Exhibit 10.14
EXECUTION COPY
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WARRANT AGREEMENT
between
METROMEDIA FIBER NETWORK, INC.
and
XXXXXXX CORPORATION
Dated as of October 1, 2001
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
SECTION 1.01. Definitions...........................................1
SECTION 1.02. Terms Generally.......................................7
SECTION 1.03. Accounting Terms and Determinations...................8
ARTICLE II
PURCHASE AND SALE OF WARRANTS
SECTION 2.01. Authorization and Issuance of Warrant Stock
and Warrant...........................................8
SECTION 2.02. Issuance of Warrants..................................8
SECTION 2.03. Purchase for Initial Holders' Account.................8
SECTION 2.04. Securities Act Compliance.............................9
SECTION 2.05. Listing...............................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Existence; Qualification..............................9
SECTION 3.02. No Breach............................................10
SECTION 3.03. Corporate Action.....................................10
SECTION 3.04. Approvals............................................10
SECTION 3.05. Investment Company Act...............................10
SECTION 3.06. Public Utility Holding Company Act...................11
SECTION 3.07. Capitalization.......................................11
SECTION 3.08. Private Offering.....................................12
SECTION 3.09. Litigation...........................................12
SECTION 3.10. Brokers..............................................12
SECTION 3.11. SEC Documents; Financial Statements..................12
(i)
ARTICLE IV
RESTRICTIONS ON TRANSFERABILITY
SECTION 4.01. Transfers Generally..................................13
SECTION 4.02. Transfers of Restricted Securities Pursuant
to Registration Statement and Exemptions.............13
SECTION 4.03. Restrictive Legends..................................13
SECTION 4.04. Termination of Restrictions..........................14
SECTION 4.05. Dispositions of Warrants and Warrant Stock...........14
SECTION 4.06. Provisions Applicable to Regulated Holders...........15
ARTICLE V
ADJUSTMENTS OF STOCK UNITS
SECTION 5.01. Purchases and Redemptions............................17
SECTION 5.02. Subdivisions and Combinations........................17
SECTION 5.03. Issuance of Common Stock.............................17
SECTION 5.04. Issuance of Other Securities, Rights or Obligations..18
SECTION 5.05. Superseding Adjustment...............................19
SECTION 5.06. Other Provisions Applicable to Adjustments...........20
SECTION 5.07. Merger, Consolidation or Disposition of Assets.......20
SECTION 5.08. Other Action Affecting Common Stock..................21
SECTION 5.09. No Adjustment Necessary..............................21
SECTION 5.10. Notice of Adjustments................................21
SECTION 5.11. Notice of Certain Corporate Action...................22
ARTICLE VI
REGISTRATION RIGHTS
SECTION 6.01. (a) Filing of Shelf Registration....................22
SECTION 6.02. Hold-Back Agreements; Cutbacks.......................23
SECTION 6.03. Registration Procedures..............................24
SECTION 6.04. Registration Expenses................................29
SECTION 6.05. Restriction on Other Registrations...................29
SECTION 6.06. Indemnification......................................29
SECTION 6.07. Rule 144.............................................32
SECTION 6.08. Remedies.............................................32
(ii)
ARTICLE VII
TAG-ALONG SALE 32
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SECTION 7.01. Tag-Along Obligations................................32
SECTION 7.02. Procedures...........................................34
ARTICLE XIII
HOLDERS' RIGHTS
SECTION 8.01. Delivery Expenses....................................34
SECTION 8.02. Taxes................................................34
SECTION 8.03. Replacement of Instruments...........................35
SECTION 8.04. Indemnification......................................35
SECTION 8.05. Inspection Rights....................................35
ARTICLE IX
OTHER COVENANTS OF ISSUER
SECTION 9.01. Financial Statements, Etc............................36
SECTION 9.02. Restrictions on Performance..........................36
SECTION 9.03. Modification of Other Equity Documents...............36
SECTION 9.04. Reservation and Authorization of Common Stock........36
SECTION 9.05. Notice of Expiration Date............................37
SECTION 9.06. Occurrence of Initial Exercise Date..................37
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Home Office Payment.................................37
SECTION 10.02. Waiver..............................................38
SECTION 10.03. Notices.............................................38
SECTION 10.04. Expenses, Etc.......................................38
SECTION 10.05. Amendments, Etc.....................................38
SECTION 10.06. Successors and Assigns..............................39
SECTION 10.07. Survival............................................39
SECTION 10.08. Specific Performance................................39
SECTION 10.09. Captions............................................39
SECTION 10.10. Counterparts........................................39
SECTION 10.11. Governing Law.......................................39
(iii)
SECTION 10.12. Severability........................................40
SECTION 10.13. Entire Agreement....................................40
ANNEX 1 - FORM OF WARRANT
ANNEX 2 - FORM OF ASSIGNMENT
ANNEX 3 - FORM OF JOINDER AGREEMENT
(iv)
WARRANT AGREEMENT dated as of October 1, 2001 between
METROMEDIA FIBER NETWORK, INC., a company duly organized and validly existing
under the laws of the State of Delaware (the "ISSUER") and XXXXXXX CORPORATION
(and each assignee thereof) (the "INITIAL HOLDER").
WHEREAS, the Issuer, Metromedia Fiber Network Services, Inc.
("MFNS") and the Initial Holder are parties to Master Restructuring Agreement,
dated as of even date herewith (as originally executed, the "MASTER
RESTRUCTURING AGREEMENT"; references to the Master Restructuring Agreement
herein shall apply whether or not the Master Restructuring Agreement is then in
force), providing for, among other things, the issuance of the Note by the
Issuer to the Initial Holder in an original aggregate principal amount of US$89
million, subject to the terms and conditions thereof.
WHEREAS, as a condition to the closing of the transactions
contemplated by the Master Restructuring Agreement and the issuance thereunder
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Issuer has agreed to issue one or more
Warrants (as hereinafter defined) to the Initial Holder providing for the
purchase of shares of Stock Units (as hereinafter defined) of the Issuer, in the
manner hereinafter provided.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
SECTION 1.01. DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"APPLICABLE DISPOSITION" means any sale, transfer or other
disposition by the Principal Shareholder of Common Stock, to the extent that
such sale, transfer or other disposition, together with all other sales,
transfers and other dispositions by the Principal Shareholder and its Affiliates
in the aggregate represents in excess of 20% of the aggregate amount of Common
Stock beneficially owned by the Principal Shareholder and its Affiliates on the
Closing Date.
"BOARD" means the board of directors of the Issuer.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain close.
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"CLASS B COMMON STOCK" has the meaning set forth in the Master
Restructuring Agreement.
"CLOSING DATE" means the date of the original issuance of the
Warrants hereunder.
"COMMISSION" means the Securities and Exchange Commission or
any other similar or successor agency of the Federal government administering
the Securities Act and/or the Exchange Act.
"COMMON STOCK" means the Issuer's Class A Common Stock, par
value US$0.01 per share, as constituted on the Closing Date and any stock into
which such Common Stock may thereafter be converted or changed, and also shall
include any other stock of the Issuer of any other class (other than the
Issuer's Class B Common Stock, par value US$0.01 per share), which is not
preferred as to dividends or assets over any other class of any other stock of
the Issuer. References herein and in the Warrant(s) to the Common Stock
outstanding "on a fully diluted basis" at any time means the number of shares of
Common Stock then issued and outstanding, assuming full conversion, exercise and
exchange of all Convertible Securities and Options that are (or may become)
exchangeable for, or exercisable or convertible into, Common Stock, including
the Warrant(s). All references to Common Stock herein shall be subject to
appropriate adjustment by reason of any stock dividend, split, reverse split,
combination, recapitalization or any similar corporate transaction.
"COMPANY STOCKHOLDERS' MEETING" has the meaning set forth in
the Master Restructuring Agreement.
"CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "CONTROLLING" and "CONTROLLED" shall have meanings correlative
thereto.
"CONVERTIBLE SECURITIES" means evidences of indebtedness,
interests or other securities or rights, which are exchangeable for or
exercisable or convertible into shares of Common Stock either immediately or
upon the arrival of a specified date or the occurrence of a specified event.
"CURRENT MARKET VALUE" means, on any date, (i) the average of
the daily market prices for each day during the 5 consecutive trading days
ending on the last trading day prior to such date or (ii) if the applicable
securities are not publicly traded or are not registered under the Exchange Act,
the fair value of such securities. The market price for each such Business Day
shall be the last sale price on such day as reported in the Consolidated Last
Sale Reporting System or as quoted in the National Association of Securities
Dealers Automated Quotation System, or if such last sale price is not available,
the average of the closing bid and asked prices as reported in either such
system, or in any other case the higher bid price quoted for such day as
reported by The Wall Street Journal and the National Quotation Bureau pink
sheets.
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"CURRENT WARRANT PRICE" means, as at any date, the amount per
share of Common Stock equal to the quotient resulting from dividing the Exercise
Price per Stock Unit in effect on such date by the number of shares (including
any fractional share) of Common Stock comprising a Stock Unit on such date.
"8.5% SENIOR CONVERTIBLE NOTES" has the meaning set forth in
the Master Restructuring Agreement.
"EQUITY SECURITIES" means Securities, Convertible Securities,
Options and Rights to Purchase Securities.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, 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.
"EXERCISE PRICE" has the meaning specified in the form of
Warrant attached as ANNEX 1.
"EXPIRATION DATE" has the meaning specified in form of the
Warrant attached as ANNEX 1.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period.
"GOVERNMENTAL AUTHORITY" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory, monetary or administrative powers or functions of
or pertaining to government.
"HOLDER" means any Person (including, without limitation, each
Initial Holder) who acquires Warrants or Warrant Stock pursuant to the
provisions of this Agreement, including any transferees of Warrants or Warrant
Stock; PROVIDED, HOWEVER, that a holder of Warrants or Warrant Stock purchased
pursuant to an effective registration statement or pursuant to Rule 144 (other
than Affiliates of Bechtel) shall not be deemed a Holder.
"INDEMNIFIED PARTIES" has the meaning specified in SECTION
6.06(a).
"INDEMNIFIED PARTY" has the meaning specified in SECTION
6.06(c).
"INFORMATION STATEMENT" has the meaning set forth in the
Master Restructuring Agreement.
"INITIAL EXERCISE DATE" shall mean the earlier to occur of (i)
the approval and ratification of the issuance of shares of Common Stock issuable
upon the conversion of this Note
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and upon exercise of the Warrant by a majority of holders of Common Stock and
Class B Common Stock, voting as a single class, that are present in person or by
proxy at a duly called meeting of Company's stockholders, or (ii) the twentieth
(20th) day following the delivery by the Company of an effective Information
Statement meeting the requirements of Schedule 14C promulgated under the
Exchange Act that contains the requisite information describing the Written
Consent; it being understood and agreed, that, so long as it is permissible
under the rules and regulations of NASDAQ to obtain the approval of the shares
of Common Stock issuable upon conversion of the Note and upon exercise of the
Warrant by written consent and not at a Company Stockholders' Meeting, the
Company shall be obligated to pursue the delivery of the Information Statement
described in clause (ii) above.
"INITIAL HOLDER" has the meaning specified in the preamble of
this Agreement.
"ISSUER" has the meaning specified in the preamble of this
Agreement.
"JOINDER AGREEMENT" has the meaning specified in SECTION
7.01(c) of this Agreement.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Agreement, a Person shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"LIQUIDATED DAMAGES" has the meaning specified in SECTION
6.01(b).
"MASTER RESTRUCTURING AGREEMENT" has the meaning specified in
the recital of this Agreement.
"MFNS" has the meaning set forth in the preamble to this
Agreement.
"NASD" means the National Association of Securities Dealers.
"NASDAQ" has the meaning set forth in the Master Restructuring
Agreement.
"NOTE" means the note to be issued by MFNS to the Initial
Holder pursuant to the Master Restructuring Agreement.
"OPTION" means any warrant, option or other right to subscribe
for or purchase shares of Common Stock.
"OPTION PLANS" means any stock option plan, stock grant plan,
stock purchase, stock option or employment arrangement approved from time to
time by the Board.
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"OTHER EQUITY DOCUMENTS" means the Option Plans, the
certificate of incorporation of the Issuer, the by-laws of the Issuer and any
other instrument or document of organization or governance of the Issuer.
"OTHER WARRANTS" has the meaning set forth in the Master
Restructuring Agreement.
"PERSON" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"PRINCIPAL SHAREHOLDER" means Metromedia Company.
"PRINCIPAL SHAREHOLDER BENEFICIAL OWNER" means Xxxx X. Xxxxx
and/or Xxxxxx Xxxxxxxxx, as applicable.
"PROSPECTUS" means any Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"REGISTRABLE SECURITIES" means the Warrants and the Warrant
Stock; PROVIDED that a security ceases to be a Registrable Security when it is
no longer a Transfer Restricted Security.
"REGISTRATION DEFAULT" has the meaning specified in SECTION
6.01(b).
"REGISTRATION EXPENSES" has the meaning specified in SECTION
6.04.
"REGISTRATION STATEMENT" means any registration statement of
the Issuer which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
"REQUIRED EFFECTIVE DATE" has the meaning specified in SECTION
6.01(a).
"REQUIRED FILING DATE" has the meaning specified in SECTION
6.01(a).
"REQUIRED HOLDERS" means the Holders of a majority of the
Warrant Stock issued or issuable upon exercise of the Warrant(s). For purposes
of giving notices, waivers and consents hereunder, Holders of Warrants shall be
deemed holders of the Warrant Stock issued on exercise thereof.
"RESTRICTED CERTIFICATE" means a certificate for Warrant Stock
or Warrants bearing or required to bear the restrictive legend set forth in
SECTION 4.03.
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"RESTRICTED SECURITIES" means Restricted Warrant Stock and
Restricted Warrants.
"RESTRICTED WARRANT STOCK" means Warrant Stock evidenced by a
Restricted Certificate.
"RESTRICTED WARRANTS" means Warrants evidenced by a Restricted
Certificate.
"RESTRUCTURING" has the meaning set forth in the Master
Restructuring Agreement.
"RIGHTS TO PURCHASE SECURITIES" means options and rights
issued by the Issuer (whether presently exercisable or not) to purchase
Securities or Convertible Securities.
"RULE 144" means Rule 144 promulgated by the Commission under
the Securities Act (or any successor or similar rule then in force).
"RULE 144A" means Rule 144A promulgated by the Commission
under the Securities Act (or any successor or similar rule then in force).
"SECURITIES" means the Common Stock and any other equity
securities of the Issuer of any kind or class.
"SECURITIES ACT" means 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.
"SHAREHOLDER" means any Person who directly or indirectly owns
any shares of Common Stock (including Warrant Stock).
"SHELF REGISTRATION" has the meaning ascribed to it in SECTION
6.01(a).
"STOCK UNIT" means one share of Common Stock, as such Common
Stock is constituted on the date hereof, and thereafter means such number of
shares (including any fractional shares) of Common Stock and other securities,
cash or other property as shall result from the adjustments specified in Article
V.
"SUBSIDIARY" of a Person means (a) any corporation more than
50% of the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (b) any company, partnership, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
means a direct or indirect Subsidiary of the Issuer.
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"TAG-ALONG RIGHTS" means the right of a Holder to participate
in a Tag-Along Sale pursuant to, and in accordance with, ARTICLE VII.
"TAG-ALONG SALE" has the meaning specified in SECTION 7.01(a).
"TAG-ALONG SELLER" has the meaning specified in SECTION
7.01(a).
"TRANSFER RESTRICTED SECURITY" means the Registrable
Securities beginning upon original issuance thereof, until the later of (i) such
time as all Registrable Securities are eligible for sale under Rule 144(k) under
the Securities Act so that all transfer restrictions and restrictive legends
with respect to such shares may be removed upon the consummation of such sale
and (ii) the third anniversary of the Initial Exercise Date.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" means a
registration in which securities of the Issuer are sold to an underwriter for
reoffering to the public.
"WARRANT" and "WARRANTS" means the Warrant issued by the
Issuer to the Initial Holder pursuant to this Agreement on the date hereof,
evidencing rights to purchase up to an aggregate of 25,000,000 Stock Units
(which Warrant represent as of the Closing Date approximately 1.5% of the
outstanding shares of Common Stock on a fully diluted basis), and all Warrants
issued upon transfer, division or combination of, or in substitution for, any
thereof.
"WARRANT STOCK" means all shares of Common Stock issuable from
time to time upon exercise of the Warrant.
"WRITTEN CONSENT" has the meaning set forth in the Master
Restructuring Agreement.
SECTION 1.02. TERMS GENERALLY. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits, Annexes and Schedules shall
be construed to refer to Articles and Sections of, and Exhibits, Annexes and
Schedules to, this Agreement or the Warrant, as the case may be, and (e) the
words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any
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and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
SECTION 1.03. ACCOUNTING TERMS AND DETERMINATIONS. Except as
otherwise may be expressly provided herein, all accounting terms used herein
shall be interpreted, and all financial statements and certificates and reports
as to financial matters required to be delivered to the Holder hereunder shall
be prepared, in accordance with GAAP. All calculations made for the purposes of
determining compliance with the terms of this Agreement shall (except as
otherwise may be expressly provided herein) be made by application of GAAP.
ARTICLE II
PURCHASE AND SALE OF WARRANTS
SECTION 2.01. AUTHORIZATION AND ISSUANCE OF WARRANT STOCK AND
WARRANT. The Issuer has authorized: (a) the issuance of the Warrant(s) evidenced
by warrant certificate in the form of ANNEX 1; and (b) the issuance of such
number of shares of Common Stock as shall be necessary to permit the Issuer to
comply with its obligations to issue shares of Common Stock pursuant to the
Warrant(s).
SECTION 2.02. ISSUANCE OF WARRANTS. On the date hereof, in
consideration of the Initial Holder entering into the Master Restructuring
Agreement,
(a) the Issuer shall issue to Initial Holder a Warrant
evidencing the right to purchase 25,000,000 Stock Units;
(b) the Issuer shall deliver to Initial Holder a single
certificate for the Warrant issued pursuant to the clause (a) above,
registered in the name of Initial Holder, except that, if Initial
Holder shall notify the Issuer in writing prior to such issuance that
it desires certificates for such Warrant to be issued in other
denominations or registered in the name or names of any Affiliate,
nominee or nominees of Initial Holder for its or their benefit, then
the certificates for such Warrant shall be issued to Initial Holder in
the denominations and registered in the name or names specified in such
notice; and
(c) the Issuer shall deliver to Initial Holder a legal opinion
from counsel to the Issuer in form and substance satisfactory to
Initial Holder.
SECTION 2.03. PURCHASE FOR INITIAL HOLDERS' ACCOUNT. Initial
Holder represents and warrants to the Issuer as follows:
(a) Initial Holder is acquiring the Warrant and the Warrant
Stock for investment for its own account, without a view to the distribution
thereof, all without prejudice, however, to the right of Initial Holder at any
time, in accordance with this Agreement, lawfully to sell or otherwise to
dispose of all or any part of the Warrant or the Warrant Stock held by it.
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(b) Such Initial Holder is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act.
(c) All documents, records or books pertaining to this
investment have been made available for inspection by Initial Holder, its
attorneys and/or its accountants. Initial Holder understands that Initial Holder
and/or its representatives have had the opportunity to ask questions of, and
receive answers from, the Issuer or one or more persons acting on the Issuer's
behalf concerning the offering of the Warrant and the Warrant Stock and the
business of the Issuer and all such questions have been answered to Initial
Holder's full satisfaction.
SECTION 2.04. SECURITIES ACT COMPLIANCE. Initial Holder
understands that the Issuer has not registered the Warrant or the Warrant Stock
under the Securities Act or applicable state securities laws, and Initial Holder
agrees that neither the Warrant nor the Warrant Stock shall be sold or
transferred or offered for sale or transfer without registration or
qualification under the Securities Act or applicable state securities laws or
the availability of an exemption therefrom, all as more fully provided in
ARTICLE IV, and Initial Holder understands that the Warrant and the Warrant
Stock will bear a legend to such effect and the Issuer will make a notation on
its transfer books to such effect.
SECTION 2.05. LISTING. Prior to the issuance of Warrant Stock
upon the exercise of a Warrant, the Company shall secure the listing of such
shares of Warrant Stock upon each of the national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance upon the exercise of such
Warrant) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all shares of Warrant Stock from time to time
issuable upon the exercise of a Warrant; and the Company shall so list on each
national securities exchange or automated quotation system, and shall maintain
such listing of, any other shares of capital stock of the Company issuable upon
the exercise of a Warrant if and so long as shares of the same class shall be so
listed on such national securities exchange or automated system.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Issuer represents and warrants as follows:
SECTION 3.01. EXISTENCE; QUALIFICATION. The Issuer is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. The Issuer is duly qualified, licensed or
admitted to do business and is in good standing as a foreign corporation in
every jurisdiction where the failure to be so qualified would have a material
adverse effect on the business, financial condition, operations, assets,
prospects, liabilities or capitalization of the Issuer and has all requisite
corporate power and authority to transact its business as now conducted in all
such jurisdictions.
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SECTION 3.02. NO BREACH. The execution, delivery and
performance of this Agreement and the Warrant(s) by the Issuer and the
consummation by it of the transactions contemplated hereby and thereby will not
(a) violate the certificate of incorporation or by-laws or any other instrument
or document of organization or governance of the Issuer, (b) violate, or result
in a breach of or default under, any other material instrument or agreement to
which the Issuer is a party or is bound, (c) violate any judgment, order,
injunction, decree or award against or binding upon the Issuer, (d) result in
the creation of any material Lien upon any of the properties or assets of the
Issuer or (e) violate any law, rule or regulation relating to the Issuer.
SECTION 3.03. CORPORATE ACTION. The Issuer has all necessary
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Warrant(s); the execution, delivery and performance
by the Issuer of this Agreement and the Warrant(s) have been duly authorized by
all necessary action (including all Shareholder action) on the part of the
Issuer; this Agreement and the Warrant(s) being issued on the date hereof have
been (and the Warrant(s) issued after the date hereof will be) duly executed and
delivered by the Issuer and constitute (or in the case of the Warrant(s) issued
after the date hereof, will constitute) the legal, valid and binding obligations
of the Issuer, enforceable against the Issuer in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or law); the Warrant Stock covered by the Warrant(s) has been duly and
validly authorized and reserved for issuance and shall, when paid for, issued
and delivered in accordance with the Warrant(s), be duly and validly issued,
fully paid and nonassessable and free and clear of any Liens; and none of the
Warrant Stock issued pursuant to the terms hereof will be in violation of any
preemptive rights of any Shareholder.
SECTION 3.04. APPROVALS. Except in connection with the
registration of the Warrant Stock pursuant to ARTICLE VI, no authorizations,
approvals or consents of, and no filings or registrations with, any Governmental
Authority or any other Person, including the Nasdaq National Market or any
national securities exchange or other automated quotation system, are necessary
for the execution, delivery or performance by the Issuer of this Agreement or
the Warrant(s) or for the validity or enforceability thereof. Any such action
required to be taken as a condition to the execution and delivery of this
Agreement, or the execution, issuance and delivery of the Warrant(s), has been
duly taken by all such Governmental Authorities or other Persons, as the case
may be.
SECTION 3.05. INVESTMENT COMPANY ACT. The Issuer is not an
"investment company", or a company "controlled by" an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
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SECTION 3.06. PUBLIC UTILITY HOLDING COMPANY ACT. The Issuer
is not a "holding company", or an "affiliate" of a "holding company" or a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 3.07. CAPITALIZATION.
(a) As of September 28, 2001, the authorized capital stock of
the Issuer consisted of (i) 2,404,031,240 shares of Common Stock, of which
548,575,321 shares were issued and outstanding; (ii) 522,254,782 shares of Class
B Common Stock, of which 67,538,544 shares were issued and outstanding; and
(iii) 20,000,000 shares of Preferred Stock, US$0.01 par value per share, none of
which were issued and outstanding. All of such issued and outstanding shares are
validly issued, fully paid and non-assessable. No shares of capital stock are
held by the Issuer as treasury stock as of the date of this Agreement and no
shares of capital stock of the Issuer shall be held by the Issuer as treasury
stock as of the Closing. The Issuer has agreed to issue 87,811,368 shares of
Common Stock in connection with the Restructuring, all of which when issued will
be validly issued, fully paid and non-assessable. Except for the Note, the
Warrant or as otherwise disclosed in SCHEDULE 3.12 to the Master Restructuring
Agreement, the Issuer does not have nor after giving effect to the Restructuring
will have, outstanding any Convertible Securities or Options exercisable or
convertible into or exchangeable for any interests or other equity rights of the
Issuer or its Subsidiaries, nor shall it have outstanding any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, any interests or equity
rights of the Issuer or its Subsidiaries or Convertible Securities exercisable
or convertible into or exchangeable for any interests or equity rights of the
Issuer or its Subsidiaries.
(b) Other than this Agreement or as otherwise disclosed in
SCHEDULE 3.12(b) to the Master Restructuring Agreement, there is not in effect
on the date hereof any agreement by the Issuer pursuant to which any holders of
debt or equity securities of the Issuer have a right to cause the Issuer to
register such securities under the Securities Act. None of the agreements listed
on SCHEDULE 3.12(b) to the Master Restructuring Agreement contain any provision
that conflict or are inconsistent in any material respect with the rights
granted under the Registration Rights Agreement or the Warrant Agreement. Except
for the (i) Verizon Stockholders Agreement, (ii) voting agreements with respect
to the Citicorp Facility and the Nortel Agreement entered into in connection
with the Restructuring, and (iii) warrant agreements with respect to Other
Warrants, there is not in effect on the date hereof any agreement to which the
Issuer or (to its knowledge) any of its Shareholders is a party relating to the
voting, transfer or sale of such securities.
(c) There is not in effect on the date hereof any agreement by
the Issuer or any of its Shareholders that (i) restricts the transferability of
the Warrant and/or the Warrant Stock, except as provided in ARTICLE IV hereof,
(ii) restricts the transferability of the right of the Holder in this Agreement
to any transferee of all or a portion of the Holder's Warrant and/or Warrant
12
Stock, or (iii) requires any consent or other approval of any Person to the
exercise of the Warrant by the Holder or the issuance of Warrant Stock upon such
exercise.
SECTION 3.08. PRIVATE OFFERING.
(a) Assuming the truth and accuracy of the Initial Holder's
representations and warranties contained in SECTIONS 2.03 and 2.04, the issuance
of the Warrant to the Initial Holder hereunder is exempt from the registration
and prospectus delivery requirements of the Securities Act.
SECTION 3.09. LITIGATION.
(a) There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Issuer, threatened against the Issuer or any
of its Subsidiaries before any Governmental Authority seeking to enjoin the
transactions contemplated by this Agreement or the Warrant(s).
(b) There are no legal or arbitral proceedings or any
proceedings by or before any Governmental Authority, now pending or (to the
knowledge of the Issuer) threatened against the Issuer or any of its
Subsidiaries which could reasonably be expected to have a material adverse
effect on the business, financial condition, operations, assets, prospects,
liabilities or capitalization of the Issuer and its Subsidiaries taken as a
whole.
SECTION 3.10. BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried out by the
Issuer directly with the Initial Holder without the intervention of any Person
on behalf of the Issuer in such manner as to give rise to any valid claim by any
Person against the Initial Holder or any other Holder for a finder's fee,
brokerage commission or similar payment.
SECTION 3.11. SEC DOCUMENTS; FINANCIAL STATEMENTS. The Issuer
has filed in a timely manner all documents that the Issuer was required to file
with the Commission under Sections 13, 14(a) and 15(d) of the Exchange Act, and
with the Nasdaq National Market since its initial public offering. As of their
respective filing dates, all documents filed by the Issuer with the Commission
("SEC DOCUMENTS") complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable. None of the SEC Documents as
of their respective dates contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Issuer included in
the SEC Documents (the "FINANCIAL STATEMENTS") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the Commission with respect thereto. The Financial Statements
have been prepared in accordance with GAAP and fairly present the consolidated
financial position of the Issuer and its Subsidiaries at the dates thereof and
the consolidated results of their operations and consolidated cash flows for the
periods then ended (subject, in the case of unaudited statements,
Bechtel Warrant Agreement
13
to the lack of full footnote disclosure and to normal, recurring adjustments).
Since December 31, 2000, neither the Issuer nor any of its Subsidiaries has
incurred any material liabilities or obligations (whether absolute, accrued,
fixed, contingent, liquidated, unliquidated or otherwise and whether due or to
become due) of any nature, except liabilities, obligations or contingencies (a)
which are reflected on the audited balance sheet of the Issuer and its
Subsidiaries as at December 31, 2000, (including the notes hereto), or (b) which
(i) were incurred in the ordinary course of business after December 31, 2000 and
consistent with past practices, or (ii) are disclosed or reflected in the SEC
Documents filed after December 31, 2000. Since March 6, 2000, the Issuer has
timely filed with the SEC all forms, reports and other documents required to be
filed prior to the date hereof, and no Subsidiary of the Issuer has filed, or
been required to file, any form, report or other document with the SEC, in each
case, pursuant to the Securities Act, the Exchange Act or the rules and
regulations thereunder.
SECTION 3.11. MASTER RESTRUCTURING AGREEMENT. The
representations and warranties with respect to the Issuer set forth in the
Master Restructuring Agreement are true and correct.
ARTICLE IV
RESTRICTIONS ON TRANSFERABILITY
SECTION 4.01. TRANSFERS GENERALLY. The Restricted Securities
shall be transferable only upon the conditions specified in this ARTICLE IV and
in ARTICLE VI, which conditions are intended to insure compliance with the
provisions of the Securities Act and applicable state securities laws in respect
of the transfer of any Restricted Securities.
SECTION 4.02. TRANSFERS OF RESTRICTED SECURITIES PURSUANT TO
REGISTRATION STATEMENT AND EXEMPTIONS. The Restricted Securities may be offered
or sold by the Holder thereof pursuant to an effective registration statement
under the Securities Act and applicable state securities laws or a valid
exemption therefrom (including, without limitation, to the extent applicable,
Rule 144 or Rule 144A).
SECTION 4.03. RESTRICTIVE LEGENDS. Unless and until otherwise
permitted by this ARTICLE IV, each certificate for the Warrant issued under this
Agreement, each certificate for any Warrants issued to any subsequent
transferees of any such certificate, each certificate for any Warrant Stock
issued upon exercise of any Warrant and each certificate for any Warrant Stock
issued to any subsequent transferee of any such certificate, shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE RESTRICTIONS SPECIFIED IN THAT
CERTAIN WARRANT AGREEMENT DATED AS OF SEPTEMBER 17, 2001 (THE
"WARRANT AGREEMENT"), BETWEEN METROMEDIA FIBER
Bechtel Warrant Agreement
14
NETWORK, INC., A DELAWARE CORPORATION (THE "ISSUER"), AND
XXXXXXX CORPORATION AS MODIFIED AND SUPPLEMENTED AND IN EFFECT
FROM TIME TO TIME, AND NO TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE
UNTIL SUCH RESTRICTIONS HAVE LAPSED OR BEEN FULFILLED,
RELEASED OR WAIVED. A COPY OF THE FORM OF THE WARRANT
AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE
BOUND BY THE PROVISIONS OF THE WARRANT AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, AND ACCORDINGLY, SUCH
SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED
OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM."
SECTION 4.04. TERMINATION OF RESTRICTIONS. All of the
restrictions imposed by this ARTICLE IV upon the transferability of the
Restricted Securities shall cease and terminate as to any particular Restricted
Security when such Restricted Security shall have been effectively registered
under the Securities Act and applicable state securities laws and sold by the
Holder thereof in accordance with such registration or sold under and pursuant
to Rule 144 or is eligible to be sold under and pursuant to paragraph (k) of
Rule 144. Whenever the restrictions imposed by this ARTICLE IV shall terminate
as to any Restricted Security as hereinabove provided, the Holder thereof shall,
upon written request, be entitled to receive from the Issuer, without expense, a
new certificate evidencing such Restricted Security not bearing the restrictive
legend otherwise required to be borne by a certificate evidencing such
Restricted Security, PROVIDED, that the Holder thereof shall have furnished the
Issuer with such certificates and opinions as it shall have reasonably
requested.
SECTION 4.05. DISPOSITIONS OF WARRANTS AND WARRANT STOCK.
(a) Notwithstanding anything in this Agreement or the
Warrant(s) to the contrary, but subject to compliance with the Securities Act,
applicable state securities laws and the requirement as to placement of a legend
on certificates for Restricted Securities specified in SECTION 4.03, any Holder
shall have the right to transfer any or all of its Restricted Securities to
Bechtel Warrant Agreement
15
any Person. The Person to which Restricted Securities are transferred pursuant
to the immediately preceding sentence shall be deemed to be a Holder of such
Restricted Securities and bound by the provisions of this Agreement applicable
to the Holders so long as such Person continues to own any of the Restricted
Securities so transferred to it.
(b) In connection with any transfer of any Warrant, the Holder
shall surrender such Warrant to the Issuer, together with a written assignment
of such Warrant duly executed by the Holder hereof or such Holder's agent or
attorney. Such written assignment shall be in the form of the Assignment
attached as ANNEX 2. Upon such surrender and receipt by the Issuer of a written
agreement, in form reasonably satisfactory to the Issuer, of the assignee
agreeing to be bound by this Agreement to the same extent as such Holder was so
bound), the Issuer shall execute and deliver a new Warrant or Warrants in the
name of the assignee and in the denominations specified in such instrument of
assignment, and the original Warrant shall promptly be canceled.
(c) Any Warrant may be exchanged for other Warrants of the
same series upon presentation to the Issuer, together with a written notice
specifying the denominations in which new Warrants are to be issued, signed by
the Holder thereof. The Issuer shall execute and deliver a new Warrant or
Warrants to such Holder in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice. The Issuer shall pay all expenses,
taxes (other than income taxes or capital gains of the Holder transferring such
Warrant but including transfer taxes) and other charges payable in connection
with the preparation, issuance, delivery, transfer or exchange of the Warrants.
(d) The Issuer shall maintain books for the registration and
transfer of the Warrants, and shall allow each Holder of Warrants to inspect
such books at such reasonable times as such Holder shall request.
SECTION 4.06. PROVISIONS APPLICABLE TO REGULATED HOLDERS.
(a) Notwithstanding anything in this Agreement or the Warrants
to the contrary, no Holder which is subject to the provisions of Regulation Y of
the Board of Governors of the Federal Reserve System (or any successor
regulation thereto) ("REGULATION Y") or which is affiliated with any entity
subject to the provisions of Regulation Y (if such Affiliate holds securities of
the Issuer (any such Holder being referred to herein as a "REGULATED HOLDER"))
and no transferee of such Regulated Holder may exercise the Warrants for a
number of shares of Warrant Stock which would permit such Regulated Holder,
together with its Affiliates and transferees, to own or control a number of
shares of Warrant Stock greater than that permitted by applicable law including
Regulation Y (and, for purposes of this restriction, a reasoned opinion of
counsel to such Holder and reasonably acceptable to the Issuer based on facts
and circumstances deemed appropriate by such counsel to the effect that such
Holder does not have the power to exercise a controlling influence or otherwise
control the Issuer, shall be conclusive).
Bechtel Warrant Agreement
16
(b) The Issuer shall not, without 15 days' prior notice to
each Holder, directly or indirectly, purchase, redeem, retire or otherwise
acquire any shares of Common Stock if, as a result of such purchase, redemption,
retirement or other acquisition and after giving effect to the exercise of all
outstanding Warrants, such Holder, together with its Affiliates, shall own or
control, or shall be deemed to own or control, in the aggregate a greater number
of securities of any kind issued by the Issuer than are permitted under
Regulation Y.
(c) In the event of any underwritten public offering of
Restricted Securities in which a Regulated Holder is participating, the Issuer
shall provide reasonable assistance to the underwriter in ensuring that any
Warrant or Warrant Stock sold by such Holder are widely disseminated.
(d) In the event that a Holder determines that there is a
Regulatory Problem (as defined below), the Issuer agrees to use commercially
reasonable efforts to take all such actions as are within its control and
reasonably required by such Holder in order (i) to effectuate and facilitate any
transfer by any Holder of any Warrant or Warrant Stock then held by such Holder
to any Person designated by such Holder and (ii) to permit such Holder (or any
of its Affiliates) to exchange all or a portion of any voting security then held
by it on a share-for-share basis for shares of a non-voting security of the
Issuer, which non-voting security shall convey equivalent economic benefits to
such Warrants or Warrant Stock and include equivalent anti-dilution protection
and otherwise identical in all respects to the voting security exchanged for it,
except that it shall be non-voting and shall be convertible into a voting
security on such terms as are required by such Holder in light of regulatory
considerations then prevailing. Such actions may include, but shall not
necessarily be limited to entering into such additional agreements, adopting
such amendments to the certificate of incorporation and bylaws of the Issuer
subject to required Shareholder approvals and taking such additional actions as
are reasonably requested by any Holder in order to effectuate the intent of the
foregoing. For purposes of this Agreement, a "REGULATORY PROBLEM" means any set
of facts or circumstances wherein it has been asserted by any Governmental
Authority (or any Holder believes that there is a substantial risk of such
assertion) that any Holder is not entitled to hold, or exercise any significant
right with respect to, any Warrant or Warrant Stock held by it. Any exchange
referred to in clause (ii) above shall occur as soon as practicable but in any
event within 60 days after written notice by such Holder to the Issuer (or such
earlier date if required to comply with applicable law so long as such Holder
has provided reasonable prior notice of such date to the Issuer).
ARTICLE V
ADJUSTMENTS OF STOCK UNITS
SECTION 5.01. PURCHASES AND REDEMPTIONS. If at any time the
Issuer shall propose to purchase or redeem any shares of its Common Stock for
cash, evidence of indebtedness or other property of any nature whatsoever, the
Issuer shall deliver to each Holder of Warrants or shares of Warrant Stock a
notice of such proposed purchase or redemption, and each such Holder shall, at
its option, have the right to require the Issuer to at the same time
Bechtel Warrant Agreement
17
purchase or redeem Warrants and shares of Warrant Stock owned by such holder,
pro-rata based on the number of shares of such other Common Stock to be so
purchased or redeemed, on the same terms and conditions as the proposed purchase
or redemption of such other Common Stock and for the same consideration per
Warrant or share of Warrant Stock, as the case may be, as is paid to the Holders
of such other Common Stock for each share of Common Stock so redeemed or
purchased, minus, in the case of Warrants, the exercise price of the Warrants to
be so purchased or redeemed.
SECTION 5.02. SUBDIVISIONS AND COMBINATIONS. If at any time
the Issuer shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend or other distribution of Common
Stock;
(b) subdivide 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 immediately after the occurrence of any such event the number of shares of
Warrant Stock comprising a Stock Unit shall be adjusted so as to equal the
number of shares of Warrant Stock, which such holder would have been entitled to
receive if such Holder had exercised the Warrant immediately prior to the
occurrence of such event.
SECTION 5.03. ISSUANCE OF COMMON STOCK. In case at any time
the Issuer (i)(A) shall take a record of the holders of its Common Stock for the
purpose of entitling them to subscribe for or purchase shares of any class or
series of Common Stock or (B) shall otherwise sell or issue any such securities
and (ii) the consideration per share of Common Stock to be paid upon such
issuance or subscription is less than the Current Market Value per share of
Common Stock on such record date, then the number of shares of Warrant Stock
comprising a Stock Unit shall be adjusted to be that number determined by
multiplying the number of shares of Warrant Stock comprising a Stock Unit
immediately prior to such record date by a fraction (not to be less than one)
(A) the numerator of which shall be equal to the product of (x) the number of
shares of Common Stock outstanding after giving effect to such issuance,
distribution, subscription or purchase and (y) the Current Market Value per
share of Common Stock determined immediately before such record date and (B) the
denominator of which shall be equal to the sum of (x) the product of (1) the
number of shares of Common Stock outstanding immediately before such record date
and (2) the Current Market Value per share of Common Stock determined
immediately before such record date and (y) the aggregate consideration to be
received by the Issuer for the total number of shares of Common Stock to be
issued, distributed, subscribed for or purchased. Aggregate consideration for
purposes of the preceding clause (y) shall be determined as follows: In case any
shares of Common Stock shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount payable to the Issuer
therefor, after deduction therefrom of any expenses incurred or any underwriting
commissions or
Bechtel Warrant Agreement
18
concessions or discounts or, in the case of a private placement thereof,
finders' fees or commissions paid or allowed by the Issuer in connection
therewith. In case any shares of Common Stock shall be issued or sold for a
consideration other than cash payable to the Issuer, the consideration received
therefor shall be deemed to be the Current Market Value of such consideration,
after deduction therefrom of any expenses incurred or any underwriting
commissions or concessions or discounts paid or allowed by the Issuer in
connection therewith. In case any shares of Common Stock shall be issued in
connection with any merger of another corporation into the Issuer, the amount of
consideration therefor shall be deemed to be the Current Market Value of such
portion of the assets of such merged corporation as the Board shall determine to
be attributable to such shares of Common Stock.
SECTION 5.04. ISSUANCE OF OTHER SECURITIES, RIGHTS OR
OBLIGATIONS. In case at any time the Issuer (i)(A) shall take a record of the
holders of its Common Stock for the purpose of entitling them to subscribe for
or purchase options to purchase or rights to subscribe for Common Stock or
securities directly or indirectly convertible into or exchangeable for Common
Stock (or options or rights with respect to such securities) or (B) shall
otherwise issue or sell any such options, rights or securities and (ii) the
consideration per share for which Common Stock is deliverable upon exercise of
such options or rights or conversion or exchange of such securities (determined
by dividing (x) the total amount received or receivable by the Issuer in
consideration of the issuance of or subscription for such options, rights or
securities, plus the minimum aggregate amount of premiums (if any) payable to
the Issuer upon such exercise, conversion or exchange, by (y) the total maximum
number of shares of Common Stock necessary to effect the exercise, conversion or
exchange of all such options, rights or securities) shall be less than the
Current Market Value per share of Common Stock on such record date or sale or
issuance date, as the case may be, then the number of shares of Warrant Stock
comprising a Stock Unit shall be adjusted to be that number determined by
multiplying the number of shares of Warrant Stock comprising a Stock Unit
immediately prior to such date by a fraction (not to be less than one) (i) the
numerator of which shall be equal to the product of (A) the total maximum number
of shares of Common Stock outstanding after giving effect to the assumed
exercise or conversion of all such options, rights or securities and (B) the
Current Market Value per share of Common Stock determined immediately before
such date and (ii) the denominator of which shall be equal to the sum of (A) the
product of (1) the number of shares of Common Stock outstanding immediately
before such date and (2) the Current Market Value per share of the Common Stock
determined immediately before such date and (B) the aggregate consideration per
share (determined as set forth in subsection (ii)(x) and (y) above) for which
Common Stock is deliverable upon exercise conversion or exchange of such
options, rights or securities. Aggregate consideration for purposes of the
preceding clause (B) shall be determined as follows: In case any options, rights
or convertible or exchangeable securities (or options or rights with respect
thereto) shall be issued or sold, or exercisable, convertible or exchangeable
for cash, the consideration received therefor shall be deemed to be the amount
payable to the Issuer (determined as set forth in subsection (ii)(x) and (y)
above) therefor, after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts or, in the case of a
private placement thereof, finders' fees or commissions paid or allowed by the
Issuer in
Bechtel Warrant Agreement
19
connection therewith. In case any such options, rights or securities shall be
issued or sold, or exercisable, convertible or exchangeable for a
consideration other than cash payable to the Issuer, the consideration
received therefor (determined as set forth in subsection (ii)(x) and (y)
above) shall be deemed to be the Current Market Value of such consideration,
after deduction therefrom of any expenses incurred or any underwriting
commissions or concessions or discounts or, in the case of a private
placement thereof, finders' fees or commissions paid or allowed by the Issuer
in connection therewith. In case any such options, rights or securities shall
be issued or sold, or exercisable, convertible or exchangeable in connection
with any merger of another corporation into the Issuer, the amount of
consideration therefor shall be deemed to be the Current Market Value of such
portion of the assets of such merged corporation as the Board shall determine
to be attributable to such options, rights or securities.
SECTION 5.05. SUPERSEDING ADJUSTMENT. If at any time after any
adjustment in the number of shares of Warrant Stock comprising a Stock Unit
shall have been made on the basis of the issuance of any options or rights, or
convertible or exchangeable securities (or options or rights with respect to
such securities) pursuant to SECTION 5.04:
(a) the options or rights shall expire prior to exercise or
the right to convert or exchange any such securities shall terminate; or
(b) the consideration per share for which shares of Common
Stock are issuable pursuant to the terms of such options or rights or
convertible or exchangeable securities shall be increased or decreased, other
than under or by reason of provisions designed to protect against dilution,
such previous adjustment shall be rescinded and annulled,
thereupon a recomputation shall be made of the effect of such options or rights
or convertible or exchangeable securities with respect to shares of Common Stock
on the basis of:
(A) treating the number of shares of Common
Stock, if any, theretofore actually issued
or issuable pursuant to the previous
exercise, conversion or exchange of such
options, rights or securities as having been
issued on the date or dates of such
exercise, conversion or exchange and for the
consideration actually received and
receivable therefore, and
(B) treating any such options, rights or
securities which then remain outstanding as
having been granted or issued immediately
after the time of such increase or decrease
for the consideration per share for which
shares of Common Stock are issuable upon
exercise, conversion or exchange of such
options, rights or securities.
Bechtel Warrant Agreement
20
To the extent called for by the foregoing provisions of this SECTION 5.05 on the
basis aforesaid, a new adjustment in the number of shares of Warrant Stock
comprising a Stock Unit shall be made in accordance with SECTION 5.04,
determined using the Current Market Value used at the time of the original
determination, which new adjustment shall supersede the previous adjustment so
rescinded and annulled. If the exercise, conversion or exchange price provided
for in any such option, right or security shall decrease at any time under or by
reason of provisions designed to protect against dilution, then in the case of
the delivery of shares of Common Stock upon the exercise, conversion or exchange
of any such option, right or security, the Stock Unit purchasable upon the
exercise of a Warrant shall forthwith be adjusted in the manner which would have
been obtained had the adjustment made upon issuance of such option, right or
security been made upon the basis of the issuance of (and the aggregate
consideration received for) the shares of Common Stock delivered as aforesaid.
SECTION 5.06. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Warrant Stock comprising a Stock Unit:
(a) The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Issuer (other than to
the Holders hereunder) shall be deemed to be an issuance thereof for purposes of
this ARTICLE V.
(b) In computing adjustments under this ARTICLE V, fractional
interests in Common Stock shall be taken into account to the nearest
one-thousandth of a share.
(c) If the Issuer shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall, thereafter and before
the distribution thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, 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.
SECTION 5.07. MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS.
If the Issuer shall merge or consolidate with another Person, or shall sell,
transfer or otherwise dispose of all or substantially all of its assets to
another Person and pursuant to the terms of such merger, consolidation or
disposition of assets, cash, shares of common stock or other securities of the
successor or acquiring Person, or property of any nature is to be received by or
distributed to the holders of Common Stock of the Issuer, then each Holder of
Warrants, at such Holder's election, have the right to receive (whether or not
such Holder exercises such Warrants) the amount of cash or other consideration
it would have been entitled to receive if such Holder had exercised such
Warrants immediately prior to the occurrence of such merger, consolidation or
disposition of assets, net of the exercise price of such Warrants, and shall
thereupon be deemed to have exercised such Warrants. In case of any such merger,
consolidation or disposition of assets in which the foregoing election is not
made, the successor or acquiring Person (and any affiliate thereof issuing
securities) shall expressly assume the due and punctual observance and
Bechtel Warrant Agreement
21
performance of each and every covenant and condition to be performed and
observed by, and all of the obligations and liabilities of, the Issuer hereunder
and under the Warrants, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board) in order to provide for
adjustments of Stock Units which shall be as nearly equivalent as practicable to
the adjustments provided for in this ARTICLE V. The foregoing provisions shall
similarly apply to successive mergers, consolidations and dispositions of
assets.
SECTION 5.08. OTHER ACTION AFFECTING COMMON STOCK. If at any
time or from time to time the Issuer shall take any action affecting its Common
Stock, other than an action described in any of the foregoing subsections of
this ARTICLE V or an action taken in the ordinary course of the Issuer's
business and consistent with past practice, then, unless in the reasonable
opinion of the Board such action will not have a material adverse effect upon
the rights of the Holders of the Warrants, the number of shares of Warrant Stock
comprising a Stock Unit shall be adjusted in such manner and at such time as the
Board shall in good faith determine to be equitable in the circumstances.
SECTION 5.09. NO ADJUSTMENT NECESSARY. Anything to the
contrary herein notwithstanding, no adjustment to the number of shares of
Warrant Stock comprising a Stock Unit shall be made as a result of, or in
connection with, the issuance of any Option or any Common Stock issuable or
issued upon the exercise thereof (so long as the exercise price for such Option
represents the Current Market Value of the Equity Securities issued at the time
such Option was awarded).
SECTION 5.10. NOTICE OF ADJUSTMENTS. Whenever the number of
shares of Warrant Stock comprising a Stock Unit shall be adjusted pursuant to
this Agreement, the Issuer shall forthwith obtain a certificate signed by the
Issuer's chief financial officer (or, if the Holders of a majority in interest
of the Warrants issued hereunder so request after delivery of a certificate from
the chief financial officer, signed by a firm of independent accountants of
recognized national standing selected by the Issuer), setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the number of shares of Warrant
Stock comprising a Stock Unit, after giving effect to such adjustment. The
Issuer shall promptly cause a signed copy of such certificate to be delivered to
each holder of Warrants. The Issuer shall keep at its office copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by any Holder of Warrants or any prospective
purchaser of Warrants designated by the registered Holder of such Warrants.
SECTION 5.11. NOTICE OF CERTAIN CORPORATE ACTION. If the
Issuer shall propose (i) to pay any dividend to the holders of its Common Stock
or to make any other distribution to the holders of its Common Stock; (ii) to
offer to the holders of its Common Stock rights to subscribe for or to purchase
any additional shares of Common Stock (or options or rights with respect
thereto); (iii) to effect any reclassification of its Common Stock; (iv) to
otherwise issue any Equity Securities; (v) to effect any capital reorganization;
(vi) to effect any consolidation, merger or sale, transfer or other disposition
of all or substantially all of its assets; or (vii) to
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22
effect the liquidation, dissolution or winding up of the Issuer, then, in each
such case, the Issuer shall give to each Holder of Warrants a notice of such
proposed action, which shall specify the date on which a record is to be taken
for the purposes of such dividend, distribution or rights offer, or the date on
which such reclassification, issuance, reorganization, consolidation, merger,
sale, transfer, disposition, liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Common Stock, and the number of shares of Warrant Stock which will
comprise a Stock Unit after giving effect to any adjustment which will be
required as a result of such action. Such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 20 days prior to the
record date for determining holders of the Common Stock for purposes of such
action, and in the case of any other such action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of Common Stock, whichever shall be the earlier.
ARTICLE VI
REGISTRATION RIGHTS
SECTION 6.01. FILING OF SHELF REGISTRATION. (a) The Issuer
shall use its reasonable best efforts to file a "shelf" registration statement
on any appropriate form pursuant to Rule 415 (or similar rule that may be
adopted by the SEC) under the Securities Act (a "SHELF REGISTRATION") as
promptly as practicable and in no event later than the date that is 5 days
following the date hereof (the "REQUIRED FILING DATE") to permit resales of all
of the Registrable Securities. The Issuer agrees to use its reasonable best
efforts to cause such Shelf Registration to become effective as promptly as
possible after the filing thereof, but in no event later than 90 days after the
Required Filing Date (the "REQUIRED EFFECTIVE DATE"), and thereafter to keep it
continuously effective for the period that will terminate upon the earlier of
the date on which (1) all the Registrable Securities covered by the Shelf
Registration have been sold pursuant to such Shelf Registration or have been
sold to the public pursuant to Rule 144 and (2) no Registrable Securities remain
outstanding.
(b) LIQUIDATED DAMAGES. If (i) the Registration Statement has
not been declared effective by the SEC on or prior to the Required Effective
Date or (ii) the Registration Statement is filed and declared effective but
shall thereafter cease to be effective at any time within the time period
required for effectiveness in subsection (a) above without being succeeded
immediately by a post-effective amendment to the Registration Statement that
cures such failure and that is itself immediately declared effective (each such
event referred to in clauses (i) and (ii), a "REGISTRATION DEFAULT"), the Issuer
shall pay liquidated damages ("LIQUIDATED DAMAGES") to each holder of
Registrable Securities in an amount equal to US$0.01 per share of Warrant Stock
held by such holder for each week or portion thereof during which any
Registration Default continues (other than with respect to any period during
which such holder is required to discontinue the disposition of Registrable
Securities pursuant to the last paragraph of SECTION 6.03 hereof). The amount of
such Liquidated Damages shall increase on each 90-day anniversary of the day the
Bechtel Warrant Agreement
23
first Registration Default occurred by an additional US$0.01 per share of
Warrant Stock for each week or portion thereof during which any Registration
Default continues until all Registration Defaults have been cured, up to a
maximum amount of Liquidated Damages of US$0.05 per week or portion thereof per
share of Warrant Stock. All accrued Liquidated Damages shall be paid by wire
transfer of immediately available funds or by federal funds check on the last
day of each four week period to an account previously designated in writing to
the Issuer by each holder of Registrable Securities. Following the cure of all
Registration Defaults relating to any particular Registrable Security, the
accrual of Liquidated Damages with respect to such Registrable Security will
cease. Except as provided in SECTION 6.06 hereof, no holder of Registrable
Securities shall be entitled to any damages for a Registration Default beyond
the Liquidated Damages provided for herein.
All obligations of the Issuer set forth in the preceding
paragraph that are outstanding with respect to any Registrable Security at the
time such security ceases to be a Registrable Security shall survive until such
time as all such obligations have been paid in full.
SECTION 6.02. HOLD-BACK AGREEMENTS; CUTBACKS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE
SECURITIES. Each holder of Registrable Securities whose Registrable Securities
are covered by a Registration Statement filed pursuant to SECTION 6.01 hereof
agrees, if requested by the managing underwriters in an underwritten offering,
not to effect any public sale or distribution of securities of the Issuer of the
same class as the securities included in such Registration Statement, including
a sale pursuant to Rule 144 under the Securities Act (except as part of such
underwritten registration), during the 15-day period prior to, and during the
90-day period beginning on, the closing date of each underwritten offering made
pursuant to such Registration Statement, to the extent timely notified in
writing by the Issuer or the managing underwriters; PROVIDED, HOWEVER, that each
holder of Registrable Securities shall be subject to the hold-back restrictions
of this SECTION 6.02(a) only once during any twelve-month period.
The foregoing provisions shall not apply to any holder of
Registrable Securities if such holder is prevented by applicable statute or
regulation from entering into any such agreement; PROVIDED, HOWEVER, that any
such holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale or distribution of any
Registrable Securities held by such holder and covered by a Registration
Statement commencing on the date of sale of the Registrable Securities unless it
has provided 45 days prior written notice of such sale or distribution to the
underwriter or underwriters.
(b) RESTRICTIONS ON SALE OF SECURITIES BY THE ISSUER AND
OTHERS. The Issuer agrees (1) not to effect any public or private offer, sale or
distribution of any of its equity securities or any class or series of its
capital stock having a preference in liquidation or with respect to dividends,
including a sale pursuant to Regulation D under the Securities Act (other than
any such sale or distribution of such securities in connection with any merger
or consolidation by the Issuer or any subsidiary of the Issuer or the
acquisition by the Issuer or a
Bechtel Warrant Agreement
24
subsidiary of the Issuer of the capital stock or substantially all the assets of
any other Person or in connection with any employee stock option or other
benefit plan), during the 10-day period prior to, and during the 90-day period
beginning with, the effectiveness of a Registration Statement filed under
SECTION 6.01 hereof to the extent timely notified in writing by a holder of
Registrable Securities or the managing underwriters in an underwritten offering
(except as part of such if permitted, or pursuant to registrations on Forms S-4
or S-8 or any successor form to such registration Forms) and (2) during the
aforementioned period to use reasonable best efforts to cause each holder of
each of its privately placed equity securities or any class or series of its
capital stock having a preference in liquidation or with respect to dividends
purchased from the Issuer at any time on or after the date of this Agreement to
agree not to effect any public sale or distribution of any such securities
during such period, including a sale pursuant to Rule 144 under the Securities
Act (except as part of such registration, if permitted).
(c) CUTBACKS IN UNDERWRITTEN REGISTRATIONS. In connection with
any registration hereunder in which more than one securityholder has a right to
request registration of its Common Stock, in the event that such registration
involves an underwritten offering and the managing underwriter or underwriters
participating in such offering advise the securityholders participating in such
offering that the total number of shares of Common Stock to be included in such
offering exceeds the amount that can be sold in (or during the time of) such
offering without delaying or jeopardizing the success of such offering
(including the price per share of Common Stock), then the Issuer shall include
in any such total number of Registrable Securities and all other shares of
Common Stock which have registration rights with respect to such registration to
be offered for the account of all securityholders shall be reduced to a number
deemed satisfactory by such managing underwriter or underwriters, provided that
the shares of Common Stock to be excluded shall be determined in the following
sequence: (i) first, there shall be excluded shares of Common Stock held by
securityholders of the Issuer other than the holders of Registrable Securities
requesting and legally entitled to include such shares of Common Stock in such
registration, on a PRO RATA basis (based upon the number of shares of Common
Stock requested (or proposed) to be registered by each such holder and (ii)
second, Registrable Securities, on a PRO RATA basis (based upon the number of
Registrable Securities requested to be included in such registration).
SECTION 6.03. REGISTRATION PROCEDURES. In connection with the
Issuer's Shelf Registration obligations pursuant to SECTION 6.01 hereof, the
Issuer will use its best efforts to effect such registration to permit the sale
of such Registrable Securities in accordance with the intended method or methods
of distribution thereof (which methods may include, at the request of the
Required Holders, an underwritten offering), and pursuant thereto the Issuer
will, as expeditiously as possible:
(a) prepare and file with the SEC, within the time period
provided in SECTION 6.01 hereof, a Registration Statement or Registration
Statements relating to the Shelf Registration on any appropriate form under the
Securities Act, which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of
Bechtel Warrant Agreement
25
distribution thereof and shall include (i) all financial statements (including,
if applicable, financial statements of any Person which shall have guaranteed
any indebtedness of the Issuer) required by the SEC to be filed therewith and
(ii) if the sale is by means of an underwritten offering, any other information
that the managing underwriter reasonably believes to be of material importance
to the success of such offering, cooperate and assist in any filings required to
be made with the NASD, and use its best efforts to cause such Registration
Statement to become effective within such time period; PROVIDED that as far in
advance as practical before filing a Registration Statement or any amendments or
supplements thereto, the Issuer will furnish to the holders of the Registrable
Securities covered by such Registration Statement and the underwriters, if any,
copies of all such documents proposed to be filed, which documents will be
subject to the review by such holders and underwriters, and the Issuer will not
file any Registration Statement or any amendments or supplements thereto to
which the holders of a majority of the Registrable Securities or such managing
underwriters, if any, shall reasonably object within 14 days;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective until all Registrable Securities
covered by such Registration Statement have been sold; cause the Prospectus to
be supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(c) notify the selling holders of Registrable Securities and
the managing underwriters, if any, promptly, and (if requested by any such
Person) confirm such advice in writing, (1) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (3) of the issuance by the SEC of any stop order of which the
Issuer or its counsel is aware suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose, (4) if at any
time the representations and warranties of the Issuer contemplated by paragraph
(n) below cease to be true and correct in any material respect, (5) of the
receipt by the Issuer of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (6) of the
Issuer's becoming aware that the Prospectus (including any document incorporated
therein by reference), as then in effect, includes an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(d) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
Bechtel Warrant Agreement
26
(e) if reasonably requested by the managing underwriter or
underwriters or a holder of Registrable Securities being sold in connection with
an underwritten offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters or the holders of a majority of the Registrable Securities being
sold agree should be included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the amount of Registrable Securities being sold to
such managing underwriter or underwriters, the purchase price being paid
therefor by such underwriters and any other terms of the underwritten (or best
efforts underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as promptly as practicable upon being notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling holder of Registrable Securities
and each managing underwriter, if any, without charge, if requested, at least
one signed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference);
(g) deliver to each selling holder of Registrable Securities
and the underwriters, if any, without charge, if requested, as many copies of
the Prospectus (including each preliminary Prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the Issuer consents
to the use (subject to the limitations set forth in the last paragraph of this
SECTION 6.03) of the Prospectus or any amendment or supplement thereto by each
of the selling holders of Registrable Securities and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by the Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
holders of Registrable Securities, the underwriters, if any, and their
respective counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any such seller or underwriter reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the disposition in such jurisdictions of such Registrable Securities; provided
that the Issuer will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process or taxation in any such jurisdiction
where it is not then so subject;
(i) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing such Registrable
Securities to be sold and not bearing any restrictive legends; and enable such
Registrable Securities to be in such denominations and registered in such names
as
27
such managing underwriters may request at least two business days prior to any
sale of such Registrable Securities to the underwriters;
(j) use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the underwriters, if any, to
consummate the disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by paragraph
(c)(6) above, immediately prepare a supplement or post-effective amendment to
the related Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the holders of the Registrable Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading
in light of the circumstances then existing;
(l) use best efforts to cause all Registrable Securities
covered by a Registration Statement to be listed on each securities exchange on
which securities of the same class issued by the Issuer are then listed;
(m) not later than the effective date of the Shelf
Registration, provide a CUSIP number for all Registrable Securities and provide
the transfer agent with printed certificates for the Registrable Securities,
which are in a form eligible for deposit with The Depository Trust Company;
(n) enter into such agreements (including an underwriting
agreement) and take all such other appropriate and reasonable actions in
connection therewith in order to expedite or facilitate the disposition of such
Registrable Securities and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration (1) make such representations and warranties to the holders of such
Registrable Securities and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in primary underwritten
offerings and covering matters; (2) obtain opinions of counsel to the Issuer
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the holders of a majority
of the Registrable Securities) addressed to each selling holder and the
underwriters, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such holders and underwriters; (3) obtain "cold comfort" letters
and updates thereof from the Issuer's independent certified public accountants
addressed to such holders and underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters by underwriters in connection with primary underwritten
offerings; (4) if an underwriting agreement is entered into, if permitted by the
managing underwriter the same shall set forth in full the indemnification
provisions and procedures of SECTION 6.06 hereof with respect to all parties to
be indemnified pursuant to said Section; provided that the
Bechtel Warrant Agreement
28
indemnification provisions and procedures set forth in such underwriting
agreement shall be no less favorable to the selling holders of Registrable
Securities and the underwriters than the indemnification provisions and
procedures of SECTION 6.06 hereof; and (5) the Issuer shall deliver such
documents and certificates as may be requested by the holders of a majority of
the Registrable Securities being sold and the managing underwriters, if any, to
evidence compliance with paragraph (k) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Issuer. The above shall be done at each closing under such underwriting or
similar agreement or as and to the extent required thereunder;
(o) make available for inspection by any holder of Registrable
Securities or any underwriter participating in any disposition of Registrable
Securities pursuant to a Shelf Registration, and any attorney or accountant
retained by such holders or underwriters, if any, all financial and other
records, pertinent corporate documents and properties of the Issuer as may be
reasonably necessary to enable them to exercise their due diligence
responsibilities, and provide reasonable access to appropriate officers of the
Issuer in connection with such due diligence responsibilities;
(p) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC; and
(q) make appropriate officers of the Issuer available to such
holders and underwriters for meetings with prospective purchasers of the
Registrable Securities and prepare and present to potential investors customary
"road show" material in a manner consistent with other new issuances of other
securities similar to the Registrable Securities.
The Issuer may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Issuer such
information regarding the distribution of such securities as the Issuer may from
time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acceptance of
such Registrable Securities that, upon receipt of any notice from the Issuer of
the happening of any event of the kind described in SECTION 6.03(c)(3), (5) or
(6) hereof, such holder will forthwith discontinue disposition of Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by SECTION 6.03(k) hereof, or until it is
advised in writing by the Issuer that the use of such Prospectus may be resumed,
and has received copies of any additional or supplemental filings which are
incorporated by reference in such Prospectus, and, if so directed by the Issuer
such holder will deliver to the Issuer (at the Issuer's expense) all copies,
other than permanent file copies then in such holder's possession, of such
Prospectus covering such Registrable Securities current at the time of receipt
of such notice.
SECTION 6.04. REGISTRATION EXPENSES. All expenses incident to
the Issuer's performance of or compliance with this Agreement, including without
limitation all (i) registration and filing fees, fees and expenses associated
with filings required to be made with the NASD (including, if applicable, the
fees and expenses of any "qualified independent
Bechtel Warrant Agreement
29
underwriter" and its counsel as may be required by the rules and regulations of
the NASD), (ii) fees and expenses of compliance with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters or selling
holders in connection with blue sky qualifications of the Registrable Securities
and determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters or holders of a majority of the
Registrable Securities being sold may reasonably designate), (iii) printing
expenses (including expenses of printing certificates for the Registrable
Securities in a form eligible for deposit with The Depository Trust Issuer and
of printing prospectuses), (iv) fees and disbursements of counsel for the Issuer
and customary out of pocket expenses and fees paid by issuers to the extent
provided for in an underwriting agreement (excluding discounts, commissions or
fees of underwriters, selling brokers, dealer managers or similar securities
industry professionals relating to the distribution of the Registrable
Securities, transfer taxes or legal expenses of any Person other than the Issuer
and the selling holders), (v) the cost of securities acts liability insurance if
the Issuer so desires and (vi) fees and expenses of other Persons retained by
the Issuer (all such expenses being herein called "REGISTRATION EXPENSES") will
be borne by the Issuer regardless of whether the Registration Statement becomes
effective. Each holder of Registrable Securities will pay any fees or
disbursements of counsel to such holder and all underwriting discounts and
commissions and transfer taxes, if any, and other fees, costs and expenses of
such holder (other than Registration Expenses) relating to the sale or
disposition of such holder's Registrable Securities. The Issuer, in any event,
will pay the Issuer's own internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange on which similar securities issued by the Issuer are
then listed, rating agency fees and the fees and expenses of any Person,
including special experts, retained by the Issuer.
SECTION 6.05. RESTRICTION ON OTHER REGISTRATIONS. The Issuer
agrees that, until the occurrence of the date on which the Registration
Statement referred to in SECTION 6.01 hereof is declared effective by the SEC,
it shall not effect a registration of any of its equity securities, other than
with respect to up to 25,000,000 shares of Common Stock.
SECTION 6.06. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE ISSUER. The Issuer agrees to
indemnify and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities, their officers, directors and employees and each Person
who controls such holder (within the meaning of the Securities Act) (the
"INDEMNIFIED PARTIES") against all losses, claims, damages, liabilities and
expenses incurred by such party in connection with any actual or threatened
action arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
Prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a Prospectus or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, and the Issuer agrees to reimburse
such Indemnified Parties for any legal or other expenses reasonably incurred by
them in connection with
Bechtel Warrant Agreement
30
investigating or defending any such loss or action or proceeding in respect
thereof, except insofar as the same arise out of or are based upon any such
untrue statement or omission made in reliance on and in conformity with any
information furnished in writing to the Issuer by such holder or its counsel
expressly for use therein. The Issuer shall also indemnify underwriters, their
officers and directors and each Person who controls such Persons (within the
meaning of the Securities Act) to the same extent as provided above with respect
to the indemnification of the Indemnified Parties, if requested.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In
connection with the Shelf Registration, each holder of Registrable Securities
will furnish to the Issuer in writing such information and affidavits as the
Issuer reasonably requests for use in connection with any Registration Statement
or Prospectus and agrees to indemnify and hold harmless, to the full extent
permitted by law, the Issuer, its directors and officers and each Person who
controls the Issuer (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue
statement of a material fact contained in any Registration Statement or
Prospectus or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, to the extent, but only to the extent, that such untrue statement or
omission relates to such holder and is made in reliance on and in conformity
with any information or affidavit furnished in writing by such holder to the
Issuer specifically for inclusion in such Registration Statement or Prospectus.
In no event shall the liability of any selling holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the proceeds received
by such holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation. The Issuer shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution of such Registrable
Securities to the same extent above with respect to information or affidavit
furnished writing by such Persons as provided specifically for any Prospectus or
Registration Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnification hereunder will (i) give prompt notice to the Issuer
or holder of Registrable Securities, as the case may be (in either case, as
applicable, an "INDEMNIFYING PARTY"), of any claim with respect to which it
seeks indemnification and (ii) permit such Indemnifying Party to assume the
defense of such claim with counsel reasonably satisfactory to such Person;
PROVIDED, HOWEVER, that any Person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense of
such Person unless (a) the Indemnifying Party has agreed to pay such fees or
expenses, (b) the Indemnifying Party has failed to assume the defense of such
claim or (c) in the reasonable judgment of any such Person, based upon written
advice of its counsel, it would be inappropriate under applicable ethical
standards for counsel to the Indemnifying Party to represent such Person in the
defense of such claim (in which case, if the Person notifies the Indemnifying
Party in writing that such Person elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right
Bechtel Warrant Agreement
31
to assume the defense of such claim on behalf of such Person). If such
defense is not assumed by the Indemnifying Party, the Indemnifying Party will
not be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). No Indemnifying Party will
consent to entry of any judgment or enter into any settlement without the
consent of the Indemnified Party, which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. Any
Indemnifying Party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all Persons entitled to indemnification by such Indemnifying Party
with respect to such claim in any one jurisdiction, unless in the reasonable
judgment of such Person a conflict of interest may exist between such Person and
any other Person entitled to indemnification hereunder with respect to such
claim, in which event the Indemnifying Party shall be obligated to pay the fees
and expenses of such additional counsel or counsels, but only of one such
additional counsel for each group of similarly situated Persons in any one
jurisdiction.
(d) CONTRIBUTION. If for any reason the indemnification
provided for in the preceding paragraphs (a) and (b) is unavailable to a Person
entitled to indemnification or is insufficient to hold it harmless as
contemplated by the preceding paragraphs (a) and (b), then the Indemnifying
Party shall contribute to the amount paid or payable by such Person as a result
of such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of such Person and the Indemnifying Party, as well as
any other relevant equitable considerations, PROVIDED that no holder of
Registrable Securities shall be required to contribute an amount greater than
the dollar amount of the proceeds received by such holder of Registrable
Securities with respect to the sale of any securities. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Indemnifying Party or the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this paragraph were to be determined by pro rata
allocation or by any other method of allocation, which does not take into
account, the equitable considerations referred to in the first sentence of this
paragraph. 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.
SECTION 6.07. RULE 144. The Issuer covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if it is
not required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 under the Securities Act), and it
will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions
Bechtel Warrant Agreement
32
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any holder of Registrable Securities, the Issuer
will deliver to such holder a written statement as to whether it has complied
with such information and filing requirements.
SECTION 6.08 REMEDIES. Each holder of Registrable Securities,
in addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, in connection with the breach by the
Issuer of its obligations to register the Registrable Securities will be
entitled to specific performance of its rights under this Agreement. The Issuer
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 Agreement and
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.
ARTICLE VII
TAG-ALONG SALE
SECTION 7.01. TAG-ALONG OBLIGATIONS.
(a) If at any time the Principal Shareholder or any Affiliate
(other than the Company) of the Principal Shareholder that has such Affiliate
status solely by virtue of his, her or its status as an Affiliate of the Issuer
("TAG-ALONG SELLER") shall, in one or in a series of transactions, enter into an
agreement to effect, or effect or propose to effect, an Applicable Disposition
to any transferee (a "TAG-ALONG SALE"), Initial Holder shall have the right, but
not the obligation, to participate in such Tag-Along Sale by selling up to the
number of shares (on an aggregate basis) of Warrant Stock subject to the Warrant
and shares of Warrant Stock equal to the product of (i) the total number of
shares (on an aggregate basis) of Common Stock proposed to be sold in the
proposed Tag-Along Sale multiplied by (ii) a fraction, the numerator of which is
equal to the number of shares (on an aggregate basis) of Warrant Stock subject
to Warrant and shares of Warrant Stock owned by Initial Holder immediately prior
to the Tag-Along Sale, and the denominator of which is equal to (A) the number
of shares of Common Stock owned by the Tag-Along Seller immediately prior to the
Tag-Along Sale plus (B) the number of shares (on an aggregate basis) of Warrant
Stock subject to the Warrant and shares of Warrant Stock owned by such holder
together with the number of shares of Common Stock owned by any holder thereof
who has similar "tag-along" rights and elects to exercise such rights in
connection with the Tag-Along Sale, in each case immediately prior to the
Tag-Along Sale. Any such sales by Initial Holder shall be on the same terms and
conditions as the proposed Tag-Along Sale by the Tag-Along Seller, except
Initial Holder shall not be required to make any representations or warranties
except as to (x) its title to the Warrant or shares of Warrant Stock to be sold
by it, (y) Initial Holder's power and authority to effect such transfer and (z)
such matters pertaining to compliance with securities law as the transferee may
reasonably require.
(b) Notwithstanding the foregoing, the provisions of SECTION
7.01(a) shall not apply to any transfer, sale or disposition of shares of Common
Stock by the Principal
Bechtel Warrant Agreement
33
Shareholder (i) to any of its Affiliates, PROVIDED that, any further sale,
disposition or transfer by such Affiliate transferee shall be subject to the
provisions of this SECTION 7.01(a), (II) in an ordinary brokerage transaction
pursuant to Rule 144 or (iii) to a Principal Shareholder Beneficial Owner's
spouse or the members of the Principal Shareholder Beneficial Owner's immediate
family or to a custodian, trustee, executor, or other fiduciary for the account
of the Principal Shareholder Beneficial Owner's spouses or members of the
Principal Shareholder Beneficial Owner's immediate family, or to a trust for the
Principal Shareholder Beneficial Owner's own self, PROVIDED, that each such
transferee or assignee, prior to the completion of the sale, transfer, or
assignment shall have executed documents assuming the obligations of the
Principal Shareholder Beneficial Owner with respect to the transferred
securities.
(c) On the date hereof, the Issuer shall deliver to Initial
Holder a joinder agreement substantially in the form attached hereto as ANNEX 3
(a "JOINDER AGREEMENT"), executed by the Issuer, the Principal Shareholder and
the Principal Shareholder Beneficial Owners, pursuant to which such parties will
agree to be bound by the provisions of this ARTICLE VII. As a condition to the
validity of any sale, disposition or other transfer of any Common Stock by any
of the Persons who have executed and delivered a Joinder Agreement pursuant to
this SECTION 7.01 to any other Person, the transferee thereof shall execute and
deliver to the Issuer and each Holder a Joinder Agreement.
Bechtel Warrant Agreement
34
(d) References in this SECTION 7.01 to Initial Holder shall
include Initial Holder's Affiliates to the extent that such Affiliates then hold
Warrants or Warrant Stock.
SECTION 7.02. PROCEDURES. If a Tag-Along Seller is
participating in a Tag-Along Sale, at least 15 days before the proposed date
thereof, the Issuer shall provide each Holder of Warrants or Warrant Stock with
written notice of such Tag-Along Sale setting forth in reasonable detail the
consideration per share to be paid by the transferee, the number of shares to be
sold and the other terms and conditions of the Tag-Along Sale. Each Holder of
Warrants or Warrant Stock wishing to participate in the Tag-Along Sale shall
provide written notice to such Tag-Along Seller and to the Issuer within 15 days
of the date the notice specified in the preceding sentence is received by such
Holder. Such notice shall set forth the number (on an aggregate basis) of then
exercisable Warrants and shares of Warrant Stock, if any, such holder elects to
include in the Tag-Along Sale. If a Holder, or Holders, of Warrants or Warrant
Stock has elected to participate in a Tag-Along Sale, the Tag-Along Seller shall
reduce, to the extent necessary, the number of shares of Common Stock that it is
entitled to sell in the Tag-Along Sale to permit the Holder, or Holders, of
Warrants or Warrant Stock to participate in the Tag-Along Sale and the Holder,
or Holders, of Warrant or Warrant Stock so electing shall sell such number of
shares identified in its notice to the Tag-Along Seller. If such notice is not
received from a Holder within the 15-day period specified above, the Tag-Along
Seller shall have the right to sell or otherwise transfer the shares of Common
Stock to the proposed transferee without any participation by such Holder, but
only (i) on the terms and conditions stated in the notice, and (ii) if the sale
or transfer of such shares of Common Stock is consummated not later than 60 days
after the end of such 5-day period specified above.
ARTICLE XIII
HOLDERS' RIGHTS
SECTION 8.01. DELIVERY EXPENSES. If any Holder surrenders any
certificate for Warrants or Warrant Stock to the Issuer or a transfer agent of
the Issuer for exchange for instruments of other denominations or registered in
another name or names, the Issuer shall cause such new instruments to be issued
and shall pay the cost of delivering to or from the office of such Holder from
or to the Issuer or its transfer agent, duly insured, the surrendered instrument
and any new instruments issued in substitution or replacement for the
surrendered instrument.
SECTION 8.02. TAXES. The Issuer shall pay all taxes (other
than Federal, state or local income taxes) which may be payable in connection
with the execution and delivery of this Agreement or the issuance of the
Warrants and Warrant Stock hereunder or in connection with any modification of
this Agreement or the Warrants and shall hold each Holder harmless without
limitation as to time against any and all liabilities with respect to all such
taxes. The obligations of the Issuer under this SECTION 8.02 shall survive any
redemption, repurchase or acquisition of
35
Warrants or Warrant Stock by the Issuer, any termination of this Agreement, and
any cancellation or termination of the Warrants.
SECTION 8.03. REPLACEMENT OF INSTRUMENTS. Upon receipt by the
Issuer of evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of any certificate or instrument
evidencing any Warrants or Warrant Stock, and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the Common Stock is not
at the time publicly traded and the owner of the same is any Holder or
an institutional lender or investor, its own agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender or cancellation
thereof, the Issuer, at its expense, shall execute, register and
deliver, in lieu thereof, a new certificate or instrument for (or
covering the purchase of) an equal number of Warrants or Warrant Stock.
SECTION 8.04. INDEMNIFICATION. The Issuer shall indemnify and
hold harmless each of the Holders and each of their respective directors,
officers, employees, shareholders, Affiliates and agents (each, an "INDEMNIFIED
PERSON") on demand from and against any and all losses, claims, damages,
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) and expenses that arise out of, result from, or in any way relate to,
this Agreement or the Warrants, or in connection with the other transactions
contemplated hereby, and to reimburse each indemnified person, upon its demand,
for any legal or other expenses incurred in connection with investigating,
defending or participating in the defense of any such loss, claim, damage,
liability, action or other proceeding (whether or not such indemnified person is
a party to any action or proceeding out of which any such expenses arise), other
than any of the foregoing claimed by any indemnified person to the extent
incurred by reason of the gross negligence or willful misconduct of such
indemnified person. No indemnified person shall be responsible or liable to
either the Issuer or any other Person for any damages which may be alleged as a
result of or relating to this Agreement or the Warrants (other than in
connection with a breach of this Agreement), or in connection with the other
transactions contemplated hereby and thereby. Any claim for indemnity in
connection with or relating to a registration of securities pursuant to ARTICLE
VI shall be governed by SECTION 6.06, without regard to the provisions of this
SECTION 8.04.
SECTION 8.05. INSPECTION RIGHTS. The Issuer shall afford, and
shall cause its Subsidiaries to afford, any Holder or its authorized agents,
access, at reasonable times, upon reasonable prior notice and subject to
customary confidentiality obligations, (a) to inspect the books and records of
the Issuer and its Subsidiaries, (b) to discuss with management of the Issuer
and its Subsidiaries the business and affairs of the Issuer and its Subsidiaries
and (c) to inspect the properties of the Issuer and its Subsidiaries.
Bechtel Warrant Agreement
36
ARTICLE IX
OTHER COVENANTS OF ISSUER
The Issuer agrees with each Holder that, so long as any of
the Warrants and/or Warrant Stock shall be outstanding:
SECTION 9.01. FINANCIAL STATEMENTS, ETC. The Issuer agrees
that it will file the reports required to be filed by it under the Securities
Act and the Exchange Act so long as the Issuer is registered under the Exchange
Act. Upon the request of any Holders, the Issuer will deliver to such Holder a
written statement as to whether it has complied with such requirements.
SECTION 9.02. RESTRICTIONS ON PERFORMANCE. The Issuer shall
not at any time enter into an agreement or other instrument limiting in any
manner its ability to perform its obligations under this Agreement or the
Warrants, or making such performance or the issuance of Warrant Stock upon the
exercise of any Warrant a default under any such agreement or instrument.
SECTION 9.03. MODIFICATION OF OTHER EQUITY DOCUMENTS. The
Issuer shall not amend or consent to any modification, supplement or waiver of
any provision of any Other Equity Documents in any manner which would have a
material adverse effect on the holders of Warrants or Warrant Stock, in each
case without the prior written consent of the Required Holders. Without limiting
the generality of the foregoing, the Issuer shall not amend, or consent to any
modification, supplement or waiver of any provision of any Other Equity
Documents in a way which would (i) restrict the transferability of the Warrants
or the Warrant Stock, (ii) restrict the transferability of the rights of any
Holder in this Agreement to any transferee of all or a portion of such Holder's
Warrants and/or Warrant Stock or (iii) require any consent or other approval of
any Person to the exercise of the Warrants by any Holder or the issuance of
Warrant Stock upon such exercise.
SECTION 9.04. RESERVATION AND AUTHORIZATION OF COMMON STOCK.
The Issuer shall at all times reserve and keep available for issue upon the
exercise or conversion of 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. The Issuer shall not amend its certificate of
incorporation in any respect relating to the Common Stock other than (i) to
increase or decrease the number of shares of authorized capital stock (subject
to the provisions of the preceding sentence) or (ii) to decrease the par value
of any shares of Common Stock. All shares of Common Stock which shall be so
issuable, when issued upon exercise of any Warrant and payment of the applicable
Exercise Price therefor in accordance with the terms of this Warrant, shall be
duly and validly issued, fully paid and nonassessable and free and clear of any
Liens.
Before taking any action which would result in an adjustment
in the number of shares of Common Stock comprising a Stock Unit or which would
cause an adjustment reducing the Current Warrant Price per share of Common Stock
below the then par value, if any, of the
Bechtel Warrant Agreement
37
shares of Common Stock issuable upon exercise of the Warrants, the Issuer shall
take any corporate action which is necessary in order that the Issuer may
validly and legally issue fully paid and nonassessable shares of Common Stock
free and clear of any Liens upon the exercise of all the Warrants immediately
after the taking of such action.
Before taking any action, which would result in an adjustment
in the number of shares of Common Stock comprising a Stock Unit or in the
Current Warrant Price per share of Common Stock, the Issuer shall obtain all
such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction thereof.
The Issuer will list on each national securities exchange on
which any Common Stock may at any time be listed, subject to official notice of
issuance upon exercise of the Warrants, and will maintain such listing of, all
shares of Common Stock from time to time issuable upon the exercise of the
Warrants.
SECTION 9.05. NOTICE OF EXPIRATION DATE. The Issuer shall give
to each Holder notice of the Expiration Date. Such notice may be given by the
Issuer not less than 30 days but not more than 60 days prior to the Expiration
Date; PROVIDED, HOWEVER, that if the Issuer fails to give timely notice, the
Expiration Date will be extended to the date which is 30 days after the day on
which such notice is given.
SECTION 9.06. OCCURRENCE OF INITIAL EXERCISE DATE. The Issuer
agrees to use its reasonable best efforts to cause the Initial Exercise Date to
occur as promptly as practicable, and in no event later than the 45th day
following the Closing Date.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. HOME OFFICE PAYMENT. Notwithstanding anything
to the contrary in this Agreement or the Warrants, so long as any Holder or any
nominee designated by it shall be a Holder, the Issuer shall punctually pay all
amounts which become due and payable with respect to any Warrant or Warrant
Stock to such Holder at the address registered on the books of the Issuer
maintained for such purpose, or at such other place and in such manner as such
Holder may designate by notice to the Issuer, without presentation or surrender
of such Warrant or the making of any notation thereon. Each Holder agrees that
prior to the sale, transfer or other disposition of a part of any Warrant, it
will make notation thereon of the number of shares of Warrant Stock covered by
the part of the Warrant sold, transferred or disposed, or surrender the same in
exchange for a Warrant covering the number of shares of Warrant Stock remaining
on the Warrant so surrendered. The Issuer agrees that the provisions of this
Section 10.01 shall inure to the benefit of any other Holder registered on the
books of the Issuer.
38
SECTION 10.02. WAIVER. No failure on the part of any Holder to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement or the Warrants shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege under this Agreement or the Warrant preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
SECTION 10.03. NOTICES. (a) All notices, requests and other
communications provided for herein and the Warrants (including any waivers or
consents under this Agreement and the Warrants) shall be given or made in
writing, (a) to any party hereto, delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party, at such other address as shall be designated by such party
in a written notice to each other party, or (b) any other Person who is the
registered Holder of any Warrants or Warrant Stock, to the address for such
Holder as it appears in the stock or warrant ledger of the Issuer.
(b) All such notices, requests and other communications shall
be: (i) personally delivered, sent by courier guaranteeing overnight delivery or
sent by registered or certified mail, return receipt requested, postage prepaid,
in each case given or addressed as aforesaid; and (ii) effective upon receipt.
SECTION 10.04. EXPENSES, ETC. The Issuer agrees to pay or
reimburse the Holders for: (a) all reasonable out-of-pocket costs and expenses
of Initial Holder (including the reasonable fees and expenses of Shearman &
Sterling, in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the issuance of Warrants hereunder and (ii) any
amendment, modification or waiver of (or consents in respect of) any of the
terms of this Agreement and/or the Warrants; and (b) all costs and expenses of
the Holders (including reasonable legal fees and expenses) in connection with
(i) any default by the Issuer hereunder or under the Warrants or any enforcement
proceedings resulting therefrom and (ii) the enforcement of this SECTION 10.04.
SECTION 10.05. AMENDMENTS, ETC. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Issuer and the Required
Holders; PROVIDED that (a) the consent of the holders of any class of Warrant
Stock or Warrants shall not be required with respect to any amendment or waiver
which does not affect the rights or benefits of such class under this Agreement,
and (b) no such amendment or waiver shall, without the written consent of all
Holders of such Warrant Stock and Warrants at the time outstanding, amend this
SECTION 10.05.
SECTION 10.06. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Bechtel Warrant Agreement
39
SECTION 10.07. SURVIVAL. All representations and warranties
made by the Issuer herein or in any certificate or other instrument delivered by
it or on its behalf under this Agreement shall be considered to have been relied
upon by the Holders and shall survive the issuance of the Warrants or the
Warrant Stock regardless of any investigation made by or on behalf of the
Holders. All statements in any such certificate or other instrument so delivered
shall constitute representations and warranties by the Issuer hereunder. All
representations and warranties made by the Holders herein shall be considered to
have been relied upon by the Issuer and shall survive the issuance to the
Holders of the Warrants or the Warrant Stock regardless of any investigation
made by the Issuer or on its behalf.
SECTION 10.08. SPECIFIC PERFORMANCE. Damages in the event of
breach of this Agreement by a Holder or the Issuer would be difficult, if not
impossible, to ascertain, and it is therefore agreed that each Holder and the
Issuer, in addition to and without limiting any other remedy or right it may
have, will have the right to an injunction or other equitable relief in any
court of competent jurisdiction, enjoining any such breach, and enforcing
specifically the terms and provisions hereof, and each Holder and the Issuer
hereby waives any and all defenses it may have on the ground of lack of
jurisdiction or competence of the court to grant such an injunction or other
equitable relief. The existence of this right will not preclude the Holders or
the Issuer from pursuing any other rights and remedies at law or in equity,
which the Holders or the Issuer may have.
SECTION 10.09. CAPTIONS. The captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.
SECTION 10.10. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart signature page or counterpart.
SECTION 10.11. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the law of the State of New York without
giving effect to the conflicts of law principles thereof, except to the extent
that New York conflicts of laws principles would apply the Delaware General
Corporation Law to matters relating to corporations organized thereunder.
SECTION 10.12. SEVERABILITY. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a
40
part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
SECTION 10.13. ENTIRE AGREEMENT. This Agreement supersedes all
prior discussions and agreements between the parties with respect to the subject
matter hereof and, together with the Warrants, contains the sole and entire
agreement between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Warrant Agreement as of the date first above written.
METROMEDIA FIBER NETWORK, INC.
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx
Title: President & CEO
INITIAL HOLDER
XXXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President, Telecommunications
and Industrial
Bechtel Warrant Agreement
Annex 1 to Warrant Agreement
[Form of Warrant]
WARRANT
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE RESTRICTIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT
DATED AS OF OCTOBER 1, 2001 (THE "WARRANT AGREEMENT"), BETWEEN
METROMEDIA FIBER NETWORK, INC., A DELAWARE CORPORATION (THE "ISSUER"),
AND XXXXXXX CORPORATION AS MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM
TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH RESTRICTIONS HAVE
LAPSED OR BEEN FULFILLED, RELEASED OR WAIVED. A COPY OF THE FORM OF THE
WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF
THE WARRANT AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND ACCORDINGLY, SUCH SECURITIES MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH
THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND
STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
No. of Stock Units Covered Hereby: 25,000,000 Warrant No. [_]
WARRANT
to Purchase Common Stock of
METROMEDIA FIBER NETWORK, INC.
THIS IS TO CERTIFY THAT XXXXXXX CORPORATION, or its registered
assigns (the "HOLDER"), is entitled to purchase in whole or in part from time to
time from METROMEDIA FIBER NETWORK, INC., a Delaware corporation (the "ISSUER"),
at any time on and after the Initial Exercise Date, but not later than 5:00
p.m., New York time, the fifth anniversary of the Initial Exercise Date (as it
may be extended pursuant to SECTION 9.06 of the
Warrant
-2-
Warrant Agreement, the "EXPIRATION DATE"), 25,000,000 Stock Units at a purchase
price of US$0.53875 per Stock Unit (the "EXERCISE PRICE"), subject to the terms
and conditions hereinbelow provided. All capitalized terms unless otherwise
defined herein shall have the meanings set forth in the Warrant Agreement.
On and after the Initial Exercise Date and until 5:00 p.m., New York
time, on the Expiration Date, the Holder may exercise this Warrant, on one or
more occasions, on any Business Day, in whole or in part, by delivering to the
Issuer,
(a) a written notice of the Holder's election to exercise this
Warrant, which notice shall specify the number of Stock Units to be
purchased (the "EXERCISE NOTICE");
(b) payment of the aggregate Exercise Price for the number of
Stock Units as to which this Warrant is being exercised (payable as set
forth below); and
(c) this Warrant.
The Exercise Price shall be payable, at the option of the
Holder, (a) in cash or by certified or official bank check payable to the order
of the Issuer or by wire transfer of immediately available funds to the account
of the Issuer, (b) by delivery to the Issuer of the Note (as defined in the
Warrant Agreement), with such securities being credited against the Exercise
Price in an amount equal to the aggregate principal amount of the Notes (plus
unpaid and accrued interest) so delivered, or (c) by delivery of this Warrant
Certificate to the Issuer for cancellation in accordance with the following
formula: in exchange for each share of Common Stock issuable on exercise of each
Warrant represented by this Warrant Certificate that is being exercised, the
Holder shall receive such number of shares of Common Stock as is equal to the
product of (i) the number of shares of Common Stock issuable upon exercise of
the Warrants being exercised at such time multiplied by (ii) a fraction, the
numerator or which is the Current Market Value per share of Common Stock at such
time minus the Exercise Price per share of Common Stock at such time, and the
denominator of which is the Current Market Value per share of Common Stock at
such time. Such Exercise Notice may be substantially in the form of EXHIBIT A
hereto. Upon receipt thereof, the Issuer shall, as promptly as practicable and
in any event within 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 Warrant Stock and other securities issuable
upon such exercise and any other property to which the Holder is entitled.
The certificate or certificates for Warrant Stock so delivered
shall be in such denominations as may be specified in the Exercise Notice and
shall be registered in the name of the Holder or such other name or names as
shall be designated in such Exercise Notice. 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 Warrant Stock, including, to the extent permitted by law, the right to vote
Warrant Stock or to consent or to receive notice as a Shareholder, as of the
date on which the last of the Exercise Notice, payment of the Exercise Price and
this Warrant is received by the Issuer as aforesaid, and all
Warrant
-3-
taxes required to be paid by the Holder, if any, pursuant to the Warrant
Agreement, prior to the issuance of Stock Units have been paid. If this Warrant
shall have been exercised only in part, the Issuer shall, at the time of
delivery of the certificate or certificates representing Warrant Stock and other
securities, execute and deliver to the Holder a new Warrant evidencing the
rights of the Holder to purchase the unpurchased Stock Units called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.
The Issuer shall not be required to issue a fractional amount
of Warrant Stock upon exercise of this Warrant. As to any fraction of a Warrant
Stock, which the Holder would otherwise be entitled to purchase upon such
exercise, the Issuer shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Current Market Value per
share of Warrant Stock on the date of exercise.
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.
Dated: October 1, 2001
METROMEDIA FIBER NETWORK, INC.
By
----------------------------------
Name:
Title:
Attest:
--------------------------------
Secretary
Warrant
Exhibit A to Warrant
FORM OF EXERCISE
(To be executed by the registered holder hereof)
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of [___] Stock Units of METROMEDIA FIBER
NETWORK, INC., a Delaware corporation and herewith makes payment therefore [in
cash, as provided in clause (a) of the third paragraph of this Warrant] [by
delivery of any Notes, as provided in clause (b) of the third paragraph of this
Warrant] [by delivery the Warrant Certificate(s) for cancellation in accordance
with the formula provided in clause (c) of the third paragraph of this Warrant],
all at the price and on the terms and conditions specified in this Warrant, and
requests that certificates for the shares of Common Stock be issued in
accordance with the instructions given below, and, if such Stock Units shall not
include all of the Stock Units to which the Holder is entitled under this
Warrant, that a new Warrant of like tenor and date for the unpurchased balance
of the Stock Units issuable hereunder be delivered to the undersigned.
Dated: _____________, 200[_]
---------------------------------------
(Signature of Registered Holder)
Instructions for issuance and
registration of Common Stock:
--------------------------------
Name of Registered Holder
(please print)
Social Security or Other Identifying
Number: _________________________
Please deliver certificate to
the following address:
------------------------------------
Xxxxxx
-------------------------------------
Xxxx, Xxxxx and Zip Code
Form of Exercise
Annex 2 to Warrant Agreement
FORM OF ASSIGNMENT
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED, the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the assignee named below all
the rights of the undersigned under this Warrant with respect to the number of
shares of Warrant Stock covered thereby set forth hereinbelow unto:
Number of Stock Units and
Name of Assignee Address Class of Common Stock
--------------------------------------------------------------------------------
Dated: ____________, 200[_]
--------------------------------
Signature of Registered Holder
--------------------------------
Name of Registered Holder
(Please Print)
Witness:
----------------------
Form of Assignment
Annex 3 to Warrant Agreement
[Form of Joinder Agreement]
JOINDER AGREEMENT, dated as of October 1, 2001 between METROMEDIA FIBER
NETWORK, INC, a Delaware Corporation (the "ISSUER"), and the other parties
signatories hereto (this "JOINDER AGREEMENT").
A. Reference is made to that certain Warrant Agreement dated as
of October 1, 2001 (as modified and supplemented and in effect
from time to time, the "WARRANT AGREEMENT"), between the
Issuer and Bechtel (and each assignee thereof, the "INITIAL
HOLDER"). Each capitalized term used but not defined herein
shall have the meaning assigned to such term in the Warrant
Agreement; and
B. SECTION 7.01(c) of the Warrant Agreement requires that the
Issuer shall deliver to the Initial Holder this Joinder
Agreement executed by the Issuer, the Principal Shareholder
and the Principal Shareholder Beneficial Owners.
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby agrees that:
1. The undersigned: (a) is delivering this Joinder Agreement pursuant
to SECTION 7.01(c) of the Warrant Agreement and (b) acknowledges receipt of a
copy of the Warrant Agreement.
2. The undersigned hereby agrees to be bound by the provisions of
Article VII of the Warrant Agreement.
IN WITNESS WHEREOF, the undersigned has signed this Joinder Agreement
as of the date first above written.
METROMEDIA COMPANY
By:
---------------------------------
Name:
Title:
XXXX X. XXXXX
By:
---------------------------------
Name:
Title:
XXXXXX XXXXXXXXX
By:
---------------------------------
Name:
Title:
Acknowledged and Agreed to as
of the date first above written:
METROMEDIA FIBER NETWORK, INC.
By:
-------------------------------
Name:
Title:
