 3 Holders" means Xxxxx Xxxxxx Sons', Inc., Level 3 Communications,
Inc. and Level 3 Delaware Holdings, Inc. and any of their respective Controlled
Affiliates.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind.
"Material Adverse Effect" means (i) with respect to the Corporation, a
material adverse effect on the condition (financial or otherwise), business,
assets or results of operations of the Corporation and its Subsidiaries, taken
as whole, excluding any such effect resulting from or arising in connection with
(A) this Agreement, the transactions contemplated hereby or the announcement
thereof, (B) changes or conditions generally affecting the industries in which
the Corporation and its Subsidiaries operate or (C) changes in general economic,
regulatory or political conditions, or (ii) with respect to Buyer, a material
adverse effect on the condition (financial or otherwise), business, assets or
results of operations of Buyer and its Subsidiaries, taken as a whole, excluding
any such effect resulting from or arising in connection with (A) this Agreement,
the transactions contemplated hereby or the announcement thereof, (B) changes or
conditions generally affecting the industries in which Buyer and its
Subsidiaries operate or (C) changes in general economic, regulatory or political
conditions.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust and any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof
"Qualified Director" means any individual who at the time of any such
determination is a member of the Board of Directors and has continuously been a
member of the Board of Directors since the date on which the Corporation
consummated its initial public offering.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Subsidiary" means, with respect to any Person, any corporation or other
entity (and any predecessor thereof) of which the securities or other ownership
interests having ordinary voting power to elect a majority of the Board of
Directors or other persons performing similar functions are directly or
indirectly owned by such Person.
"Takeover Proposal" means any solicited or unsolicited tender or exchange
offer (or a proposal therefor) or proposal for a merger, consolidation, sale of
assets or other business combination or transaction (including a sale or
issuance of equity
securities or a proxy contest) that, in any such case, could reasonably be
expected to result in a Change of Control.
"Total Voting Power" means the aggregate number of votes which may be cast
by holders of Voting Securities in respect of Voting Securities.
"Voting Percentage" means, with respect to any Person, the percentage of
the Total Voting Power beneficially owned by such Person.
"Voting Securities" means securities of the Corporation ordinarily having
the power to vote for the election of directors of the Corporation; provided
that when the term "Voting Securities" is used with respect to any other Person
it means the capital stock or other equity interests of any class or kind
ordinarily having the power to vote for the election of directors or other
members of the governing body of such Person.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
Advance Pro Rata Notice 5.04
Affiliated Permitted Transferee 6.02
Authorizations 3.14
Bank Consent 3.04
Buyer Member 4.06
Buyer Proposal 6.04
Class B Stock 3.05
Closing 2.02
Damages 10.02
Demand Transferee 11.04
Determination Period 6.04
Exchange Agreement 3.05
Fully Financed 6.04
Gross Up Adjustment 10.02
HMTF Waiver 5.07
HSR Act 3.03
Indemnified Party 10.03
Indemnifying Party 10.03
Issuance 5.04
Listing Notification 7.05
NASD 7.05
Negotiated Proposal 6.04
Negotiation Notice 6.04
Note Purchase Recitals
Notes Recitals
Offer 6.04
Per Share Purchase Price 2.01
Permitted Actions 6.04
Permitted Transferee 6.02
Pro Rata Notice 5.04
Pro Rata Offerees 5.04
Pro Rata Securities 5.04
Proxy Statement 3.09
Regulatory Authorities 3.03
Representatives 6.01
Rights 5.04
SEC Reports 3.05
Section 6.04(e) Event 6.04
Series A Certificate 5.07
Series A Preferred Stock 3.05
Series B Preferred Stock 3.05
Standstill Period 6.04
Vulcan 3.05
Vulcan Purchase Agreement 3.05
Vulcan Waiver 3.15
Warrants Recitals
Warrant Shares 3.06
(c) The following definitional provisions shall apply to this Agreement:
(i) The words "hereof," "herein," and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(ii) the terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(iii) The terms "Dollars" and "$" shall mean United States Dollars.
(iv) References herein to a specific Section, Subsection or Schedule
shall refer, respectively, to Sections, Subsections or Schedules of this
Agreement, unless the express context otherwise requires.
(v) Wherever the word "include," "includes," or "including" is used in
this Agreement, it shall be deemed to be followed by the words
"without limitation."
ARTICLE 2
PURCHASE AND SALE
Section 2.01 Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, the Corporation agrees to sell to Buyer, and Buyer
agrees to purchase from the Corporation, 7,661,074 shares of Common Stock and
3,830,537 Warrants at the Closing. The per share purchase price for the Common
Shares (including the Warrants) is $6.5265 in cash (the "Per Share Purchase
Price") and the aggregate purchase price is $50,000,000. The purchase price
shall be paid as provided in Section 2.02.
Section 2.02 Closing. The closing (the "Closing") of the purchase and sale
of the Common Shares and the Warrants hereunder shall take place at the offices
of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, as soon as possible, and in no event later than five business days
after satisfaction or waiver of the conditions set forth in Article 8 (other
than those conditions that by their nature are to be satisfied at the Closing
and will in fact be satisfied at the Closing), or at such other time or place as
Buyer and the Corporation may agree. At the Closing:
(a) Buyer shall deliver to the Corporation the Per Share Purchase Price
multiplied by the aggregate number of Common Shares (which amount equals
$50,000,000) in immediately available funds by wire transfer to an account of
the Corporation with a bank designated by the Corporation, by notice to Buyer
received not later than two business days prior to the Closing Date.
(b) The Corporation shall deliver to Buyer a certificate for the Common
Shares being purchased by Buyer hereunder and shall deliver to Buyer the
Warrants.
Section 2.03 Certificates for Shares. (a) Each certificate for Common
Shares or Warrant Shares issued to Buyer shall (in addition to any other legend
required to be borne on such Common Share or Warrant Share) bear the following
legend:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, and may not be offered, sold,
transferred or otherwise disposed of except in compliance with such Act and
other applicable laws."
(b) Each certificate for Common Shares or Warrant Shares (in addition to
any other legend previously borne by such Common Share or Warrant Share)
beneficially owned by Buyer will bear the following legend:
"The securities represented hereby are subject to certain restrictions
under the terms of the Stock Purchase Agreement dated as of May 28, 2001,
as amended from time to time, between RCN Corporation and Red Basin, LLC
and may not be offered, sold, transferred or otherwise disposed of except
in accordance with the terms of that Agreement."
(c) The Corporation agrees that, at the request of Buyer or any Permitted
Transferee, it will remove from the certificates representing any Common Shares
or Warrant Shares the legend contemplated by subsection (a) regarding the
restriction under the Securities Act in the event that outside counsel for Buyer
or such Permitted Transferee determines that the transfer of such Common Shares
or Warrant Shares is no longer restricted by the Securities Act and outside
counsel for the Corporation concurs in such determination (such concurrence not
to be unreasonably withheld). The Corporation agrees that, at the request of
Buyer, it will remove from the certificates representing Common Shares or
Warrant Shares the legend contemplated by subsection (b) regarding the
restrictions under this Agreement at the time after which such restrictions are
no longer applicable. If Buyer transfers any Common Shares or Warrant Shares in
accordance with Section 6.02, the Corporation will issue to such transferee a
certificate representing such transferred Common Shares or Warrant Shares
without the legend contemplated by subsection (b) regarding the restrictions
under this Agreement.
Section 2.04 Use of Proceeds. The proceeds from the sale of the Common
Shares hereunder shall be used by the Corporation solely to purchase the Notes
pursuant to the Note Purchase and to pay the costs and expenses incurred in
connection with the transactions contemplated hereby and the Note Purchase.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE CORPORATION
The Corporation represents and warrants to Buyer as of the date hereof and
as of the Closing that:
Section 3.01 Corporate Existence and Power. The Corporation is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers required to carry on
its business as now conducted.
Section 3.02 Corporate Authorization. (a) The execution, delivery and
performance of this Agreement by the Corporation is within the Corporation's
corporate powers and, except for any required approval of the Corporation's
stockholders, has been duly authorized by all necessary corporate action on the
part of the Corporation.
(b) This Agreement constitutes a legal and binding agreement of the
Corporation, enforceable against the Corporation in accordance with its terms,
except (i) as such enforcement is limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally and (ii)
for limitations imposed by general principles of equity.
Section 3.03 Actions or Filings. Except as set forth on Schedule 3.03
hereto, the execution, delivery and performance of this Agreement by the
Corporation requires no action by or in respect of, or filing with, any
governmental or non-governmental body, agency, official or authority other than
(i) compliance with any applicable requirements of the Exchange Act, (ii) with
respect to the Corporation's obligations under Section 7.04, compliance with any
applicable requirements of the Securities Act, (iii) compliance with the
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (iv) filings with, notifications to and
consents from the Federal Communications Commission, franchising authorities,
state public utility commissions and other similar governmental entities
(collectively, "Regulatory Authorities"), and (v) other filings, notifications
and consents that are immaterial to the consummation of the transactions
contemplated hereby.
Section 3.04 Non-contravention. Except as set forth on Schedule 3.04
hereto, assuming compliance with the matters referred to in Section 3.03 and set
forth on Schedule 3.03 hereto, the execution, delivery and performance of this
Agreement by the Corporation do not and will not (i) violate the certificate of
incorporation or bylaws of the Corporation, (ii) violate any applicable law,
rule, regulation, judgment, injunction, order or decree binding upon the
Corporation, other than violations that would be immaterial to the Corporation
or Buyer, or (iii) except for the consent of Chase Manhattan Bank and the other
parties to the Corporation's credit agreement set forth on Schedule 3.04 hereto
(the "Bank Consent") and except as to matters which would be immaterial to the
Corporation or Buyer, constitute a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of the
Corporation or to a loss of any benefit to which the Corporation is entitled
under any provision of any agreement or other instrument binding upon the
Corporation or (iv) result in the creation or imposition of any Lien
on any asset of the Corporation except where such Lien would not have a Material
Adverse Effect on the Corporation.
Section 3.05 Capitalization. (a) As of the date hereof, the authorized
capital stock of the Corporation consists of: 300,000,000 shares of Common
Stock; 400,000,000 shares of Class B common stock ("Class B Stock"), par value
$1.00 per share; and 25,000,000 shares of preferred stock, par value $1.00 per
share. As of March 31, 2001, there were issued and outstanding the following
shares of such stock: 87,725,546 shares of Common Stock, no shares of Class B
Stock, 263,054 shares of Series A 7% Senior Convertible Preferred Stock ("Series
A Preferred Stock"), 1,650,000 shares of Series B 7% Senior Convertible
Preferred Stock ("Series B Preferred Stock") and options to purchase 1,045,611
shares of Common Stock (using the treasury method of computation and assuming an
exercise price of $6.03 per share).
(b) All outstanding shares of Common Stock and all outstanding shares of
Series A Preferred Stock and Series B Preferred Stock are duly authorized,
validly issued and fully paid and nonassessable. Except as provided in the Stock
Purchase Agreement, dated October 1, 1999, between the Corporation and Vulcan
Ventures Incorporated ("Vulcan," and such agreement, the "Vulcan Purchase
Agreement") and the Exchange Agreement, dated as of June 17, 1997, by and
between C-TEC Corporation and BECOCOM, Inc. (the "Exchange Agreement"), there
are no preemptive or other similar rights available to the existing holders of
the capital stock of the Corporation. As of the date hereof and other than (i)
as set forth in the financial statements contained in the forms, reports and
documents filed with the Commission (the "SEC Reports") and (ii) in connection
with the transactions contemplated by this Agreement, there are no outstanding
options, warrants, rights, puts, calls, commitments, or other contracts,
arrangements, or understandings issued by or binding upon the Corporation
requiring, and there are no outstanding debt or equity securities of the
Corporation which upon the conversion, exchange or exercise thereof would
require, the issuance, sale or transfer by the Corporation of any new or
additional equity interests in the Corporation (or any other securities of the
Corporation or any of its Subsidiaries which, whether after notice, lapse of
time or payment of monies, are or would be convertible into or exercisable or
exchangeable for equity interests in the Corporation). Except as set forth in
the SEC Reports and as contemplated by this Agreement, there are no voting
trusts or other agreements or understandings to which the Corporation or any of
its Subsidiaries is a party with respect to the voting of capital stock of the
Corporation.
Section 3.06 Authorization of Common Shares and Warrant Shares. The
issuance, sale and delivery of the Common Shares, the Warrants and the shares of
Common Stock issuable upon conversion of the Warrants (the " Warrant Shares")
has been duly authorized by all requisite corporate action of the Corporation,
and the Common Shares and the Warrant Shares when issued and delivered in
accordance with the terms of this Agreement and the Warrants, respectively, will
be validly issued and outstanding, fully paid and nonassessable, free and clear
of any Liens and not subject to preemptive or other similar rights of the
stockholders of the Corporation.
Section 3.07 Finders Fees. Except for Xxxxxxx Xxxxx & Co., Inc., whose fees
and expenses will be paid by the Corporation, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of the Corporation who might be entitled to any fee or
commission in connection with the transactions contemplated by this Agreement.
Section 3.08 SEC Reports. The Corporation has filed all required SEC
Reports when due in accordance with the Exchange Act and delivered or made
available to Buyer copies thereof. As of their respective dates (or, in the case
of any amended SEC Report, as of the date of the amendment), the SEC Reports
complied in all material respects with all applicable requirements of the
Exchange Act or the Securities Act, as the case may be. As of their respective
dates (or, in the case of any amended SEC Report, as of the date of the
amendment), none of the SEC Reports contained any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Section 3.09 [Intentionally Omitted]
Section 3.10 Financial Statements. The consolidated financial statements of
the Corporation contained in the SEC Reports (or, in the case of any amended SEC
Report, in the SEC Report as so amended) comply as to form in all material
respects with the published rules and regulations of the Commission with respect
thereto, were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present, in conformity with GAAP (except as may be indicated in the
notes thereto), the consolidated financial position of the Corporation and its
consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements, which adjustments will not be material either
individually or in the aggregate).
Section 3.11 Absence of Certain Changes. Since December 31, 2000, there has
not been any event, occurrence or development of a state of circumstances or
facts that has had or would reasonably be expected to have a Material Adverse
Effect on the Corporation or an adverse effect on the ability of the Corporation
to perform its obligations under this Agreement.
Section 3.12 Litigation. Except as disclosed in the SEC Reports, there is
no action, suit, investigation or proceeding pending against, or to the
knowledge of the Corporation threatened against or affecting, the Corporation or
any Subsidiary before any court or arbitrator or any governmental body, agency
or official which (i) in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated by this Agreement or
(ii) if resolved adversely to the Corporation or a Subsidiary would reasonably
be likely to have, individually or in the aggregate, a Material Adverse Effect
on the Corporation.
Section 3.13 Offering of Common Shares. Neither the Corporation nor any
Person acting on its behalf has taken or will take any action (including,
without limitation, any offering of any securities of the Corporation under
circumstances which would require, under the Securities Act, the integration of
such offering with the offering and sale of the Common Shares) which might
subject the offering, issuance or sale of the Common Shares, the Warrant Shares
or the Warrants to the registration requirements of Section 5 of the Securities
Act.
Section 3.14 Governmental Authorizations. The Corporation has all necessary
franchises, approvals, authorizations, permits, licenses, registrations,
qualifications and similar rights obtained from any federal, state or local
regulatory authority ("Authorizations") to conduct and operate the businesses of
the Corporation, except any such Authorizations which the failure to have would
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Corporation. The Authorizations are currently in
full force and effect, are not in default, and are valid under all applicable
rules and regulations according to their terms, except as would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Corporation. The Corporation is in compliance with the
terms and conditions of the Authorizations, including requirements for
notifications, filing, reporting, posting and maintenance of logs and records,
except where any failure to so comply would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Corporation.
Section 3.15 Vulcan Waiver. The Corporation has obtained from Vulcan
Ventures Incorporated a waiver (the "Vulcan Waiver") of (i) all its rights to
acquire any of the Common Shares, Warrants or Warrant Shares and (ii) the
application of
Section 8(g) of the Certificate of Designations, Preferences and
Rights of Series B 7% Senior Convertible Preferred Stock of the Corporation with
respect to the issuance of Common Shares, Warrants and Warrants Shares.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Corporation as of the date hereof and
as of the Closing that:
Section 4.01 Existence and Power. Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
Section 4.02 Authorization. The execution, delivery and performance of this
Agreement by Buyer are within Buyer's powers and have been duly authorized by
all necessary action on the part of Buyer. This Agreement constitutes a legal,
valid and binding agreement of Buyer, enforceable against Buyer in accordance
with its terms, except (a) as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and (b) for limitations imposed by general principles of equity.
Section 4.03 Actions or Filings. The execution, delivery and performance of
this Agreement by Buyer requires no action by or in respect of, or filing with,
any governmental or non-governmental body, agency or official or any other
Person other than (i) compliance with any applicable requirements of the
Exchange Act, (ii) compliance with the applicable requirements of the HSR Act,
(iii) filings with, notifications to and consents from Regulatory Authorities
and (iv) other filings or notifications that are immaterial to the consummation
of the transactions contemplated hereby.
Section 4.04 Non-contravention. Assuming compliance with the matters
referred to in Section 4.03, the execution, delivery and performance of this
Agreement by Buyer does not and will not (i) except in the case where Buyer is
an individual, violate the certificate of incorporation, bylaws or other
organizational documents of Buyer, (ii) violate any applicable law, rule,
regulation, judgment, injunction, order or decree, except for any such
violations which would not have a material adverse effect on the ability of
Buyer to consummate the transactions contemplated hereby or (iii) constitute a
default under any agreement or other
instrument binding upon Buyer except as to matters which would not be material
to Buyer.
Section 4.05 Purchase for Investment. Buyer is an "accredited investor" as
defined in Rule 501 under the Securities Act. Buyer is purchasing the Common
Shares for investment for its own account and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act.
Buyer (either alone or together with its advisors) has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Common Shares and is capable of
bearing the economic risks of such investment
Section 4.06 Current Ownership. Buyer, and each owner of equity interests
in Buyer, as set forth on Exhibit A hereto (each, a "Buyer Member"), is the
record and beneficial owner of the number of shares, if any, of Common Stock and
the percentage ownership interest in Buyer set forth opposite such Buyer
Member's name on Exhibit A hereto. Except for the shares of Common Stock
referenced on Exhibit A (including shares owned by the family corporation
referenced thereon), neither Buyer, nor any Buyer Member, nor any of their
respective Affiliates, beneficially owns shares of equity (or securities
convertible into equity) of the Corporation.
Section 4.07 Voting Arrangments. Buyer has not:
(i) formed, joined or in any way participated in a Group with respect
to any Common Equity; or
(ii) granted any "proxies" (as defined under the Exchange Act) with
respect to any Common Equity to any Person or deposited any Common Equity
in a voting trust or entered into any other arrangement or agreement with
respect to the voting thereof.
Section 4.08 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer threatened against or
affecting, Buyer before any court or arbitrator or any governmental body, agency
or official which has a reasonable likelihood of success and in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
Section 4.09 Finders' Fees. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of Buyer who might be entitled to any fee or commission from the
Corporation or any of its Affiliates upon consummation of the transactions
contemplated by this Agreement (other than in connection with the Note
Purchase).
Section 4.10 HSR. No filing under the HSR Act and rules thereunder is
required in connection with the transactions contemplated hereby (other than any
such filing that may be required prior to the exercise of the Warrants).
ARTICLE 5
COVENANTS OF THE CORPORATION
The Corporation agrees that:
Section 5.01 Access to Information. From the date hereof until the Closing
Date, the Corporation will (i) furnish to Buyer and its authorized
representatives such financial and operating data and other information relating
to the Corporation and its Subsidiaries as such Persons may reasonably request
and (ii) instruct its counsel, independent accountants and financial advisors to
cooperate with Buyer and its authorized representatives in its investigation of
the Corporation. Any investigation pursuant to this Section shall be conducted
in such manner as not to interfere unreasonably with the conduct of the business
of the Corporation.
Section 5.02 Restrictions Pending the Closing. After the date hereof and
prior to the Closing Date, except as expressly provided for in this Agreement or
as consented to in writing by Buyer and subject to any additional consents
required to be obtained from holders of Series A Preferred Stock and Series B
Preferred Stock, the Corporation will not:
(i) amend its Certificate of Incorporation or By-laws or similar
organizational documents;
(ii) split, combine or reclassify any shares of the Corporation's
capital stock;
(iii) declare or pay any dividend or distribution (whether in cash,
stock or property) in respect of its Common Stock;
(iv) take any action, or knowingly omit to take any action, that
would, or that would reasonably be expected to, result in (A) any of the
representations and warranties of the Corporation set forth in Article 3
becoming untrue or (B) any of the conditions to the obligations of Buyer
set forth in Section 8.01 or 8.02 not being satisfied; or
(v) enter into any agreement or commitment to do any of the foregoing.
Section 5.03 Other Transfers of Common Shares or Warrant Shares. The
Corporation shall take all actions reasonably necessary to enable holders of the
Common Shares or Warrant Shares to sell such stock without registration under
the Securities Act pursuant to Rule 144 under the Securities Act or any
successor rule or regulation, subject in each case to the provisions of this
Agreement and, specifically, the filing on a timely basis of all reports
required to be filed under the Exchange Act.
Section 5.04 Pro Rata Participation. (a) For so long as Buyer and
Affiliated Permitted Transferees (as defined herein) own in the aggregate at
least 50% of the shares of Common Stock of the Corporation being purchased by
Buyer pursuant to this Agreement, if the Corporation shall issue (such issuance,
including any Common Equity issued to Buyer pursuant to this Section 5.04, an
"Issuance") any Common Equity (other than an issuance of Common Equity (i)
pursuant to the Corporation's existing or future stock option plans or pursuant
to any other existing or future director or employee compensation plan approved
by the Board of Directors, (ii) as consideration for the acquisition of a
business or of assets, (iii) to the Corporation's joint venture partners in
exchange for interests in the relevant joint venture, (iv) upon conversion,
exercise or exchange of Convertible Securities, (v) pursuant to any
shareholders' rights plan, (vi) as dividends on any class of preferred stock of
the Corporation) or (vii) upon exercise of the Warrants), Buyer and Affiliated
Permitted Transferees (the "Pro Rata Offerees") shall have the right to purchase
for cash an amount of such Common Equity ("Pro Rata Securities") on the same
terms and at the same price as the issue price of such Common Equity (such price
to be agreed by the Corporation and Buyer if such Common Equity is to be issued
for consideration other than cash, and if the parties cannot agree on such
price, the price shall be determined as provided in paragraph (c) of this
Section 5.04) so that, after the Issuance, the Pro-Rata Offerees would own the
same proportional interest of the Common Equity of the Corporation in the
aggregate (assuming conversion, exercise or exchange of all Convertible
Securities) as their remaining Common Shares represent of the Common Equity of
the Corporation immediately prior to the Issuance (assuming conversion, exercise
or exchange of all Convertible Securities). The Corporation shall deliver
written notice (a "Pro Rata Notice") to each Pro Rata Offeree with respect to
any Issuance subject to the provisions of this Section 5.04 either, at the
Corporation's option, (i) not less than 5 days before the anticipated date of
such Issuance (an "Advance Pro Rata Notice"), or (ii) promptly after
consummation of such Issuance. Each Pro Rata Offeree's right to purchase Pro
Rata Securities with respect to any Issuance shall terminate 5 business days
after delivery of the Pro Rata Notice unless such Pro-Rata Offeree elects to
exercise its right to purchase Pro Rata Securities within such 5 business days.
Such election will constitute a binding offer to purchase and may not be revoked
by such Pro Rata Offeree; provided, however, that such Pro Rata Offeree's
obligation to acquire the
Pro Rata Securities will be subject to terms and conditions at least as
favorable as those applicable to the Issuance giving rise to the Pro Rata
Offeree's rights under this Section 5.04 and to receipt of any necessary
governmental approvals (and the parties agree to expeditiously seek and
cooperate with respect to obtaining such approvals). Notwithstanding anything
in this Section 5.04 to the contrary, if a Pro Rata Offeree exercises its right
to purchase any Pro Rata Securities pursuant to an Advance Pro Rata Notice, but
the Corporation does not consummate the issuance of Common Equity referred to in
such notice (or reduces the size of such issuance), the Pro Rata Offerees will
not have the right to purchase such Pro Rata Securities (or, in the event of a
reduction in the size of the Issuance, have its right to purchase reduced pro
rata).
(b) If Buyer and the Corporation fail to agree on the price at which Buyer
may purchase securities under paragraph (a) of this Section 5.04 within 30 days
following receipt by Buyer of a Pro Rata Notice, then the items in dispute shall
be referred to a nationally recognized investment banking firm selected jointly
by Buyer and the Corporation. The determination of such investment banking firm
shall be rendered within 30 days of such referral. The Corporation and Buyer
shall share equally in payment of all fees and expenses of such investment
banking firm. All determinations made pursuant to this paragraph (b) shall be
final and binding on Buyer and the Corporation.
Section 5.05 [Intentionally Omitted]
Section 5.06 Cross Ownership. For so long as Buyer or any Affiliated
Permitted Transferees or any of their respective Affiliates hold equity
securities representing at least 5% of the total equity of the Corporation, the
Corporation and its Affiliates will use their reasonable best efforts not to
take any action which would cause or result in any violation by the Corporation
and its Affiliates or by Buyer or any Buyer Members or any of their respective
Affiliates of applicable provisions of the cross-ownership provisions of the
Communications Act of 1934, as amended, or any comparable provisions of other
applicable federal, state or local statutes or regulations, such that Buyer, or
any Affiliated Permitted Transferee or any of their respective Affiliates would,
as a result of Buyer's or any Affiliated Permitted Transferee's or any of their
respective Affiliates' ownership, operation or management (whether directly or
by attribution) of local telephone systems owned, operated, managed (whether
directly or by attribution) or subject to a definitive purchase agreement to be
acquired by Buyer, any of the Level 3 Holders, any Affiliated Permitted
Transferees or any of their respective Affiliates as of the date of this
Agreement and its interest in the Corporation, be compelled to (i) divest or
restructure any interest in any such local telephone system; (ii) divest or
restructure its interest in the Corporation; or (iii) incur any penalty or other
sanction as a result of such action. Buyer and the Corporation will, and will
cause their respective Affiliates to, cooperate with each other to seek to
obtain any consents or waivers necessary to avoid violations of the type
referred to in the previous sentence,
provided that none of Buyer, any of the Level 3 Holders, any Affiliated
Permitted Transferees or any of their respective Affiliates shall be required to
agree to any divestiture or restructuring of any of its assets or business in
order to secure any such consent or waiver. Should such required consents and
waivers not be secured, the Corporation and its Affiliates will use their
reasonable best efforts to refrain from such actions and will use their
reasonable best efforts to take such actions as may be necessary from time to
time in order to remedy any situation that could otherwise give rise to any such
results as a result of such circumstances.
Section 5.07 HMTF Waiver; NSTAR Waiver. The Corporation will use its
reasonable best efforts to obtain from (i) HMTF Live Wire Investors, LLC (the
"HMTF Waiver") prior to the Closing Date a waiver of the application of Section
8(g) of the Certificate of Designations, Preferences and Rights of Series A 7%
Senior Convertible Preferred Stock of the Corporation (the "Series A
Certificate") with respect to the issuance of Common Shares, Warrants and
Warrant Shares and (ii) NSTAR Communications, Inc., prior to the Closing Date a
waiver of all its rights to acquire any of the Common Shares, Warrants or
Warrant Shares pursuant to the Exchange Agreement or otherwise.
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
Section 6.01 Confidentiality. (a) Buyer will hold, and will use its best
efforts to cause its officers, directors, members, employees, accountants,
counsel, consultants, advisors, financing sources, financial institutions, and
agents (its "Representatives") to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law
or national stock exchange, all confidential documents and information
concerning the Corporation or any of its Affiliates furnished to Buyer, except
to the extent that such information can be shown to have been (i) previously
known on a non-confidential basis by Buyer or such Representatives, (ii) in the
public domain through no fault of Buyer or its Representatives (acting in their
capacity as such or with respect to information received in their capacity as
such) or (iii) later acquired by Buyer or such Representatives from sources
other than the Corporation or any of its Affiliates not known by Buyer or such
Representatives, as applicable, to be bound by any confidentiality obligation;
provided that Buyer may disclose such information to any
of its Representatives in connection with the transactions contemplated by this
Agreement so long as such Persons are informed by Buyer of the confidential
nature of such information and are directed by Buyer to treat such information
confidentially. Buyer shall be responsible for any failure to treat such
information confidentially by such Persons. The obligation of Buyer to hold and
to cause its Representatives to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar
information. Buyer agrees that it shall not and it shall cause its
Representatives not to use any confidential documents or information for any
purpose other than monitoring and evaluating its investment in the Corporation
and in connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, Buyer will, and will use its reasonable best efforts to
cause its Representatives to, destroy or deliver to the Corporation, upon
request, all documents and other materials, and all copies thereof, obtained by
Buyer or on its behalf from the Corporation, or any of its Representatives, in
connection with this Agreement that are subject to such confidence.
(b) In the event Buyer or anyone to whom Buyer transmits confidential
information is requested or required (by oral questions, interrogatories,
requests for information or documents, subpoenas, civil investigative demand or
similar process) to disclose any such information, Buyer will provide the
Corporation with prompt notice so that the Corporation may seek a protective
order or other appropriate remedy and/or waive Buyer's compliance with the
provisions of this Section. In the event that such protective order or other
remedy is not obtained sufficiently promptly so as not to adversely affect Buyer
or those of its officers, directors, employees, accountants, counsel,
consultants, advisors and agents as to whom the information has been requested
or required, or the Corporation waives Buyer's compliance with the provisions of
this Agreement, Buyer will furnish only that portion of such information that
Buyer is advised by counsel is legally required and will, at the Corporation's
expense and direction, exercise its reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded such information.
Section 6.02 Sale or Transfer of Common Shares or Warrant Shares. During
the Standstill Period, Buyer will not, and will not permit its Affiliates to,
directly or indirectly, sell, pledge, encumber or otherwise transfer, or agree
to sell, pledge, encumber or otherwise transfer, any Common Shares, Warrants or
Warrant Shares without the prior written consent of the Board of Directors,
specifically expressed in a resolution adopted by a majority of the directors of
the Corporation who are not designees or representatives of Buyer (or designees
or representatives of any other Person who is acting in concert with Buyer with
respect to a requested action); provided, that upon expiration of the 180-day
period following the Closing Date, Buyer and its Affiliates may sell, pledge,
encumber or otherwise transfer Common Shares, Warrants or Warrant Shares (a) in
any transaction in compliance with Rule 144 under the Securities Act; provided,
that any such sale shall be subject
to the volume and manner of sale limitations set forth in such rule whether or
not legally required unless Buyer and its Affiliates shall use commercially
reasonable efforts not to sell securities to a Person that would not be a
Permitted Transferee (and in the case of an arranged sale Buyer will not
transfer securities to a Person that would not be a Permitted Transferee without
the prior written consent of the Board of Directors, specifically expressed in a
resolution adopted by a majority of the directors of the Corporation who are not
designees or representatives of Buyer (or designees or representatives of any
other Person who is acting in concert with Buyer with respect to a requested
action)), (b) pursuant to the registration rights contemplated by Exhibit B
hereto or in a bona fide firm commitment, underwritten public offering
registered under the Securities Act in which Buyer, its Affiliates and the
underwriters use commercially reasonable efforts to prevent the sale of such
stock to any Person that would, after giving effect to such sale, not be a
Permitted Transferee, (c) to a commercial bank or other financial institution in
connection with a bona fide financing transaction by Buyer or its Affiliates,
provided that such bank or other financial institution agrees to comply with the
transfer restrictions set forth in this Agreement with respect to such stock,
and (d) to Permitted Transferees. "Permitted Transferee" is (i) a Person who
after giving effect to such sale, pledge, encumbrance or transfer, would,
together with its Affiliates and with any members of a Group in which such
Person or any of its Affiliates is a member, beneficially own securities
representing less than 5% of the Total Voting Power and less than 15% of the
aggregate number of outstanding shares of Common Stock and Class B Stock
(assuming, in each case, the conversion, exercise or exchange of all Convertible
Securities beneficially owned by such Person, its Affiliates and such Group
members) or (ii) provided that such Person enters into an agreement in form and
substance reasonably acceptable to the Corporation pursuant to which such Person
agrees to be bound by the terms of this Agreement, (A) (x) any Buyer Member or
(y) W. Xxxxx Xxxxx, Xxx Xxxxx Xxxxxx or Xxxxx Xxxxx Xxxxx (collectively, the
"Family Members"), (B) the lineal descendants, heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any Buyer Member or the
Family Members, (C) any public foundation, private foundation, or public charity
established by any of the foregoing and (D) any trust, the beneficiaries of
which, or corporation or partnership, the stockholders, members or general or
limited partners of which, include only a Buyer Member, his or her spouse,
members of his or her immediate family or his or her lineal descendants or any
of the foregoing. Such Persons contemplated in clause (ii) of this definition of
Permitted Transferee are referred to herein as "Affiliated Permitted
Transferees."
Section 6.03 Acquisition of Voting Securities. Buyer agrees that during the
Standstill Period, and notwithstanding anything in this Agreement to the
contrary,
without the prior written consent of the Board of Directors specifically
expressed in a resolution adopted by a majority of the directors of the
Corporation who are not designees or representatives of Buyer (or designees or
representatives of any other Person who is acting in concert with Buyer with
respect to a requested action), Buyer will not, and will not permit its
Affiliates to, purchase or otherwise acquire, directly or indirectly, or agree
or offer to purchase or otherwise acquire any Voting Securities of the
Corporation if, as a result thereof, Buyer and its Affiliates, in the aggregate,
would beneficially own Voting Securities representing more than 15% of the Total
Voting Power.
Section 6.04 Standstill. (a) Buyer agrees that from the date hereof until
the earlier of (i) the date of a Change of Control, (ii) the seventh anniversary
of the Closing Date, (iii) the date upon which the Level 3 Holders sell to one
Person, in one transaction or a series of related transactions, Voting
Securities or Convertible Voting Securities representing 5% or more of the Total
Voting Power (assuming the conversion, exercise or exchange of all Convertible
Voting Securities held by such Person and the members of any Group of which such
Person is a member) if following such sale such Person, or any Group of which
such Person is a member, would beneficially own Voting Securities representing
15% or more of the Total Voting Power (assuming the conversion, exercise or
exchange of all Convertible Voting Securities held by such Person and the
members of any Group of which such Person is a member) and (iv) the occurrence
of a Section 6.04(e) Event (the "Standstill Period"), without the prior written
consent of the Board of Directors, specifically expressed in a resolution
adopted by a majority of the directors of the Corporation who are not designees
of Buyer (or designees or representatives of any other Person who is acting in
concert with Buyer with respect to a requested action), Buyer will not and will
not permit its Affiliates to:
(i) purchase or otherwise acquire, directly or indirectly, or agree or
offer to purchase or otherwise acquire (except, in any case, (A) pursuant
to the terms of this Agreement, (B) by way of a stock dividend, stock
split, reclassification, recapitalization or other similar event by the
Corporation, (C) pursuant to the exercise of the Warrants or (D) with prior
written consent of the Board of Directors, specifically expressed in a
resolution adopted by a majority of the directors of the Corporation who
are not designees or representatives of Buyer (or designees or
representatives of any other Person who is acting in concert with Buyer
with respect to a requested action), any Voting Securities or Convertible
Voting Securities if such purchase or acquisition would result in Buyer,
the Buyer Members and any Group of which any of Buyer or any Buyer Member
is a member, owning, directly or indirectly, 15% or more in the aggregate
of the Total Voting Power (assuming
the conversion, exercise or exchange of all Convertible Voting Securities
held by Buyer, the Buyer Members and the members of any Group of which any
of Buyer or any Buyer Member is a member); provided that if the Corporation
shall issue any Voting Securities or Convertible Voting Securities in
respect of which the Pro-Rata Offerees did not have the right to purchase
their pro rata share under Section 5.04, the Pro-Rata Offerees shall be
permitted to purchase in the open market or pursuant to one or more private
transactions, the number of shares of such class of Voting Securities or
Convertible Voting Securities as they would have been entitled to purchase
if they had been entitled to purchase their pro rata share of such issuance
under Section 5.04;
(ii) "solicit,"or become a "participant," directly or indirectly, in
any "solicitation" of proxies (as such terms are defined under the Exchange
Act) from any holder of Voting Securities or Convertible Voting Securities
in connection with any vote or other action on any matter or agree or
announce its intention to vote with any Person undertaking a "solicitation"
with respect to the voting of any Voting Security;
(iii) seek, propose (in a manner that is intended to require, or would
reasonably be expected to require, public disclosure) or publicly make any
statement inconsistent with the position of the Board of Directors with
respect to, or otherwise participate in, any merger, consolidation,
business combination, tender or exchange offer, sale or purchase of assets,
sale or purchase of securities (except as and to the extent specifically
permitted by this Section 6.04), dissolution, liquidation, restructuring,
recapitalization or similar transactions of or involving the Corporation or
any of its Subsidiaries;
(iv) form, join or in any way participate in a Group with respect to
any Voting Securities or Convertible Voting Securities;
(v) grant any "proxies" (as defined under the Exchange Act) with
respect to any Voting Securities to any Person (except as recommended by
the Board of Directors of the Corporation) or deposit any Voting Securities
or Convertible Voting Securities in a voting trust or enter into any other
arrangement or agreement with respect to the voting thereof;
(vi) otherwise act, alone or in concert with others, to control or
seek to control or influence or seek to influence the management, Board of
Directors or policies of the Corporation;
(vii) seek, alone or in concert with others, representation on the
Board of Directors (except with respect to any Buyer Member in his capacity
as a member of the Board of Directors), or seek the removal of any member
of the Board of Directors;
(viii) make any publicly disclosed proposal or enter into any
discussion regarding any of the foregoing;
(ix) make any proposal, statement or inquiry, or disclose any
intention, plan or arrangement (whether written or oral) inconsistent with
the foregoing, or make or disclose any request to amend, waive or terminate
any provision of this Section 6.04 or Section 6.02 or 6.03; or
(x) have any discussions or communications, or enter into any
arrangements, understandings or agreements (whether written or oral) with,
or advise, finance, assist or encourage, any other Person in connection
with any of the foregoing.
(b) (1) Nothing contained in this Section 6.04 shall be deemed in any way
to prohibit or limit (i) the activities of Xxxxxx Xxxxx, Xx. (or designees or
representatives of any other Person who is acting in concert with Xxxxxx Xxxxx,
Xx. with respect to a requested action) acting in his capacity as a director of
the Corporation or as a director of Level 3 Communications, Inc. or any
Subsidiary thereof, (ii) Level 3 Communications, Inc. or any Subsidiary thereof
or (iii) any transactions in the ordinary course of business between the
Corporation and its Subsidiaries, on the one hand, and Buyer, the Affiliated
Permitted Transferees, the Level 3 Holders or any of their respective
Affiliates, on the other hand.
(2) Notwithstanding anything contained in Section 6.04(a) of this
Agreement to the contrary, the provisions of clauses (vi) through (x) of Section
6.04(a) of this Agreement shall not be applicable to any Qualified Director.
(c) The following shall apply during the Standstill Period:
Notwithstanding the provisions of Section 6.04(a), if the Corporation receives
an indication of interest for a Takeover Proposal that it intends to consider,
it will promptly notify Buyer of such fact. If thereafter or otherwise the
Corporation shall propose to enter into negotiations with any Person regarding a
possible Takeover Proposal (a "Negotiated Proposal"), then prior to entering
into such negotiations, the Corporation shall notify Buyer that it proposes to
enter into negotiations in respect of a Negotiated Proposal (a "Negotiation
Notice") and shall give Buyer a period of not less than four Business Days (the
"Determination Period") to determine whether Buyer wishes to enter into
negotiations with the Corporation regarding a possible Takeover Proposal (a
"Buyer Proposal"). The Negotiation Notice shall provide only the following
information: (i) if the Person making the
Negotiated Proposal is proposing a transaction involving the use by such Person
of cash consideration, (A) whether it will be Fully Financed (as defined below)
at the time the Board may approve the Negotiated Proposal or (B) if it will not
be Fully Financed, the identity of such Person and (ii) if the Person making the
Negotiated Proposal is proposing a transaction involving the use by such Person
of non-cash consideration, the identity of such Person and the form of
consideration proposed to be used. If after the delivery of the Negotiation
Notice, the Person making the Negotiated Proposal and the Corporation determine
to change the form of consideration or the Fully Financed status changes, the
Corporation will provide Buyer with another Negotiation Notice (which will
commence a new Determination Period). The cash consideration to be delivered
under a Negotiated Proposal will be "Fully Financed" for purposes hereof if
either (i) the Person making the Negotiated Proposal has committed financing for
such Negotiated Proposal or (ii) such Person is a publicly traded entity with an
equity market capitalization of at least 200% of the equity market
capitalization of the Corporation.
(i) If within the Determination Period, Buyer or a Buyer Member
notifies the Corporation that it wishes to negotiate regarding a Buyer
Proposal, it shall be permitted to negotiate with the Corporation
regarding a Buyer Proposal and Buyer or such Buyer Member (or designees or
representatives of any other Person who is acting in concert with Buyer or
such Buyer Member with respect to a requested action), shall recuse himself
from consideration of the Negotiated Proposal and a Buyer Proposal. If the
Board of Directors does not approve the Negotiated Proposal or a Buyer
Proposal, Buyer's and the Buyer Members' rights to negotiate regarding a
Buyer Proposal shall terminate. If the Board of Directors determines to
approve the Negotiated Proposal, Buyer and each Buyer Member shall
thereafter be permitted to (A) make a Buyer Proposal by way of a tender or
exchange offer or otherwise and (B) take other actions in opposition to the
Negotiated Proposal, and in support of a Buyer Proposal, that would
otherwise be prohibited by Section 6.04(a) (other than clause (i) thereof,
except pursuant to Buyer's or a Buyer Members' tender or exchange offer)
(the actions referred to under clause (A) and (B) of this sentence, the
"Permitted Actions"). If the Negotiated Proposal is rejected by the
shareholders of the Corporation, Buyer's and the Buyer Members' rights to
take Permitted Actions shall thereupon terminate; provided that if at such
time Buyer or a Buyer Member has proposed a Buyer Proposal to the
Corporation's shareholders and such Buyer Proposal is still pending,
Buyer's and such Buyer Member's rights to take Permitted Actions shall
continue until the earlier of (l) the date upon which the Buyer Proposal is
rejected by the Corporation's shareholders and (2) 60 days after the date
upon which the Negotiated Proposal was rejected. Upon the termination of
Buyer's or a Buyer Member's rights to take Permitted Actions hereunder,
Buyer and such Buyer Member shall take any action necessary to promptly
terminate all
proxies, agreements, Groups and other arrangements entered into that would
have been prohibited under Section 6.04(a) but for the effect of this
Section 6.04(c).
(ii) If within the Determination Period, Buyer or a Buyer Member does
not notify the Corporation that it intends to negotiate with the
Corporation regarding a Buyer Proposal, Buyer and the Buyer Members shall
not be permitted to negotiate with the Corporation regarding, or otherwise
make, a Buyer Proposal and shall not be released from the restrictions
contained in Section 6.04(a) at any time either before or after approval of
the Negotiated Proposal by the Board of Directors with respect to such
Negotiated Proposal.
(d) If, during the Standstill Period, the Board of Directors shall approve
a process pursuant to which Takeover Proposals are to be solicited from one or
more Persons, then the provisions of Section 6.04(c) shall apply in respect of
such process except that (i) the Determination Period shall end no earlier than
the day prior to the last date by which such Persons are required to submit
Takeover Proposals (or in the event that the Corporation determines to enter
into a bona fide negotiation with one or more participants in such process prior
to such date, the date upon which such negotiations shall begin) and (ii) the
term "Negotiated Proposal" shall mean the Takeover Proposal(s) of one or more of
the participants in such process.
(e) If any Person shall commence and not withdraw a bona fide unsolicited
tender or exchange offer that if successful would result in a Change of Control
(an "Offer"), the Standstill Period shall terminate unless (i) within 10
business days of the announcement of such Offer, the Corporation shall have
publicly recommended that the Offer not be accepted and (ii) the Level 3
Holders shall be subject to an agreement not to tender or otherwise sell Voting
Securities beneficially owned by the Level 3 Holders to the Person making the
Offer except to the extent the Voting Securities beneficially owned by the Level
3 Holders that are not subject to such an agreement shall be less than 5% of the
Total Voting Power. The termination of the Standstill Period pursuant to this
Section 6.04(e) is referred to herein as a "Section 6.04(e) Event."
ARTICLE 7
COVENANTS OF BUYER AND THE CORPORATION
Section 7.01 Required Regulatory Approvals; Reasonable Best Efforts;
Further Assurances. Buyer and the Corporation acknowledge that certain
regulatory or governmental approvals may be required to lawfully consummate the
transactions contemplated by this Agreement. Subject to the terms and conditions
of this Agreement, each of Buyer and the Corporation will, and will cause their
Affiliates to, use their reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary or desirable
under applicable laws and regulations to consummate the transactions
contemplated by this Agreement. The Corporation and Buyer agree to execute and
deliver such other documents, certificates, agreements and other writings and to
take such other actions as may be necessary or desirable in order to consummate
or implement expeditiously the transactions contemplated by this Agreement.
Section 7.02 Certain Filings. (a) The Corporation and Buyer will, and will
cause their Affiliates to, cooperate with one another (i) in determining whether
any action by or in respect of or filing with, any governmental body, agency,
official or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (ii) in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers. Without limiting the generality of
the foregoing, the Corporation and Buyer, to the extent required to do so in
connection with the exercise of the Warrants, shall prepare and file the
notifications required under the HSR Act in connection with the transactions
contemplated by this Agreement. The Corporation and Buyer shall respond as
promptly as practicable to (i) any inquiries or requests received from the
Federal Trade Commission or the Department of Justice for additional information
or documentation and (ii) any inquiries or requests received from any state
attorney general or other governmental body in connection with antitrust or
related matters. The Corporation and Buyer shall (A) give the other parties
prompt notice of the commencement of any action, suit, litigation, arbitration,
preceding or investigation by or before any governmental body with respect to
the transactions contemplated by this Agreement, (B) keep the other parties
informed as to the status of any such action, suit, litigation, arbitration,
preceding or investigation, and (C) promptly inform the other parties of any
communication to or from the Federal Trade Commis-sion, the Department of
Justice or any other governmental body regarding the transactions contemplated
by this Agreement.
(b) The Corporation and Buyer will, and will cause their Affiliates to,
take such actions, make such payments or commitments, and agree to such
amendments to any of their respective franchises, licenses, contracts or other
agreements or authorizations, as shall be required in order to obtain a consent,
approval or waiver from any other Person in connection with the transactions
contemplated hereby, except if such actions, payments, commitments or
amendments, considered individu-ally or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Corporation or Buyer, as the
case may be. If the Corporation or Buyer believes that such actions, payments,
commitments or amendments would have such a Material Adverse Effect, the
Corporation and Buyer shall cooperate in good faith to seek a resolution to the
circumstances which give rise to the requirement for such action, payment,
commitment or amendment or to determine an otherwise appropriate resolution.
Section 7.03 Public Announcements. Prior to the Closing, the parties agree
to consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the transactions contemplated hereby
and, except as may be required by applicable law or any listing agreement with
any national securities exchange or quotation system, will not issue any such
press release or make any such public statement prior to such consultation.
Following the Closing, the parties agree to consult with each other before
issuing any press release or making any public filing that describes any terms
of this Agreement.
Section 7.04 Registration Rights Agreement; Warrants. The terms set forth
in Exhibit C and Exhibit D hereto are hereby incorporated by reference.
Section 7.05 NASD Filing. (a) Promptly after the execution of this
Agreement, the Corporation will file with the Nasdaq Stock Market, Inc. (the
"Nasdaq") the appropriate notification form for the listing of additional shares
in a form reasonably acceptable to Buyer (the "Listing Notification") pursuant
to Rule 4310(c)(17) of the National Association of Securities Dealers, Inc. (the
"NASD") in respect of the Common Shares and Warrant Shares.
ARTICLE 8
CONDITIONS TO CLOSING
Section 8.01 Condition to Obligations of Buyer and the Corporation. The
obligations of Buyer and the Corporation to consummate the Closing are subject
to the satisfaction of the following conditions:
(a) at least 15 calendar days shall have elapsed since the filing of the
Listing Notification and Nasdaq shall not have raised any material issue with
respect thereto which has not been resolved to the reasonable satisfaction of
both Buyer and the Corporation;
(b) (i) all filings with, notifications to and consents from Regulatory
Authorities or set forth on Schedules 3.03 and 3.04 hereto required for the
consummation of the Closing, with such exceptions as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Corporation or Buyer and (ii) the Bank Consent, shall in each case have been
made or obtained, as applicable, in form and substance reasonably satisfactory
to the Corporation and Buyer;
(c) no provision of any applicable law or regulation (with such exceptions
as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Corporation or Buyer) and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing;
(d) the Note Purchase shall have been consummated;
(e) either (i) the HMTF Waiver shall have been obtained or (ii) no
anti-dilution adjustment shall be required as a result of the transactions
contemplated by this Agreement pursuant to the Series A Certificate; and
(f) the Vulcan Waiver shall be in full force and effect.
Section 8.02 Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the Closing is subject to the satisfaction of the following further
conditions:
(a) The Corporation shall have performed in all material respects all of
its obligations hereunder required to be performed by it on or prior to the
Closing;
(b) The representations and warranties of the Corporation contained in this
Agreement shall in each case, if specifically qualified by materiality, be true
and correct and, if not so qualified, be true and correct in all material
respects at and as of the Closing (except that, for the purposes of this Section
8.02(b), the representation and warranty in Section 3.12(i) shall only apply
with respect to any action, suit, investigation or proceeding instituted by a
governmental agency or authority), as if made at and as of such date (except to
the extent such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall be true and
correct, or true and correct in all material respects, as the case may be, on
and as of such earlier date);
(c) The Corporation shall have delivered to Buyer (i) a copy of the
resolutions adopted by the Board of Directors, certified by the Secretary of the
Corporation, authorizing this Agreement and the transactions contemplated hereby
and (ii) a certificate dated the Closing Date, signed by an officer of the
Corporation, certifying as to the fulfillment of the conditions set forth in
Sections 8.02(a) and (b);
(d) The Corporation shall have delivered to Buyer an opinion reasonably
acceptable to Buyer from the General Counsel of the Corporation, with respect to
the due incorporation, due authorization and capitalization of the Corporation;
and
(e) The Corporation shall have delivered to Buyer an opinion reasonably
acceptable to Buyer from Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, special
counsel to the Corporation, with respect to the valid and binding nature and
enforceability of this Agreement.
Section 8.03 Conditions to Obligation of the Corporation. The obligation of
the Corporation to consummate the Closing is subject to the satisfaction of the
following further conditions:
(a) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date;
(b) The representations and warranties of Buyer contained in this Agreement
shall in each case, if specifically qualified by materiality, be true and
correct and, if not so qualified, be true and correct in all material respects
at and as of the Closing, as if made at and as of such date (except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall be true and correct, or
true and correct in all material respects, as the case may be, on and as of such
earlier date); and
(c) The Corporation shall have received a certificate from Buyer, dated the
Closing Date, signed by an appropriate officer of Buyer certifying as to the
fulfillment of the conditions set forth in Sections 8.03(a) and 8.03(b).
ARTICLE 9
TERMINATION
Section 9.01 Grounds for Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement of the Corporation and Buyer;
(b) by either the Corporation or Buyer if the Closing shall not have been
consummated on or before July 15, 2001, unless extended by mutual agreement or
unless the failure to consummate the Closing is attributable to a failure on the
part of the party seeking to terminate this Agreement to perform any obligation
required to be performed by such party at or prior to the Closing Date; or
(c) by either the Corporation or Buyer if consummation of the transactions
contemplated hereby would violate any nonappealable final order, decree or
judgment of any court or governmental body having competent jurisdiction.
Any party desiring to terminate this Agreement pursuant to Section 9.01(b) or
9.01(c) shall promptly give notice of such termination to the other parties.
Section 9.02 Effect of Termination. If this Agreement is terminated as
permitted by Section 9.01, such termination shall be without liability of any
party (or any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other parties to this Agreement; provided
that if such termination shall result from the willful (a) failure of any party
to fulfill a condition to the performance of the obligations of the other
parties, (b) failure to perform a covenant of this Agreement or (c) breach by
any parties hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all losses incurred or
suffered by the other parties as a result of such failure or breach. The
provisions of Sections 6.01, 9.02, 11.01, 11.03, 11.05, 11.06, 11.07, 11.08,
11.09, 11.10, and 11.12 shall survive any termination hereof pursuant to Section
9.01.
ARTICLE 10
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival of Representation and Warranties. All
representations and warranties contained in this Agreement and all claims with
respect thereto shall terminate upon the expiration of 18 months after the
Closing Date, except that the representations and warranties contained in
Sections 3.01, 3.02, 3.03, 3.06, 4.01, 4.02, and 4.03 shall survive
indefinitely. Notwithstanding the preceding sentence, any representation or
warranty in respect of which indemnity may be sought under this Agreement shall
survive the time at which it would otherwise terminate pursuant to the preceding
sentence, if notice of the inaccuracy or breach thereof giving rise to such
right of indemnity shall have been given in
reasonable detail to the party against whom such indemnity may be sought prior
to such time.
Section 10.02 Indemnification. (a) In the event that the Closing shall
occur, the Corporation shall indemnify Buyer against and agrees to hold Buyer
harmless from any and all damage, loss, liability and expense (including,
without limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit or proceeding)
("Damages") incurred or suffered by Buyer arising out of any misrepresentation
or breach of warranty, covenant or agreement made or to be performed by the
Corporation pursuant to this Agreement; provided that (i) the Corporation shall
not be liable to Buyer under this Section 10.02(a) unless the aggregate amount
of Buyer's Damages with respect to all matters referred to in this Section
10.02(a) exceeds $1 million, in which event Buyer shall be entitled to make a
claim against the Corporation for the full amount of such Damages, and (ii) the
Corporation's maximum liability under this Section 10.02(a) with respect to
Buyer shall not exceed $50 million. In the event that such indemnity is payable
by the Corporation, the Corporation will advance or reimburse each Buyer to
which such indemnity is payable (in lieu of the amount set forth in the
preceding sentence) an amount equal to the product of (x) such Damages and (y)
the Gross Up Adjustment. "Gross Up Adjustment" means, with respect to Buyer, a
fraction, the numerator of which is one and the denominator of which is the
difference between (A) one, and (B) Buyer's percentage ownership of the
outstanding Common Stock and Class B Stock (assuming the conversion, exercise or
exchange of all Convertible Securities and expressed as a decimal) at the time
of payment of such Damages.
(b) In the event that the Closing shall occur, Buyer shall indemnify the
Corporation against and agrees to hold the Corporation harmless from any and all
Damages incurred or suffered by the Corporation arising out of any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Buyer pursuant to this Agreement; provided that (i) Buyer shall not
be liable under this Section 10.02(b) unless the aggregate amount of Damages
attributable to Buyer with respect to all matters referred to in this Section
10.02(b) exceeds $1 million, in which event the Corporation shall be entitled to
make a claim against Buyer for the full amount of such Damages, and (ii) Buyer's
maximum liability under this Section shall not exceed $50 million.
Section 10.03 Procedures. Any party seeking indemnification under Section
10.02 (the "Indemnified Party") agrees to give prompt notice to the party
against whom indemnity is sought (the "Indemnifying Party") of the assertion of
any claim, or the commencement of any suit, action or proceeding in respect of
which indemnity may be sought under such Section. The Indemnifying Party may at
its election participate in and control the defense of any such suit, action or
proceeding at its own expense. The Indemnifying Party shall not be liable under
Section 10.02 for any settlement effected without its consent of any claim,
litigation or proceeding in
respect of which indemnity may be sought hereunder.
Section 10.04 Inspection; No Other Representations. Buyer is an informed
and sophisticated purchaser, and has undertaken such investigation and has been
provided with and has evaluated such documents and information as it has deemed
necessary to enable it to make an informed and intelligent decision with respect
to the execution, delivery and performance of this Agreement. Buyer will
undertake prior to the Closing such further investigation and request such
additional documents and information as it deems necessary. Buyer agrees to
accept the Common Shares it is purchasing based upon its own inspection,
examination and determination with respect thereto as to all matters, and
without reliance upon any express or implied representations or warranties of
any nature made by or on behalf of or imputed to the Corporation, except as
expressly set forth in this Agreement. Without limiting the generality of the
foregoing, Buyer acknowledges that the Corporation makes no representation or
warranty with respect to (i) any projections, estimates or budgets delivered to
or made available to Buyer of future revenues, future results of operations (or
any component thereof), future cash flows or future financial condition (or any
component thereof) of the Corporation and the Subsidiaries or the future
business and operations of the Corporation and its Subsidiaries or (ii) any
other information or documents made available to Buyer or its counsel,
accountants or advisors with respect to the Corporation or its Subsidiaries or
their respective businesses or operations, except as expressly set forth in this
Agreement.
Section 10.05 Exclusivity. Except for Buyer's rights to indemnification set
forth in Section 10.02 of this Agreement and except in the case of fraud,
effective as of the Closing Buyer waives any rights and claims Buyer may have
against the Corporation, whether in law or in equity, relating to the
transactions contemplated hereby. The rights and claims waived by Buyer include,
without limitation, claims for breach of contract, breach of representation or
warranty, negligent misrepresentation and all other claims for breach of duty.
After the Closing, Section 10.02 will provide the exclusive remedy for any
misrepresentation, breach of warranty, covenant or other agreement or other
claim arising out of this Agreement or the transactions contemplated hereby,
except in the case of fraud.
ARTICLE 11
MISCELLANEOUS
Section 11.01 Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be deemed duly given,
effective (i) three Business Days later, if sent by registered or certified
mail, return receipt requested, postage prepaid, (ii) when sent if sent by
telecopier or fax, provided that the telecopy or fax is promptly confirmed by
telephone confirmation thereof (iii) when served, if delivered personally to the
intended recipient, and (iv) one Business Day later, if sent by overnight
delivery via a national courier service, and in each case, addressed,
if to BUYER, to:
Red Basin, LLC
x/x Xxxxxx Xxxxxxx
000 Xxxxxx Xxxxx
000 Xxxxx 00xx Xxxxxx
Xxxxx XX 00000
Attention: Xxxx Xxxxx / Xxxxxx Xxxxxxxx
Fax: (000) 000-0000
with a copy to:
Fraser Stryker
000 Xxxxxx Xxxxx
000 Xxxxx 00xx Xxxxxx
Xxxxx XX 00000
Attention: Xxxx Xxxxx / Xxxxxx Xxxxxxxx
Fax: (000) 000-0000
and to:
Xxxxxxx Xxxx and Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx/Xxxx Xxxxxxxx
Fax: (000)000-0000
if to the Corporation, to:
RCN Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx, LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
Any party may change the address to which notices or other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
Section 11.02 Amendments and Waivers. Any provision of this Agreement may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement, or in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative.
Section 11.03 Expenses. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
Section 11.04 Assignment. The rights and obligations of the parties
hereunder cannot be assigned or delegated except that (i) Buyer may assign all
of its rights and obligations under this Agreement to a single Controlled
Affiliate (provided that (A) any such Controlled Affiliate continues to be a
Controlled Affiliate of Buyer and (B) Buyer shall be responsible for any breach
by such Controlled Affiliate), (ii) Buyer may assign all or a portion of its
rights and obligations under this Agreement to any Buyer Member, provided that
such Buyer Member enters into an agreement in form and substance reasonably
acceptable to the Corporation pursuant to which such Buyer Member agrees to be
bound by the terms of this Agreement, (iii) Buyer may assign its rights and
obligations under this Agreement to any one or more Affiliated Permitted
Transferees (if the related transfer is not a sale made under Rule 144 under the
Exchange Act) and (iv) Buyer may assign its rights and obligations under Section
7.04 and Exhibit B of this Agreement solely with respect to one Demand
Registration (as defined in Exhibit B) to a Permitted Transferee that
concurrently therewith acquires in the aggregate from Buyer or its Affiliated
Permitted Transferees at least 20% of the shares of Common Stock being purchased
by Buyer pursuant to this Agreement and agrees in writing to be bound by the
terms of this Agreement (the
"Demand Transferee").
Section 11.05 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL CORPORATION LAW) AS TO ALL MATTERS, INCLUDING, BUT NOT LIMITED
TO, MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.
Section 11.06 Jurisdiction. Except as otherwise expressly provided in this
Agreement, the parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may only
be brought in the United States District Court for the Southern District of New
York or any New York State court sitting in New York City, and each of the
parties hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 11.01 shall be deemed
effective service of process on such party.
Section 11.07 Counterparts; Third-Party Beneficiaries. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. No
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder, except for rights provided to
Permitted Transferees under Section 7.04.
Section 11.08 Entire Agreement. This Agreement (including the Exhibits
hereto) constitutes the entire agreement between the parties with respect to the
subject matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
Section 11.09 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
Section 11.10 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 11.11 Specific Performance. The parties hereto agree that the
remedy at law for any breach of this Agreement will be inadequate and that any
party by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to any court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in other to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief
Section 11.12 No Recourse. Notwithstanding any of the terms or provisions
of this Agreement, (i) the Corporation agrees that neither it nor any Person
acting on its behalf may assert any claims or cause of action against any
officer, director, partner, member or stockholder of Buyer or any of its
Affiliates in connection with or arising out of this Agreement or the
transactions contemplated hereby and (ii) each Buyer agrees that neither it nor
any Person acting on its behalf may assert any claims or cause of action against
any officer, director, partner, member or stockholder of the Corporation or any
of its Affiliates in connection with or arising out of this Agreement or the
transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
RCN CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
RED BASIN, LLC
By: /s/ Xxxxxx Xxxxx, Xx.
------------------------------
Name: Xxxxxx Xxxxx, Xx.
Title: Manager, Red Basin, LLC
EXHIBIT B
REGISTRATION RIGHTS
This constitutes Exhibit B to the Stock Purchase Agreement (as it may be
amended from time to time, the "Stock Purchase Agreement") dated as of May 28,
2001 between RCN Corporation, a Delaware corporation (the "Corporation"), and
Red Basin, LLC, a Nebraska limited liability company (the "Buyer").
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. Terms defined in the Stock Purchase Agreement
are used herein as therein defined. In addition, the following terms, as used
herein, have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Holder" means a person who owns Registrable Securities and is either (a)
Buyer, (b) an Affiliated Permitted Transferee or (c) the Demand Transferee.
"Piggyback Registration" means a Piggyback Registration as defined in
Section 2.02.
"Registrable Securities" means (i) shares of Common Stock issued pursuant
to the Stock Purchase Agreement, (ii) shares issued upon exercise of the
Warrants (as defined in the Stock Purchase Agreement), (iii) shares of Common
Stock acquired under Section 5.04 of the Stock Purchase Agreement and (iv) any
additional shares of Common Stock issued in respect of the shares referred to in
(i), (ii) and (iii) in connection with a stock split, stock dividend or similar
event with respect to the Common Stock. As to any particular Registrable
Securities, such Registrable Securities shall cease to be Registrable Securities
as soon as they (i) have been sold or otherwise disposed of pursuant to a
registration statement that was filed with the Commission and declared effective
under the Securities Act, (ii) are eligible for sale pursuant to Rule 144
without being subject to applicable volume limitations thereunder, (iii) have
been otherwise sold, transferred or disposed of by a Holder to any Person that
is not a Holder, or (iv) have ceased to be outstanding.
"Rule 144" means Rule 144 (or any successor rule of similar effect)
promulgated under the Securities Act.
"Selling Holder" means any Holder who is selling Registrable Securities
pursuant to a public offering registered hereunder.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
Section 1.02. Internal References. Unless the context indicates otherwise,
references to Articles, Sections and paragraphs shall refer to the corresponding
articles, sections and paragraphs in this Exhibit B, and references to the
parties shall mean the parties to the Stock Purchase Agreement.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.01 Demand Registration. (a) Buyer, on its own behalf and on
behalf of the other Holders, may make up to three written requests for
registration under the Securities Act of all or any part of the Registrable
Securities held by the Holders (each, a "Demand Registration"); provided that
(i) Buyer may not request a Demand Registration before the first anniversary of
the Closing Date, (ii) no Demand Registration may be requested within 180 days
after the preceding request for a Demand Registration, and (iii) each Demand
Registration must be (x) in respect of Registrable Securities with a fair market
value of at least $25,000,000 or (y) in respect of all remaining Registrable
Securities and have a fair market value of at least $5,000,000. Such request
will specify the aggregate number of shares of Registrable Securities proposed
to be sold and will also specify the intended method of disposition thereof. A
registration will not count as a Demand Registration until it has become
effective. Should a Demand Registration not become effective due to the failure
of a Holder to perform its obligations under this Exhibit B or the inability of
the requesting Holders to reach agreement with the Underwriters for the proposed
sale on price or other customary terms for such transaction, or in the event the
requesting Holders withdraw or do not pursue the request for the Demand
Registration (in each of the foregoing cases, provided that at such time the
Corporation is in compliance in all material respects with its obligations under
this Exhibit B), then such Demand Registration shall be deemed to have been
effected (provided that if the Demand Registration does not become effective
because of a material adverse change in the condition (financial or otherwise),
business, assets or results of operations of the Corporation and its
Subsidiaries taken as a whole that occurs subsequent to the date of the written
request made by the requesting Holders,
then the Demand Registration shall not be deemed to have been effected).
(b) In the event that the requesting Holders withdraw or do not pursue a
request for a Demand Registration and, pursuant to Section 2.01(a) hereof, such
Demand Registration is deemed to have been effected, the Holders may reacquire
such Demand Registration (such that the withdrawal or failure to pursue a
request will not count as a Demand Registration hereunder) if the Holders
reimburse the Corporation for any and all Registration Expenses incurred by the
Corporation in connection with such request for a Demand Registration; provided
that the right to reacquire a Demand Registration may be exercised a maximum of
two times.
(c) If the Selling Holders so elect, the offering of such Registrable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. A majority in interest of the Selling Holders shall have
the right to select the managing Underwriters and any additional investment
bankers and managers to be used in connection with such offering, subject to the
Corporation's approval, which approval shall not be unreasonably withheld.
(d) The Selling Holders will inform the Corporation of the time and manner
of any disposition of Registrable Securities, and agree to reasonably cooperate
with the Corporation in effecting the disposition of the Registrable Securities
in a manner that does not unreasonably disrupt the public trading market for the
Common Stock.
(e) The Corporation will have the right to preempt any Demand Registration
with a primary registration by delivering written notice (within five business
days after the Corporation has received a request for such Demand Registration)
of such intention to Buyer indicating that the Corporation has identified a
specific business need and use for the proceeds of the sale of such securities
and the Corporation shall use commercially reasonable efforts to effect a
primary registration within 60 days of such notice. In the ensuing primary
registration, the Holders will have such piggyback registration rights as are
set forth in Section 2.02 hereof. Upon the Corporation's preemption of a
requested Demand Registration, such requested registration will not count as a
Demand Registration; provided that a Demand Registration will not be deemed
preempted if the Holders are permitted to sell all requested securities in
connection with the ensuing primary offering by exercising their piggyback
registration rights as set forth in Section 2.02. The Corporation may exercise
the right to preempt only twice in any 360-day period; provided, that during any
360-day period there shall be a period of at least 120 consecutive days during
which the Selling Holders may effect a Demand Registration.
(f) Subject to Section 2.03, the Corporation will be entitled to include in
a Demand Registration shares of Common Stock for its own account or for the
account of other Persons.
Section 2.02 Piggyback Registration. If the Corporation proposes to file a
registration statement under the Securities Act with respect to an offering of
Common Stock for its own account or for the account of another Person (other
than a registration statement on Form S-4 or S-8 or pursuant to Rule 415 (or any
substitute form or rule, respectively, that may be adopted by the Commission)),
the Corporation shall give written notice of such proposed filing to the Holders
at the address set forth in the share register of the Corporation as soon as
reasonably practicable (but in no event less than 10 days before the anticipated
filing date), and such notice shall offer each Holder the opportunity to
register on the same terms and conditions such number of shares of Registrable
Securities as such Holder may request (a "Piggyback Registration"). Each Holder
will have five business days after receipt of any such notice to notify the
Corporation as to whether it wishes to participate in a Piggyback Registration;
provided that should a Holder fail to provide timely notice to the Corporation,
such Holder will forfeit any rights to participate in the Piggyback Registration
with respect to such proposed offering. In the event that the registration
statement is filed on behalf of a Person other than the Corporation, the
Corporation will use its best efforts to have the shares of Registrable
Securities that the Holders wish to sell included in the registration statement.
If the Corporation shall determine in its sole discretion not to register or to
delay the proposed offering, the Corporation may, at its election, provide
written notice of such determination to the Holders and (i) in the case of a
determination not to effect the proposed offering, shall thereupon be relieved
of the obligation to register such Registrable Securities in connection
therewith, and (ii) in the case of a determination to delay a proposed offering,
shall thereupon be permitted to delay registering such Registrable Securities
for the same period as the delay in respect of the proposed offering. As between
the Corporation and the Selling Holders, the Corporation shall be entitled to
select the Underwriters in connection with any Piggyback Registration.
Section 2.03 Reduction of Offering. Notwithstanding anything contained
herein, if the managing Underwriter of an offering described in Section 2.01 or
2.02 states in writing that the size of the offering that Holders, the
Corporation and any other Persons intend to make is such that the inclusion of
the Registrable Securities would be likely to materially and adversely affect
the price, timing or distribution of the offering, then the amount of
Registrable Securities to be offered for the account of Holders shall be reduced
to the extent necessary to reduce the total amount of securities to be included
in such offering to the amount recommended by such managing Underwriter;
provided that in the case of a Piggyback Registration, if securities are being
offered for the account of Persons other than the Corporation, then the
proportion by which the amount of Registrable Securities intended to be
offered for the account of Holders is reduced shall not exceed the proportion by
which the amount of securities intended to be offered for the account of such
other Persons (other than any Person exercising a demand registration right) is
reduced; provided further that in the case of a Demand Registration, the amount
of Registrable Securities to be offered for the account of the Holders making
the Demand Registration shall be reduced only after the amount of securities to
be offered for the account of the Corporation and any other Persons has been
reduced to zero. In the event of a reduction pursuant to this Section 2.03 of
Registrable Securities to be offered for the account of Holders, such reduction
shall be pro rata among such Holders based on the number of Registrable
Securities each Holder had proposed to sell.
Section 2.04 Preservation of Rights. The Corporation will not grant any
registration rights to third parties which contravene the rights granted
hereunder.
ARTICLE 3
REGISTRATION PROCEDURES
Section 3.01 Filings; Information. In connection with a Demand
Registration pursuant to Section 2.01 hereof, the Corporation will use its
reasonable best efforts to effect the registration of such Registrable
Securities as promptly as is reasonably practicable, and in connection with any
such request:
(a) The Corporation will expeditiously prepare and file with the Commission
a registration statement on any form for which the Corporation then qualifies
and which counsel for the Corporation shall deem appropriate and available for
the sale of the Registrable Securities to be registered thereunder in accordance
with the intended method of distribution thereof and use its reasonable best
efforts to cause such filed registration statement to become and remain
effective for such period, not to exceed 60 days, as may be reasonably necessary
to effect the sale of such securities; provided that if the Corporation shall
furnish to Buyer a certificate signed by the Corporation's Chairman, President
or any Vice-President stating that in his or her good faith judgment it would be
detrimental or otherwise disadvantageous to the Corporation or its shareholders
for such a registration statement to be filed as expeditiously as possible
(because the sale of Registrable Securities covered by such Registration
Statement or the disclosure of information in any related prospectus or
prospectus supplement would materially interfere with any acquisition, financing
or other material event or transaction which is then intended or the public
disclosure of
which at the time would be materially prejudicial to the Corporation), the
Corporation may postpone the filing or effectiveness of a registration statement
for a period of not more than 120 days; provided, that during any 360-day period
there shall be a period of at least 120 consecutive days during which the
Corporation will make a registration statement available under this Exhibit B;
and provided further, that if (i) the effective date of any registration
statement filed pursuant to a Demand Registration would otherwise be at least
45 calendar days, but fewer than 90 calendar days, after the end of the
Corporation's fiscal year, and (ii) the Securities Act requires the Corporation
to include audited financials as of the end of such fiscal year, the Corporation
may delay the effectiveness of such registration statement for such period as is
reasonably necessary to include therein its audited financial statements for
such fiscal year.
(b) The Corporation will, if requested, prior to filing such registration
statement or any amendment or supplement thereto, furnish to the Selling
Holders, and each applicable managing Underwriter, if any, copies thereof, and
thereafter furnish to the Selling Holders and each such Underwriter, if any,
such number of copies of such registration statement, amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein) and the prospectus included in such registration statement
(including each preliminary prospectus) as the Selling Holders or each such
Underwriter may reasonably request in order to facilitate the sale of the
Registrable Securities by the Selling Holders.
(c) After the filing of the registration statement, the Corporation will
promptly notify the Selling Holders of any stop order issued or, to the
Corporation's knowledge, threatened to be issued by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
(d) The Corporation will use its reasonable best efforts to qualify the
Registrable Securities for offer and sale under such other securities or blue
sky laws of such jurisdictions in the United States as the Selling Holders
reasonably request; provided that the Corporation will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph 3.01(d), (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction.
(e) The Corporation will as promptly as is practicable notify the Selling
Holders, at any time when a prospectus relating to the sale of the Registrable
Securities is required by law to be delivered in connection with sales by an
Underwriter or dealer, of the occurrence of any event requiring the preparation
of a supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and promptly make
available to the Selling Holders, and to the Underwriters, any such supplement
or amendment. Upon receipt of any notice from the Corporation of the occurrence
of any event of the kind described in the preceding sentence, the Selling
Holders will forthwith discontinue the offer and sale of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until receipt by the Selling Holders and the Underwriters of the copies of such
supplemented or amended prospectus and, if so directed by the Corporation, the
Selling Holders will deliver to the Corporation all copies, other than permanent
file copies then in the possession of Selling Holders, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice. In the event the Corporation shall give such notice, the Corporation
shall extend the period during which such registration statement shall be
maintained effective as provided in Section 3.01(a) hereof by the number of days
during the period from and including the date of the giving of such notice to
the date when the Corporation shall make available to the Selling Holders such
supplemented or amended prospectus.
(f) The Corporation will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the sale of such
Registrable Securities.
(g) At the request of any Underwriter in connection with an underwritten
offering the Corporation will furnish (i) an opinion of counsel, addressed to
the Underwriters, covering such customary matters as the managing Underwriter
may reasonably request and (ii) a comfort letter or comfort letters from the
Corporation's independent public accountants covering such customary matters as
the managing Underwriter may reasonably request.
(h) The Corporation will make generally available to its security holders,
as soon as reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(i) The Corporation will use commercially reasonable efforts to cause all
such Registrable Securities to be listed on each securities exchange or quoted
on each inter-dealer quotation system on which the Common Stock is then listed
or quoted.
Section 3.02 Selling Holder Information. The Corporation may require
Selling Holders promptly to furnish in writing to the Corporation such
information regarding such Selling Holders, the plan of distribution of the
Registrable Securities and other information as the Corporation may from time to
time reasonably request or as may be legally required in connection with any
Demand Registration or Piggyback Registration.
Section 3.03 Registration Expenses. In connection with any Demand
Registration, the Corporation shall pay the following expenses incurred in
connection with such registration (the "Registration Expenses"): (i)
registration and filing fees with the Commission and the National Association of
Securities Dealers, Inc., (ii) fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities), (iii)
printing expenses, (iv) fees and expenses incurred in connection with the
listing or quotation of the Registrable Securities, (v) fees and expenses of
counsel to the Corporation and the reasonable fees and expenses of independent
certified public accountants for the Corporation (including fees and expenses
associated with special audits or the delivery of comfort letters) and (vi) the
reasonable fees and expenses of any additional experts retained by the
Corporation in connection with such registration. In connection with any
Piggyback Registration, the Corporation shall pay the Registration Expenses set
forth in clauses (ii) through (vi) of the preceding sentence. The Selling
Holders shall pay (i) any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities, (ii) fees and expenses of
counsel for the Selling Holders and (iii) any out-of-pocket expenses of the
Selling Holders. In connection with any Piggyback Registration, the Selling
Holders shall pay, in addition to items (i) through (iii) of the preceding
sentence, registration and filing fees with the Commission and the National
Association of Securities Dealers Inc., in proportion to the ratio that the
number of shares of Registrable Securities being registered for the account of
the Selling Holders bears to the aggregate number of shares of Common Stock
being included in the applicable registration statement.
ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
Section 4.01 Indemnification by the Corporation. The Corporation agrees to
indemnify and hold harmless each Selling Holder and its Affiliates and their
respective officers, directors, partners, stockholders, members, employees,
agents
and representatives and each Person (if any) which controls a Selling Holder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees) caused
by, arising out of or resulting from or related to any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Corporation shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by or contained in or
based upon any information furnished in writing to the Corporation by or on
behalf of such Selling Holder or any Underwriter expressly for use therein or by
the Selling Holder's or Underwriter's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Corporation has furnished the Selling Holder or the Underwriter with
copies of the same. The Corporation also agrees to indemnify any Underwriters of
the Registrable Securities, their officers and directors and each Person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 4.01.
Section 4.02 Indemnification by Selling Holders. Each Selling Holder agrees
to indemnify and hold harmless the Corporation, its officers and directors, and
each Person, if any, which controls the Corporation within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Corporation to each Selling Holder,
but only with reference to information furnished in writing by or on behalf of
such Selling Holder expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus. Each Selling Holder also
agrees to indemnify and hold harmless any Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Corporation provided in this Section 4.02.
Section 4.03 Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to Section 4.01 or
Section 4.02, such Person (the "Indemnified Party") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party, upon the request of the Indemnified Party,
shall retain counsel reasonably satisfactory to such Indemnified Party to
represent such Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the Indemnified Party and the Indemnifying Party and, in
the written opinion of counsel for the Indemnified Party, representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent (not to
be unreasonably withheld), or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
Section 4.04 Contribution. If the indemnification provided for in this
Article 4 is unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities in respect of which indemnity is to be provided
hereunder, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall to the fullest extent permitted by law contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of such party in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of the Corporation,
a Selling Holder and the Underwriters 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
information supplied by such party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Corporation and each Selling Holder agrees that it would not be just
and equitable if contribution pursuant to this Section 4.04 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article 4, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and each Selling
Holder shall not be required to contribute any amount in excess of the amount by
which the net proceeds of the offering (before deducting expenses) received by
such Selling Holder exceeds the amount of any damages which such Selling Holder
has otherwise been required to pay by reason of such 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.
ARTICLE 5
MISCELLANEOUS
Section 5.01 Participation in Underwritten Registrations. No Person may
participate in any underwritten registered offering contemplated hereunder
unless such Person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, (b) completes and executes all questionnaires, powers
of attorney, custody arrangements, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Exhibit B and (c) furnishes in writing to the Corporation
such information regarding such Person, the plan of distribution of the
Registrable Securities and other information as the Corporation may from time to
time request or as may be legally required in connection with such registration.
Section 5.02 Rule 144. The Corporation covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as the Holders may reasonably request
to the
extent required from time to time to enable the Holders to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission. Upon the request of Selling Holders, the Corporation
will deliver to the Selling Holders a written statement as to whether it has
complied with such reporting requirements.
Section 5.03 Holdback Agreements. Each Holder agrees, in the event of an
underwritten offering for the Corporation (whether for the account of the
Corporation or otherwise) not to offer, sell, contract to sell or otherwise
dispose of any Registrable Securities or other Common Stock, or any securities
convertible into or exchangeable or exercisable for any of the foregoing,
including any sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten offering), during the 14 days prior to, and during the
180-day period (or such lesser period as the lead or managing Underwriter may
agree) beginning on, the effective date of the registration statement for such
underwritten offering (or, in the case of an offering pursuant to an effective
shelf registration statement pursuant to Rule 415, the pricing date for such
underwritten offering).
Section 5.04 Termination. The registration rights granted under this
Agreement will terminate on the fifteenth anniversary of the Closing Date.
Section 5.05 Holder Determinations. In the event any determination is to be
made by the Holders or the Selling Holders as a group, such determination shall
be made by Holders or Selling Holders holding a majority in interest of the
Registrable Securities or the Registrable Securities being sold, respectively.
Exhibit C
--------------------------------------------------------------------------------
WARRANT
to Purchase Common Stock of
RCN Corporation
--------------------------------------------------------------------------------
Warrant No. [ ]
Original Issue Date: [ ]
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR ANY OF THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE SECURITIES "ACT"), OR ANY STATE SECURITIES LAW. THE HOLDER
OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY, OTHER THAN (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, OR (C) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION REASONABLY
SATISFACTORY TO IT. IN ADDITION, THE WARRANTS REPRESENTED BY THIS CERTIFICATE
AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO TRANSFER AND
OTHER RESTRICTIONS CONTAINED IN THE STOCK PURCHASE AGREEMENT DATED AS OF MAY 28,
2001 BETWEEN THE COMPANY AND RED BASIN, LLC. IN CONNECTION WITH ANY TRANSFER,
THE HOLDER WILL DELIVER TO THE COMPANY SUCH CERTIFICATES AND OTHER INFORMATION
AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.
Warrant No. [ ]
WARRANT
RCN CORPORATION
THIS IS TO CERTIFY THAT RED BASIN, LLC is entitled, at any time from and
after the Exercisability Date (such term, and certain other capitalized terms
used herein being hereinafter defined) and prior to the Expiration Date, to
purchase from RCN CORPORATION, a Delaware corporation (the "Company"), 3,830,537
shares of Common Stock (subject to adjustment as provided in Section 4 hereof),
at the Exercise Price (subject to adjustment as provided in Section 4 hereof),
all on the terms and conditions and pursuant to the provisions hereinafter set
forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective meanings
set forth below:
"Beneficially Owned" or "Beneficial Owner" shall have the interpretation
set forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
"Business Day" shall mean any day that is not a Saturday or Sunday or a day
on which banks are required or permitted to be closed in the State of New York.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise indicates)
the Common Stock of the Company, par value $0.01 per share, as constituted on
the Original Issue Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include shares of common stock of any
successor or acquiring corporation (as defined in Section 4.3 hereof received by
or distributed to the holders of Common Stock of the Company in the
circumstances contemplated by Section 4.3 hereof.
"Designated Office" shall have the meaning set forth in Section 10 hereof.
"Exercisability Date" shall mean the later of (i) [Insert 180-Day
anniversary of Closing under stock Purchase Agreement], (ii) such time after the
expiration of the applicable waiting period in respect of any filing required to
be made prior to the exercise of all or any portion of this Warrant under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and (iii) such
time after all notices, approvals, consents or waivers, if any, that may be
required by Regulatory Authorities (as defined in the Stock Purchase
Agreement) shall have been made or obtained, as applicable.
"Exercise Date" shall have the meaning set forth in Section 2.1(a) hereof.
"Exercise Notice" shall have the meaning set forth in Section 2.1(a)
hereof.
"Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1 hereof.
"Exercise Price" shall mean, in respect of a share of Common Stock at any
date herein specified, $12.928 per share, as adjusted from time to time pursuant
to Section 4 hereof.
"Expiration Date" shall mean [Insert date 54 months after issuance], 2005.
"Holder" shall mean the Person in whose name the Warrant set forth herein
is registered from time to time on the books of the Company maintained for such
purpose.
"Opinion of Counsel" means a written opinion of counsel (who may be an
employee of a Holder) experienced in Securities Act matters chosen by the holder
of this Warrant or Warrant Stock issued upon the exercise hereof and reasonably
acceptable to the Company.
"Original Issue Date" shall mean the date on which the Original Warrants
were issued, as set forth on the cover page of this Warrant.
"Original Warrants" shall mean the Warrants originally issued by the
Company on the Original Issue Date to RED BASIN, LLC.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, incorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Restricted Common Stock" shall mean shares of Common Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 8.2(a) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement by and
between the Company and Red Basin, LLC, dated as of May 28, 2001, as it may be
amended and restated from time to time in accordance with its terms.
"Subsidiary" means any corporation or association more than 50% (by number
of votes) of the voting stock of which is at the time owned by the Company or by
one or more Subsidiaries or by the Company and one or more Subsidiaries, or any
other business entity in which the Company or one or more Subsidiaries or the
Company and one or more Subsidiaries own more than a 50% interest either in the
profits or capital of such business entity.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock or of
any interest in either thereof, which would constitute a "sale" thereof within
the meaning of the Securities Act.
"Warrant Price" shall mean an amount equal to (i) the number of shares of
Common Stock being purchased upon exercise of this Warrant pursuant to Section
2.1 hereof, multiplied by (ii) the Exercise Price as of the date of such
exercise.
"Warrants" shall mean the Original Warrants and all warrants issued upon
transfer, division or combination of, or in substitution for, such Original
Warrants or any other such Warrant. All Warrants shall at all times be identical
as to terms and conditions and date, except as to the number of shares of Common
Stock for which they may be exercised.
"Warrant Stock" generally shall mean the shares of Common Stock issued,
issuable or both (as the context may require) upon the exercise of Warrants
until such time as such shares of Common Stock have either been (i) Transferred
in a public offering pursuant to a registration statement filed under the
Securities Act or (ii) Transferred in a transaction exempt from the registration
and prospectus delivery requirements of the Securities Act under Rule 144
thereunder with all transfer restrictions and restrictive legends with respect
to such Common Stock being removed in connection with such transaction.
2. EXERCISE OF WARRANT
2.1 Manner of Exercise.
(a) From and after the Exercisability Date and until 5:00 P.M., New York
City time, on the Expiration Date, the Holder may from time to time exercise
this Warrant, on any Business Day, for all or any part of the number of shares
of Common Stock purchasable hereunder (subject to adjustment pursuant to Section
4 hereof). In order to exercise this Warrant, in whole or in part, the Holder
shall (i) deliver to the Company at the Designated Office (as defined herein) a
written notice of the Holder's election to exercise this Warrant (an "Exercise
Notice"), which Exercise Notice shall be irrevocable and specify the number of
shares of Common Stock to be purchased, together with this Warrant and (ii)
pay to the Company the Warrant Price (the date on which both such delivery and
payment shall have first taken place being hereinafter sometimes referred to as
the "Exercise Date") by delivery of a certified or official bank check in the
amount of such Warrant Price. Such Exercise Notice shall be in the form of the
subscription form attached as Annex A to this Warrant, duly executed by the
Holder or its duly authorized agent or attorney. In the event that a certificate
is surrendered for exercise of less than all the Warrants represented by such
certificate at any time prior to the Expiration Date, a new certificate
representing the remaining Warrants shall be issued.
(b) Upon receipt of such Exercise Notice, Warrant and payment of the
Warrant Price, the Company shall, as promptly as practicable, and in any event
within five (5) Business Days thereafter, execute (or cause to be executed) and
deliver (or cause to be delivered) to the Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereafter provided. The stock certificate or certificates so delivered shall be,
to the extent possible, in such denomination or denominations as the exercising
Holder shall reasonably request in the Exercise Notice and shall be registered
in the name of the Holder or such other name as shall be designated in the
Exercise Notice. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder
or any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the Exercise
Date; provided, however, that a Holder shall not be entitled to revoke, rescind
or modify its Exercise Notice after such notice is delivered to the Company.
(c) If this Warrant shall have been exercised in part, the Company shall,
at the time of delivery of the certificate or certificates representing the
shares of Common Stock being issued, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant. Such new Warrant shall in all other respects
be identical with this Warrant.
2.2 No Liens. All shares of Common Stock issuable upon the exercise of this
Warrant pursuant to the terms hereof shall be validly issued, fully paid and
nonassessable, issued without violation of any preemptive rights and free and
clear of all liens (other than any created by actions of the Holder).
2.3 Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant and, in lieu
thereof, the Company shall pay a cash adjustment in respect of fractional share
in an amount equal to the same fraction of the market value of one share of
Common Stock on the Exercise Date, with such market value being equal to the
average of the closing sales prices per share of Common Stock for the twenty
consecutive trading days preceding such date.
2.4 Continued Validity and Application. A holder of shares of Warrant
Stock issued upon the exercise of this Warrant, in whole or in part, including
any transferee of such shares (other than a transferee in whose hands such
shares no longer constitute Warrant Stock as defined herein), shall continue,
with respect to such shares, to be entitled to all rights and to be subject to
all obligations that are applicable to such holder by the terms of this Warrant.
3. TRANSFER, DIVISION AND COMBINATION
3.1 Transfer. Subject to compliance with Section 8 hereof, each transfer of
this Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the Designated Office, together with a written assignment of
this Warrant in the form attached as Annex B to this Warrant, duly executed by
the Holder or its duly authorized agent or attorney. Upon such surrender and
delivery, the Company shall, subject to Section 8 hereof, execute and deliver a
new Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned
and this Warrant shall promptly be cancelled. A Warrant, if properly assigned in
compliance with Section 8 hereof, may be exercised by the new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2 Division and Combination. Subject to compliance with the applicable
provisions of this Warrant, this Warrant may be divided or combined with other
Warrants upon presentation hereof at the Designated Office, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with the applicable provisions of this Warrant as to any transfer
which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to
be divided or combined in accordance with such notice.
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense any new Warrant or Warrants required to be issued under this Section 3.
3.4 Maintenance of Books. The Company agrees to maintain, at the Designated
Office, books for the registration and transfer of the Warrants.
4. ANTIDILUTION PROVISIONS
The number of shares of Common Stock for which this Warrant is exercisable
and the Exercise Price shall be subject to adjustment from time to time as set
forth in this Section 4.
4.1 Stock Dividends, Subdivisions and Combinations. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in, or other distribution
of, additional shares of Common Stock,
(b) subdivide, split or reclassify its outstanding shares of Common
Stock into a larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then the Exercise Price shall be adjusted to equal the product of the Exercise
Price in effect immediately prior to such event multiplied by a fraction the
numerator of which is equal to the number of shares of Common Stock outstanding
immediately prior to the adjustment and the denominator of which is equal to the
number of shares of Common Stock outstanding immediately after such adjustment.
4.2 Adjustment of Number of Shares Purchasable. Upon any adjustment of the
Exercise Price as provided in Sections 4.1 and 4.3 hereof, as applicable, the
Holder hereof shall thereafter be entitled to purchase upon the exercise of this
Warrant, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest 1/100th of a share) obtained
by multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares of Common Stock issuable on the exercise hereof
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
4.3 Reorganization, Reclassification, Merger, Consolidation or Disposition
of Assets. In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is any change whatsoever
in, or distribution with respect to, the outstanding Common Stock of the
Company), or sell, transfer or otherwise dispose of all or substantially all of
its property, assets or business to another corporation and, pursuant to the
terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, (a) shares of common stock of the successor or acquiring
corporation or of the Company (if it is the surviving corporation) or (b) any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property") are to be received by or distributed to the holders of Common Stock
of the Company who are holders immediately prior to such transaction, then the
Holder of this Warrant shall have the right thereafter to receive, upon exercise
of this Warrant, the number of shares of common stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In such event, the aggregate Exercise Price
otherwise payable for the shares of Common Stock issuable upon exercise of this
Warrant shall be allocated among the shares of common stock and Other Property
receivable as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets in proportion to the respective fair
market values of such shares of common stock and Other Property as determined in
good faith by the Board of Directors of the Company. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of this Warrant to be performed and observed by the
Company and all the obligations and liabilities hereunder, subject to such
modifications as may be reasonably deemed appropriate (as determined by
resolution of the Board of Directors of the Company) in order to provide for
adjustments of any shares of the common stock of such successor or acquiring
corporation for which this Warrant thus becomes exercisable, which modifications
shall be as equivalent as practicable to the adjustments provided for in this
Section 4. For purposes of this Section 4.3, "common stock of the successor or
acquiring corporation" shall include stock of such corporation of any class that
is not preferred as to dividends or assets over any other class of stock of such
corporation and that is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities that are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.3 shall similarly apply to successive
reorganizations, reclassification, mergers, consolidations or disposition of
assets.
4.4 Determination of Consideration. For purposes of Section 4.3 hereof, as
applicable, the consideration received and/or receivable by the Company in
connection with the issuance, sale, grant or exercise of additional shares of
Common Stock, irrespective of the accounting treatment of such consideration,
shall be valued as follows:
(a) Cash Payment. In the case of cash, the net amount received by the
Company after deduction of any underwriting commissions or concessions paid
or allowed by the Company.
(b) Securities or Other Property. In the case of securities or other
property, the fair market value thereof as of the date immediately
preceding such issuance, sale, grant or exercise as determined in good
faith by the Board of Directors of the Company.
4.5 Other Provisions Applicable to Adjustments Under this Section 4. The
following provisions shall be applicable to the adjustments provided for
pursuant to this Section 4:
(a) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring such an adjustment shall occur. For the purpose of any such
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(b) Record Date. In case the Company shall take a record of the
holders of the Common Stock for the purpose of entitling them to receive a
dividend or other distribution payable in Common Stock, then all references
in this Section 4 to the date of the issuance or sale of such shares of
Common Stock shall be deemed to be references to such record date.
(c) Fractional Interests. In computing adjustments under this Section
4, fractional interests in Common Stock shall be taken into account to the
nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution to which the provisions of Section 4.1
hereof would apply, but shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
(e) Certain Limitations. Notwithstanding anything herein to the
contrary, no adjustment hereunder, including under Sections 4.1 and 4.3
hereof, as applicable, shall be made, to the extent it would cause the
Exercise Price to be less than the par value of the Common Stock, if any.
(f) Tax Adjustments. The Company may make such reductions in the
Exercise Price or increase in the number of Common Stock to be received by
any Holder upon the exercise or exchange of this Warrant, in addition to
those adjustments required by this Section 4, as it in its sole discretion
shall determine to be advisable in order that any consolidation or
subdivision of the Common Stock or any stock dividend made by the Company
to the holders of its Common Stock shall not be taxable to such holders.
(g) Certain Business Combinations. The Company will not merge or
consolidate with or into, or sell, transfer or lease all or substantially
all of its property to, any other entity unless the successor or purchasing
entity, as the case may be (if not the Company), shall expressly agree to
provide to each Holder the securities, cash or property required by Section
4.3 hereof upon the exercise or exchange of this Warrant.
(h) Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable or the Exercise Price shall be
adjusted pursuant to this Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company
setting forth, in reasonable detail, the event requiring the adjustment and
the method by which such adjustment was calculated, specifying the number
of shares of Common Stock for which this Warrant is exercisable and (if
such adjustment was made pursuant to Section 4.3 hereof) describing the
number and kind of any other shares of stock or Other Property for which
this Warrant is exercisable, and any related change in the Exercise Price,
after giving effect to such adjustment or change. The Company shall
promptly cause a signed copy of such certificate to be delivered to each
Holder in accordance with Section 14.3 hereof. The Company shall keep at
its principal office or at the Designated Office, if different, copies of
all such certificates and cause the same to be available for inspection at
said office during normal business hours by any Holder or any prospective
transferee of a Warrant designated by a Holder thereof.
(i) Independent Application. Except as otherwise provided herein, all
subsections of this Section 4 are intended to operate independently of one
another (but without duplication). If any single transaction would require
adjustment of the Exercise Price pursuant to more than one subsection of
this Section 4, only one adjustment shall be made and such adjustment shall
be the amount of adjustment which has the highest absolute value.
5. NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its charter documents or through any reorganization, reclassification,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other similar voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company shall take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, free
and clear of all liens, and shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction over it as may be necessary to enable the Company to perform its
obligations under this Warrant.
6. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Original Issue Date, the Company shall at all times
reserve and keep available for issuance upon the exercise of the Warrants such
number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
issuable pursuant to the terms hereof, when issued upon exercise of this Warrant
with payment therefor in accordance with the terms hereof, shall be duly and
validly issued and fully paid and nonassessable, not subject to preemptive
rights and shall be free and clear of all liens. Before taking any action that
would result in an adjustment in the number of shares of Common Stock for which
this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction over
such action.
7. NOTICE OF CORPORATE ACTIONS; TAKING OF RECORD; TRANSFER BOOKS
7.1 Notices of Corporate Actions. In the event of: (a) any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
distribution, (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer or other disposition of all or substantially all the assets of the
Company to another Person or (c) any action taken by the Company which would
require an adjustment pursuant to Section 4 hereof, the Company shall mail to
each Holder of a Warrant in accordance with the provisions of Section 11.2
hereof a notice specifying (i) the date or expected date on which any such
record is to be taken for the purpose of such dividend or distribution, and the
amount and character of such dividend or distribution and (ii) the date or
expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, transfer or disposition is to take
place, the time, if any such time is to be fixed, as of which the holders of
record of Common Stock shall be entitled to exchange their shares of Common
Stock for the securities or Other Property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer or
disposition and a description in reasonable detail of the transaction. Such
notice shall be mailed to the extent practicable under the circumstances as
determined in the reasonable judgment of an officer of the Company at least
fifteen (15) days prior to the date therein specified, and shall describe the
material terms of the matter in question. In the event that the Company at any
time sends any other notice to the holders of its Common Stock, it shall
concurrently send a copy of such notice to each Holder of a Warrant.
7.2 Taking of Record. In the case of all dividends or other distributions
by the Company to the holders of its Common Stock with respect to which any
provision of any Section hereof refers to the taking of a record of such
holders, the Company will in each such case take such a record and will take
such record as of the close of business on a Business Day.
7.3 Closing of Transfer Books. The Company shall not at any time,
except upon dissolution, liquidation or winding up of the Company, close its
stock transfer books or Warrant transfer books so as to result in preventing or
delaying the exercise or transfer of any Warrant.
7.4 No Rights as Stockholders. Except as provided herein, Holders shall
have no rights as holders of Common Stock of the Company solely as a result of
being the Beneficial Owner of a Warrant. Holders shall have no right to vote,
consent or otherwise participate with respect to matters submitted to a vote of
the stockholders of the Company.
8. TRANSFER
The Holder, by acceptance of this Warrant, agrees to be bound by the
provisions of this Section 8.
8.1 Restrictions on Transfer. Neither this Warrant nor any shares of
Restricted Common Stock issued upon the exercise hereof shall be Transferred
other than pursuant to an effective registration statement under the Securities
Act or an exemption from the registration provisions thereof. The Holder of this
Warrant by its acceptance hereof agrees not to offer, sell or otherwise transfer
this Warrant other than (a) to the Company, (b) pursuant to a registration
statement that has been declared effective under the Securities Act or (c)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject to the Company's right prior to any such offer, sale
or transfer pursuant to clause (c) to require the delivery of an Opinion of
Counsel, certification and/or other information reasonably satisfactory to it.
In addition, this Warrant and the Warrant Stock issuable upon conversion hereof
are subject to transfer and other restrictions contained in the Stock Purchase
Agreement. In connection with any Transfer, the Holder will deliver to the
Company such certificates and other information as the Company may reasonably
require to confirm that the transfer complies with the foregoing restrictions.
Holders of the Warrants or the Restricted Common Stock, as the case may be,
shall not be entitled to Transfer such Warrants or such Restricted Common Stock
except in accordance with this Section 8.1.
8.2 Restrictive Legends.
(a) Except as otherwise provided in this Section 8, each certificate for
Warrant Stock initially issued upon the exercise of this Warrant, and each
certificate for Warrant Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with two legends in
substantially the following forms:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OTHER
THAN (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (C) PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (C) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION REASONABLY SATISFACTORY TO
IT. IN ADDITION, THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
TRANSFER AND OTHER RESTRICTIONS CONTAINED IN THE STOCK PURCHASE AGREEMENT,
DATED AS OF MAY 28, 2001, BY AND BETWEEN THE COMPANY AND RED BASIN, LLC. IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE COMPANY SUCH
CERTIFICATES AND OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ENTITLED TO THE BENEFITS
OF AND ARE SUBJECT TO CERTAIN OBLIGATIONS SET FORTH IN THE WARRANT PURSUANT
TO THE EXERCISE OF WHICH SUCH SHARES WERE ISSUED. A COPY OF SUCH WARRANT IS
AVAILABLE AT THE EXECUTIVE OFFICES OF THE COMPANY."
(b) Except as otherwise provided in this Section 8, each Warrant shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR ANY OF THE
SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES "ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, OTHER THAN
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (C) PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (C) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION REASONABLY SATISFACTORY TO IT. IN ADDITION, THE WARRANTS
REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS CONTAINED IN THE
STOCK PURCHASE AGREEMENT DATED AS OF MAY 28, 2001 BETWEEN THE COMPANY AND
RED BASIN, LLC. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER
TO THE COMPANY SUCH CERTIFICATES AND OTHER INFORMATION AS THE COMPANY MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
8.3 Termination of Securities Law Restrictions. Notwithstanding the
foregoing provisions of Section 8, the restrictions imposed by Section 8.1
hereof upon the transferability of the Warrants and the Restricted Common Stock
and the legend requirements of Section 8.2 hereof shall terminate as to any
particular Warrant or shares of Restricted Common Stock when the Company shall
have received from the holder thereof an Opinion of Counsel to the effect that
such legend is not required in order to ensure compliance with the Securities
Act. Whenever the restrictions imposed by Sections 8.1 and 8.2 shall terminate
as to this Warrant, as hereinabove provided, the Holder hereof shall be entitled
to receive from the Company, at the expense of the Company, a new Warrant
bearing the following legend in place of the restrictive legend set forth
hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT CONTAINED IN
SECTIONS 8.1 AND 8.2 HEREOF TERMINATED ON ______________, 20__, AND ARE OF
NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Wherever the restrictions imposed
by this Section 8.3 shall terminate as to any share of Restricted Common Stock,
as hereinabove provided, the holder thereof shall be entitled to receive from
the Company, at the Company's expense, a new certificate representing such
Common Stock not bearing the restrictive legend set forth in Section 8.2(a)
hereof.
8.4 Nominees for Beneficial Owners. In the event that any Warrant Stock is
held by a nominee for the Beneficial Owner thereof, the Beneficial Owner thereof
may, at its election, be treated as the holder of such Warrant Stock for
purposes of any request or other action by any holder or holders of Warrant
Stock pursuant to this Warrant or any determination of any number or percentage
of shares of Warrant Stock held by any holder or holders of Warrant Stock
contemplated by this Agreement. If the Beneficial Owner of any Warrant Stock so
elects, the Company may require assurances reasonably satisfactory to it of
such owner's Beneficial Ownership of such Warrant Stock; provided, however, that
in no event shall there be "double-counting" of Warrants or Warrant Stock.
8.5 Payment of Taxes. The Company shall not be required to issue or deliver
Warrant Stock or a new Warrant unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Company the amount of any applicable
transfer or stamp taxes or shall have established to the reasonable satisfaction
of the Company that such taxes have been paid or are not due and owing.
9. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and an indemnity reasonably satisfactory to it and,
in case of mutilation, upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
provided, however, in the case of mutilation, no indemnity shall be required if
this Warrant in identifiable form is surrendered to the Company for
cancellation.
10. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency, which may be the principal executive offices of
the Company (the "Designated Office"), where the Warrants may be presented for
exercise, registration of transfer, division or combination as provided in this
Warrant. Such Designated Office shall initially be the office of the Company at
000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000. The Company may from time to time
change the Designated Office to another office of the Company or its agent
within the United States by notice given to all registered holders of Warrants
at least ten (10) Business Days prior to the effective date of such change.
11. REGISTRATION RIGHTS
Red Basin, LLC and Affiliated Permitted Transferees (as defined in the
Stock Purchase Agreement) shall be entitled to the benefit of the registration
rights set forth as Exhibit C to the Stock Purchase Agreement in respect of the
Warrants and the Warrant Stock.
11.1 Nonwaiver. No course of dealing or any delay or failure to exercise
any right hereunder on the part of the Company or the Holder shall operate as a
waiver of such right or otherwise prejudice the rights, powers or remedies of
such Person.
11.2 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or communication hereunder to be made pursuant to the
provisions of this Warrant shall be sufficiently given or made if in writing and
either delivered in person with receipt acknowledged or sent by registered or
certified mail, return receipt requested,
postage prepaid, addressed as follows:
(a) if to any Holder of this Warrant or holder of Warrant Stock issued
upon the exercise hereof, at its last known address appearing on the books
of the Company maintained for such purpose;
(b) if to the Company, at its Designated Office;
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or three (3) Business Days after the same
shall have been deposited in the United States mail, or one (1) Business Day
after the same shall have been delivered to Federal Express or another overnight
courier service.
11.3 Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of such Holder to pay the Exercise Price for any Warrant
Stock other than pursuant to an exercise of this Warrant or any liability as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
11.4 Remedies. Each holder of Warrants and/or Warrant Stock, in addition to
being entitled to exercise its rights granted by law, including recovery of
damages, shall be entitled to specific performance of its rights provided under
this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Warrant and hereby agrees, in an action for specific performance, to
waive the defense that a remedy at law would be adequate.
11.5 Successors and Assigns . Subject to the provisions of Sections 3.1,
8.1 and 8.2, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the permitted
successors and assigns of the Holder hereof. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and, to the extent applicable, all holders of shares of Warrant Stock issued
upon the exercise hereof (including permitted transferees), and shall be
enforceable by any such holder.
11.6 Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and holders of Warrants exercisable for the purchase of more than fifty percent
(50%) of the aggregate number of shares of Warrant Stock then purchasable upon
exercise of all then
outstanding Warrants, provided that no such Warrant may be modified or amended
to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the written consent of the holder thereof.
11.7 Severability. Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Warrant.
11.8 Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
11.9 GOVERNING LAW; JURISDICTION. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS WARRANT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE, EXCEPT WITH RESPECT TO THE VALIDITY OF THIS WARRANT, THE ISSUANCE OF
WARRANT STOCK UPON EXERCISE HEREOF AND THE RIGHTS AND DUTIES OF THE COMPANY WITH
RESPECT TO REGISTRATION OF TRANSFER, WHICH SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF DELAWARE. THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN NEW YORK CITY SHALL HAVE, EXCEPT AS SET FORTH BELOW,
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE
COMPANY AND THE HOLDER OF THIS WARRANT PERTAINING TO THIS WARRANT OR TO ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT, PROVIDED, THAT IT IS
ACKNOWLEDGED THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK CITY.
(The balance of this page is intentionally left blank.)
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by a duly authorized officer with effect from the date first set forth above.
RCN CORPORATION
By:
------------------------------
Name:
Title:
ANNEX A
-------
SUBSCRIPTION FORM
[To be executed only upon an exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for the purchase ofshares of Common Stock and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _________________ whose address is
________________________ and, if such shares of Common Stock shall not include
all of the shares of Common Stock issuable as provided in this Warrant, that a
new Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
-------------------------------
(Name of Registered Owner)
-------------------------------
(Signature of Registered Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
ANNEX B
-------
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
Common Stock set forth below:
--------------------------------------------------------------------------------
Name and Address of Assignee Number of Shares of Common Stock
---------------------------- --------------------------------
--------------------------------------------------------------------------------
and does hereby irrevocably constitute and appoint_____________ attorney-in-fact
to register such transfer onto the books of the Company maintained for the
purpose, with full power of substitution in the premises.
Dated:___________________ Print Name:___________________
Signature:____________________
Witness:______________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
