----------------------------------------------------------
----------------------------------------------------------
WARRANT AGREEMENT
Dated as of April 2, 1998
By and Between
CONVERGENT COMMUNICATIONS, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
Warrant Agent
Warrants to Purchase Common Stock
(No Par Value)
----------------------------------------------------------
----------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I ISSUANCE, FORM, EXECUTION, DELIVERY AND REGISTRATION OF WARRANT
CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.01. Issuance of Warrants. . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. Form of Warrant Certificates. . . . . . . . . . . . . . . . . . .2
SECTION 1.03. Execution of Warrant Certificates . . . . . . . . . . . . . . . .2
SECTION 1.04. Authentication and Delivery . . . . . . . . . . . . . . . . . . .3
SECTION 1.05. Temporary Warrant Certificates. . . . . . . . . . . . . . . . . .3
SECTION 1.06. Separation of Warrants and Notes. . . . . . . . . . . . . . . . .4
SECTION 1.07. Registration. . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 1.08. Registration of Transfers or Exchanges. . . . . . . . . . . . . .5
SECTION 1.09. Lost, Stolen, Destroyed, Defaced or Mutilated Warrant
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . .9
SECTION 1.10. Offices for Exercise, etc.. . . . . . . . . . . . . . . . . . . .9
ARTICLE II DURATION, EXERCISE OF WARRANTS; EXERCISE PRICE AND REPURCHASE OF
WARRANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
SECTION 2.01. Duration of Warrants. . . . . . . . . . . . . . . . . . . . . . .10
SECTION 2.02. Exercise, Exercise Price, Settlement and Delivery . . . . . . . .11
SECTION 2.03. Cancellation of Warrant Certificates. . . . . . . . . . . . . . .13
SECTION 2.04. Notice of an Exercise Event . . . . . . . . . . . . . . . . . . .13
ARTICLE III OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS . . . .14
SECTION 3.01. Enforcement of Rights . . . . . . . . . . . . . . . . . . . . . .14
SECTION 3.02. Obtaining Stock Exchange Listings . . . . . . . . . . . . . . . .14
ARTICLE IV CERTAIN COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . .14
SECTION 4.01. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 4.02. Rules 144 and 144A. . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 4.03. Form of Initial Public Equity Offering. . . . . . . . . . . . . .15
SECTION 4.04. Securities Act and Applicable State Securities Laws . . . . . . .15
SECTION 4.05. Resolution of Preemptive Rights, if Any . . . . . . . . . . . . .15
ARTICLE V ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 5.01. Adjustment of Exercise Rate; Notices. . . . . . . . . . . . . . .15
SECTION 5.02. Fractional Warrant Shares . . . . . . . . . . . . . . . . . . . .21
SECTION 5.03. Certain Distributions . . . . . . . . . . . . . . . . . . . . . .22
ARTICLE VI CONCERNING THE WARRANT AGENT . . . . . . . . . . . . . . . . . . .22
SECTION 6.01. Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 6.02. Conditions of Warrant Agent's Obligations . . . . . . . . . . . .22
SECTION 6.03. Resignation and Appointment of Successor. . . . . . . . . . . . .26
ARTICLE VII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 7.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 7.02. Notices and Demands to the Company and Warrant Agent. . . . . . .28
SECTION 7.03. Addresses for Notices to Parties and for Transmission of
Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
SECTION 7.04. Notices to Holders. . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 7.05. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 7.06. Persons Having Rights Under Agreement . . . . . . . . . . . . . .29
-i-
SECTION 7.07. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 7.08. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 7.09. Inspection of Agreement . . . . . . . . . . . . . . . . . . . .29
SECTION 7.10. Availability of Equitable Remedies. . . . . . . . . . . . . . .30
SECTION 7.11. Obtaining of Governmental Approvals . . . . . . . . . . . . . .30
-ii-
EXHIBIT A - Form of Warrant Certificate
EXHIBIT B - Form of Legend for Global Warrant
EXHIBIT C - Certificate to Be Delivered upon Exchange or
Registration of Transfer of Warrants
EXHIBIT D - Form of Certificate to Be Delivered in Connection with
Regulation S Transfers
-iii-
INDEX OF DEFINED TERMS
Defined Term Page
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Cashless Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Cashless Exercise Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Convertible Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 20
Current Market Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Definitive Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Distribution Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Election to Exercise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exercisability Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exercise Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exercise Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exercise Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exercise Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Global Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Global Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Independent Financial Expert. . . . . . . . . . . . . . . . . . . . . . . . . 21
Initial Public Equity Offering. . . . . . . . . . . . . . . . . . . . . . . . 11
Initial Purchasers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Issue Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Legended Regulation S Global Warrant. . . . . . . . . . . . . . . . . . . . . 3
Xxxxxxx Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Private Placement Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchase Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Requisite Warrant Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Resale Restriction Termination Date . . . . . . . . . . . . . . . . . . . . . 6
Securities Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Separability Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-iv-
Separation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Subject Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Surviving Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Time of Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Warrant Agent Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Warrant Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Warrant Exercise Office . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Warrant Register. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Warrant Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . 1
Warrant Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-v-
WARRANT AGREEMENT
WARRANT AGREEMENT ("AGREEMENT"), dated as of April 2, 1998 by and
between CONVERGENT COMMUNICATIONS, INC. (the "COMPANY"), a Colorado corporation,
and AMERICAN STOCK TRANSFER & TRUST COMPANY, warrant agent (with any successor
Warrant Agent, the "WARRANT AGENT").
WHEREAS, the Company has entered into a purchase agreement (the
"PURCHASE AGREEMENT") dated March 26, 1998 with Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("XXXXXXX XXXXX"), Bear, Xxxxxxx &
Co. Inc. and BT Alex. Xxxxx Incorporated (collectively, the "INITIAL
PURCHASERS"), severally, in which the Company has agreed to sell to the Initial
Purchasers 160,000 units (the "UNITS"), each consisting of (i) $1,000 principal
amount of Senior Notes due 2008 (the "NOTES") of the Company to be issued under
an indenture dated as of April 2, 1998 (the "INDENTURE"), between the Company
and Norwest Bank, N.A., trustee (in such capacity, the "TRUSTEE"), and (ii) four
warrants (the "WARRANTS"), each Warrant initially entitling the holder thereof
to purchase 2.7 shares of Common Stock (as defined herein) of the Company
(1,728,000 shares of Common Stock in the aggregate), set forth opposite such
Initial Purchaser's name on Schedule A to the Purchase Agreement. The
certificates evidencing the Warrants are herein referred to collectively as the
"WARRANT CERTIFICATES;" and
WHEREAS, the Notes and the Warrants comprising the Units shall not be
separately transferable until the Separability Date (as defined herein); and
WHEREAS, the holders of the Warrants are entitled to the benefits of a
Warrant Registration Rights Agreement dated as of April 2, 1998 by and among the
Company and the Initial Purchasers (the "WARRANT REGISTRATION RIGHTS
AGREEMENT"); and
WHEREAS, the Company desires the Warrant Agent as warrant agent to
assist the Company in connection with the issuance, exchange, cancellation,
replacement and exercise of the Warrants, and in this Agreement wishes to set
forth, among other things, the terms and conditions on which the Warrants may be
issued, exchanged, cancelled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. ISSUANCE OF WARRANTS. Warrants comprising part of the
Units shall be originally issued in connection with the issuance of the Units
and such Warrants shall not be separately transferable from the Notes until on
or after the Separability Date as provided in Section 1.06 hereof.
Each Warrant Certificate shall evidence the number of Warrants
specified therein. Each Warrant evidenced by a Warrant Certificate shall, when
it becomes exercisable as provided herein
1
and therein, represent the right, subject to the provisions contained herein and
therein, to purchase from the Company (and the Company shall issue and sell to
the holder of such Warrant) 2.7 fully paid, registered and non-assessable
Warrant Shares at an exercise price of $0.01 per share. The number of shares of
the Company's common stock, no par value, and any other class or series of
common equity equivalent shares of the Company hereafter created (the "COMMON
STOCK") issuable upon exercise of a Warrant is subject to adjustment as provided
herein and in the Warrant. The shares of Common Stock issuable upon exercise of
a Warrant are hereinafter referred to as the "WARRANT SHARES" and, unless the
context otherwise requires, such term shall also include any other securities or
property issuable and deliverable upon exercise of a Warrant as provided in
Article V, subject to adjustment as provided herein and in the Warrant.
SECTION 1.02. FORM OF WARRANT CERTIFICATES. The Warrant Certificates
will initially be issued either in global form (the "GLOBAL WARRANTS") or in
registered form as definitive Warrant Certificates (the "DEFINITIVE WARRANTS"),
in either case substantially in the form of EXHIBIT A attached hereto. Any
Global Warrants to be delivered pursuant to this Agreement shall bear the legend
set forth in EXHIBIT B attached hereto. The Global Warrants shall represent
such of the outstanding Warrants as shall be specified therein, and each Global
Warrant shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of a Global Warrant to
reflect the amount of any increase or decrease in the amount of outstanding
Warrants represented thereby shall be made by the Warrant Agent and the
Depositary (as defined below) in accordance with instructions given by the
holder thereof. The Depository Trust Company shall act as the "DEPOSITARY" with
respect to the Global Warrants until a successor shall be appointed by the
Company and the Warrant Agent. Upon written request, a holder of Warrants may
receive from the Warrant Agent or the Depositary Definitive Warrants as set
forth in Section 1.08 hereof.
SECTION 1.03. EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by its chief executive
officer, its president, its chief financial officer or any executive vice
president and attested by its secretary or assistant secretary. Such signatures
may be the manual or facsimile signatures of the present or any future such
officers. The seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates. Typographical and other minor errors or defects in any such
reproduction of any such signature shall not affect the validity or
enforceability of any Warrant Certificate that has been duly countersigned and
delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificate so signed shall be authenticated and delivered by the Warrant Agent
or disposed of by the Company, such Warrant Certificate nevertheless may be
authenticated and delivered or disposed of as though the person who signed such
Warrant Certificate had not ceased to be such officer of the Company. Any
Warrant Certificate may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Warrant Certificate, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Agreement any such person was not such an officer.
2
SECTION 1.04. AUTHENTICATION AND DELIVERY. Subject to the
immediately following paragraph, Warrant Certificates shall be authenticated by
manual signature and dated the date of authentication by the Warrant Agent and
shall not be valid for any purpose unless so authenticated and dated. The
Warrant Certificates shall be numbered and shall be registered in the Warrant
Register (as defined in Section 1.07 hereof).
Upon the receipt by the Warrant Agent of a written order of the
Company, which order shall be signed by its chief executive officer, its
president, its chief financial officer or any executive vice president and
attested by its secretary or assistant secretary, and shall specify the amount
of Warrants to be authenticated, whether the Warrants are to be Global Warrants
or Definitive Warrants, the date of such Warrants and such other information as
the Warrant Agent may reasonably request, without any further action by the
Company, the Warrant Agent is authorized, upon receipt from the Company at any
time and from time to time of the Warrant Certificates, duly executed as
provided in Section 1.03 hereof, to authenticate the Warrant Certificates and
upon the holder's request deliver them. Such authentication shall be by a duly
authorized signatory of the Warrant Agent (although it shall not be necessary
for the same signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such authorized
signatory before the Warrant Certificate shall be disposed of by the Company or
the Warrant Agent, such Warrant Certificate nevertheless may be delivered or
disposed of as though the person who authenticated such Warrant Certificate had
not ceased to be such authorized signatory of the Warrant Agent; and any Warrant
Certificate may be authenticated on behalf of the Warrant Agent by such persons
as, at the actual time of authentication of such Warrant Certificates, shall be
the duly authorized signatories of the Warrant Agent, although at the time of
the execution and delivery of this Agreement any such person is not such an
authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall
be in substantially the form set forth in EXHIBIT A hereto.
SECTION 1.05. TEMPORARY WARRANT CERTIFICATES. Warrants sold in
offshore transactions in reliance on Regulation S will initially be represented
by one or more permanent legended global Warrants in definitive, fully
registered form (each a "LEGENDED REGULATION S GLOBAL WARRANT"). The Company
may execute, and the Warrant Agent shall authenticate and deliver, Legended
Regulation S Global Warrant Certificates, which are printed, lithographed,
typewritten or otherwise produced, substantially of the tenor of the definitive
Warrant Certificates in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Warrant Certificates may determine, as evidenced by their
execution of such Warrant Certificates.
The Legended Regulation S Global Warrants will be exchangeable for one
or more unlegended permanent global Warrants on or after one year following the
Issue Date (as defined herein) upon certification that the security entitlements
in such global Warrants are owned by non-U.S. persons at any office or agency
maintained by the Company for that purpose pursuant to
3
Section 1.10 hereof. Subject to the provisions of Section 4.01 hereof, such
exchange shall be without charge to the holder. Upon surrender for cancellation
of any one or more Legended Regulation S Global Warrant Certificates, the
Company shall execute, and the Warrant Agent shall authenticate and deliver in
exchange therefor, one or more unlegended permanent global Warrant Certificates
representing in the aggregate a like number of Warrants. Until so exchanged,
the holder of a Legended Regulation S Global Warrant Certificate shall in all
respects be entitled to the same benefits under this Agreement as a holder of an
unlegended permanent global Warrant Certificate PROVIDED that prior to one year
after the Issue Date, security entitlements in the Legended Regulation S Global
Warrant may be only held through Euroclear or Cedel Bank. Cedel Bank and
Euroclear will hold interests in the Global Warrant on behalf of their
participants through DTC.
SECTION 1.06. SEPARATION OF WARRANTS AND NOTES. The Notes and the
Warrants will not be separately transferable until the Separability Date.
"SEPARABILITY DATE" shall mean the earliest of: (i) the date that is six months
after the initial sale of the Units, (ii) the date on which a registration
statement under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
with respect to a registered exchange offer for the Notes is declared effective
under the Securities Act, (iii) the occurrence of an Exercise Event (as defined
herein), (iv) the occurrence of an Event of Default (as defined in the
Indenture) or (v) such earlier date as determined by Xxxxxxx Xxxxx in its sole
discretion and specified to the Company and the Warrant Agent in writing.
Notwithstanding the foregoing, in the event a Change of Control (as defined in
the Indenture) is proposed and the Company commences a Change of Control Offer
(as defined in the Indenture) prior to the Separability Date, as determined by
the preceding sentence, the Separability Date shall be such earlier date of
commencement. The separation of the Warrants and the Notes is herein referred
to as a "SEPARATION."
SECTION 1.07. REGISTRATION. The Company will keep or cause to be
kept, at the office or agency maintained or designated by the Company for such
purpose, a register or registers in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of, and registration of transfer and exchange of, Warrants as provided in this
Article. Each person designated by the Company from time to time as a person
authorized to register the transfer and exchange of the Warrants is hereinafter
called, individually and collectively, the "REGISTRAR." The Company hereby
initially appoints the Warrant Agent as Registrar. Upon written notice to the
Warrant Agent and any acting Registrar, the Company may appoint a successor
Registrar for such purposes.
The Company will at all times designate one person (who may be the
Company and who need not be a Registrar) to act as repository of a master list
of names and addresses of the holders of Warrants (the "WARRANT REGISTER"). The
Warrant Agent will act as such repository unless and until some other person is,
by written notice from the Company to the Warrant Agent and the Registrar,
designated by the Company to act as such. The Company shall cause each
Registrar to furnish to such repository, on a current basis, such information as
to all registrations of transfer and exchanges effected by such Registrar, as
may be necessary to enable such repository to maintain the Warrant Register on
as current a basis as is practicable.
4
SECTION 1.08. REGISTRATION OF TRANSFERS OR EXCHANGES.
(a) TRANSFER OR EXCHANGE OF DEFINITIVE WARRANTS. When Definitive
Warrants are presented to the Warrant Agent with a request from the holder:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number
of Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Warrant Agreement as set forth in this Section
1.08 hereof for such transactions are met; PROVIDED, HOWEVER, that the
Definitive Warrants presented or surrendered by a holder for registration of
transfer or exchange:
(x) shall be duly endorsed or accompanied by a written
instruction of transfer or exchange in form satisfactory to the Company and the
Warrant Agent, duly executed by such holder or by his attorney, duly authorized
in writing; and
(y) in the case of Warrants the offer and sale of which have
not been registered under the Securities Act and are presented for transfer or
exchange prior to (X) the date which is two years (or such shorter period as may
be prescribed by Rule 144(k) (or any successor provision thereto)) after the
later of the date of original issuance of the Warrants and the last date on
which the Company or any affiliate of the Company was the owner of such
Warrants, or any predecessor thereto, and (Y) such later date, if any, as may be
required by any subsequent change in applicable law (the "RESALE RESTRICTION
TERMINATION DATE"), such Warrants shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Warrants are being delivered to the Warrant
Agent by a holder for registration in the name of such holder, without
transfer, a certification from such holder to that effect (in
substantially the form of EXHIBIT C hereto); or
(B) if such Warrants are being transferred to a qualified
institutional buyer as such term is defined in Rule 144A under the
Securities Act (a "QIB") in accordance with Rule 144A under the
Securities Act, a certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto); or
(C) if such Warrants are being transferred in reliance on
Regulation S under the Securities Act, delivery by the transferor of a
certification to that effect (in substantially the form of EXHIBIT C
hereto), and a Certificate for Regulation S Transfers (in
substantially the form of EXHIBIT D hereto); or
(D) if such Warrants are being transferred in reliance on
Rule 144 under the Securities Act, delivery by the transferor of (i) a
certification from the transferor to that effect (in substantially the
form of EXHIBIT C hereto), and (ii) an opinion of counsel reasonably
satisfactory to the Company to the effect that such transfer is in
compliance with the Securities Act; or
5
(E) if such Warrants are being transferred in reliance on
another exemption from the registration requirements of the Securities
Act, a certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto) and an opinion of counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE WARRANT FOR A SECURITY
ENTITLEMENT IN A GLOBAL WARRANT. A Definitive Warrant may not be transferred by
a holder for a security entitlement in a Global Warrant except upon satisfaction
of the requirements set forth below. Upon receipt by the Warrant Agent of a
Definitive Warrant, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Warrant Agent, together with:
(A) certification from such holder (in substantially the
form of EXHIBIT C hereto) that such Definitive Warrant is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act; and
(B) written instructions directing the Warrant Agent to
make, or to direct the Depositary to make, an endorsement on the
Global Warrant to reflect an increase in the aggregate amount of the
Warrants represented by the Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrant Shares represented by the Global Warrant to be increased accordingly.
If no Global Warrant is then outstanding, the Company shall issue, and the
Warrant Agent shall upon written instructions from the Company authenticate, a
new Global Warrant in the appropriate amount.
(c) TRANSFER OR EXCHANGE OF GLOBAL WARRANTS. The transfer or
exchange of Global Warrants or security entitlements therein shall be effected
through the Depositary, in accordance with this Section 1.08, the Private
Placement Legend (as defined below), this Agreement (including those
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) TRANSFER OR EXCHANGE OF A SECURITY ENTITLEMENT IN A GLOBAL
WARRANT FOR A DEFINITIVE WARRANT.
(i) Any person having a security entitlement in a Global
Warrant may transfer or exchange such security entitlement for a Definitive
Warrant upon receipt by the Warrant Agent of written instructions (or such other
form of instructions as is customary for the Depositary) from the Depositary or
its nominee on behalf of any person having a security entitlement in a Global
Warrant, including a written order containing registration instructions and, in
the case of any such transfer or exchange prior to the Resale Restriction
Termination Date, the following additional information and documents:
6
(A) if such security entitlement is being transferred to
the person designated by the Depositary as being the entitlement
holder, a certification from such person to that effect (in
substantially the form of EXHIBIT C hereto); or
(B) if such security entitlement is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certification from the transferor to that effect (in substantially the
form of EXHIBIT C hereto); or
(C) if such security entitlement is being transferred in
reliance on Regulation S under the Securities Act, delivery by the
transferor of (i) a certification to that effect (in substantially in
the form of EXHIBIT C hereto), and (ii) a Certificate for Regulation S
Transfers in substantially the form of EXHIBIT D hereto; or
(D) if such security entitlement is being transferred in
reliance on Rule 144 under the Securities Act, delivery by the
transferor of (i) a certification to that effect (in substantially the
form of EXHIBIT C hereto), and (ii) an opinion of counsel reasonably
satisfactory to the Company to the effect that such transfer is in
compliance with the Securities Act; or
(E) if such security entitlement is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification from the transferor to that effect
(in substantially the form of EXHIBIT C hereto) and an opinion of
counsel reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act;
then the Warrant Agent will cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Warrant Agent, the
aggregate amount of the Global Warrant to be reduced and, following such
reduction, the Company will execute and, upon receipt of an authentication order
in the form of an officers' certificate (a certificate signed by the chief
executive officer, the president, the chief financial officer or any executive
vice president of the Company signing alone, or by any vice president signing
together with the secretary, any assistant secretary, the treasurer, or any
assistant treasurer of the Company) (an "OFFICERS' CERTIFICATE"), the Warrant
Agent will authenticate and deliver to the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a security entitlement
in a Global Warrant pursuant to this Section 1.08(d) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Warrant Agent in writing. The Warrant Agent shall deliver such
Definitive Warrants to the persons in whose names such Warrants are so
registered and adjust the Global Warrant pursuant to paragraph (h) of this
Section 1.08.
(e) RESTRICTIONS ON TRANSFER OR EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in subsection (f) of this Section 1.08), a Global Warrant
may not be transferred or exchanged as a whole except by the Depositary to a
nominee of the Depositary; by a nominee of the Depositary to the Depositary or
7
another nominee of the Depositary; or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) AUTHENTICATION OF DEFINITIVE WARRANTS IN ABSENCE OF DEPOSITARY.
If at any time:
(i) the Depositary for the Global Warrants notifies the
Company that the Depositary is unwilling or unable to continue as Depositary for
the Global Warrant and a successor Depositary for the Global Warrant is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of Definitive Warrants for
all Global Warrants under this Agreement,
then the Company will execute, and the Warrant Agent will, upon receipt of an
Officers' Certificate requesting the authentication and delivery of Definitive
Warrants, authenticate and deliver Definitive Warrants, in an aggregate number
equal to the aggregate number of warrants represented by the Global Warrant, in
exchange for such Global Warrant.
(g) PRIVATE PLACEMENT LEGEND. Upon the transfer or exchange of
Warrant Certificates not bearing the legend set forth in the first paragraph of
EXHIBIT A attached hereto (the "PRIVATE PLACEMENT LEGEND"), the Warrant Agent
shall deliver Warrant Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Warrant Certificates
bearing the Private Placement Legend, the Warrant Agent shall deliver Warrant
Certificates that bear the Private Placement Legend unless, and the Warrant
Agent is hereby authorized to deliver Warrant Certificates without the Private
Placement Legend if, (i) there is delivered to the Warrant Agent an opinion of
counsel reasonably satisfactory to the Company and the Warrant Agent to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act or (ii) the Warrants to be transferred or exchanged represented by such
Warrant Certificates are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act.
(h) CANCELLATION OR ADJUSTMENT OF A GLOBAL WARRANT. At such time as
all security entitlements in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or cancelled, such Global Warrant
shall be returned to the Company or, upon written order to the Warrant Agent in
the form of an Officers' Certificate from the Company, retained and cancelled by
the Warrant Agent. At any time prior to such cancellation, if any security
entitlement in a Global Warrant is exchanged for Definitive Warrants, redeemed,
repurchased or cancelled, the number of Warrants represented by such Global
Warrant shall be reduced and an endorsement shall be made on such Global Warrant
by the Warrant Agent to reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS OR EXCHANGES OF DEFINITIVE
WARRANTS.
(i) To permit registrations of transfers or exchanges, the
Company shall execute, at the Warrant Agent's request, and the Warrant Agent
shall authenticate, Definitive Warrants and Global Warrants.
8
(ii) All Definitive Warrants and Global Warrants issued upon
any registration, transfer or exchange of Definitive Warrants or Global
Warrants, as the case may be, shall be the valid obligations of the Company,
entitled to the same benefits under this Warrant Agreement as the Definitive
Warrants or Global Warrants surrendered upon the registration of transfer or
exchange.
(iii) Prior to due presentment for registration of transfer of
any Warrant, the Warrant Agent and the Company may deem and treat the person in
whose name any Warrant is registered as the absolute owner of such Warrant, and
neither the Warrant Agent nor the Company shall be affected by notice to the
contrary.
SECTION 1.09. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED WARRANT
CERTIFICATES. Upon receipt by the Company and the Warrant Agent (or any agent
of the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or mutilation
of any Warrant Certificate and of indemnity satisfactory to them (including but
not limited to a lost instrument affidavit and the posting of a bond) and, in
the case of mutilation or defacement, upon surrender thereof to the Warrant
Agent for cancellation, then, in the absence of notice to the Company or the
Warrant Agent that such Warrant Certificate has been acquired by a BONA FIDE
purchaser or holder in due course, the Company shall execute, and an authorized
signatory of the Warrant Agent shall manually authenticate and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced or mutilated
Warrant Certificate, a new Warrant Certificate representing a like number of
Warrants, bearing a number or other distinguishing symbol not contemporaneously
outstanding. Upon the issuance of any new Warrant Certificate under this
Section in a name other than the prior registered holder of the lost, stolen,
destroyed, defaced or mutilated Warrant Certificate, the Company may require the
payment from the holder of such Warrant Certificate of a sum sufficient to cover
any tax, stamp tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Warrant
Agent and the Registrar) in connection therewith. Every substitute Warrant
Certificate executed and delivered pursuant to this Section in lieu of any lost,
stolen or destroyed Warrant Certificate shall constitute an additional
contractual obligation of the Company, whether or not the lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone, and
shall be entitled to the benefits of (but shall be subject to all the
limitations of rights set forth in) this Agreement equally and proportionately
with any and all other Warrant Certificates duly executed and delivered
hereunder. The provisions of this Section 1.09 are exclusive with respect to
the replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates and shall preclude (to the extent lawful) any and all other rights
or remedies notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement of lost, stolen, destroyed, defaced
or mutilated Warrant Certificates.
The Warrant Agent is hereby authorized to authenticate in accordance
with the provisions of this Agreement and deliver the new Warrant Certificates
required pursuant to the provisions of this Section.
SECTION 1.10. OFFICES FOR EXERCISE, ETC. So long as any of the
Warrants remain outstanding, the Company will designate and maintain in the
Borough of Manhattan, The City of
9
New York: (a) an office or agency where the Warrant Certificates may be
presented for exercise (each a "WARRANT EXERCISE OFFICE"), (b) an office or
agency where the Warrant Certificates may be presented for registration of
transfer and for exchange (including the exchange of temporary Warrant
Certificates for definitive Warrant Certificates pursuant to Section 1.05
hereof), and (c) an office or agency where notices and demands to or upon the
Company in respect of the Warrants or of this Agreement may be served. The
Company may from time to time change or rescind such designation, as it may deem
desirable or expedient; PROVIDED, HOWEVER, that an office or agency shall at all
times be maintained in the Borough of Manhattan, The City of New York, as
provided in the first sentence of this Section. In addition to such office or
offices or agency or agencies, the Company may from time to time designate and
maintain one or more additional offices or agencies within or outside The City
of New York, where Warrant Certificates may be presented for exercise or for
registration of transfer or for exchange, and the Company may from time to time
change or rescind such designation, as it may deem desirable or expedient. The
Company will give to the Warrant Agent written notice of the location of any
such office or agency and of any change of location thereof. The Company hereby
designates the Warrant Agent at its principal corporate trust office identified
in Section 7.03 in the Borough of Manhattan, The City of New York (the "WARRANT
AGENT OFFICE"), as the initial agency maintained for each such purpose. In case
the Company shall fail to maintain any such office or agency or shall fail to
give such notice of the location or of any change in the location thereof,
presentations and demands may be made and notice may be served at the Warrant
Agent Office and the Company appoints the Warrant Agent as its agent to receive
all such presentations, surrenders, notices and demands.
ARTICLE II
DURATION, EXERCISE OF WARRANTS; EXERCISE PRICE
AND REPURCHASE OF WARRANTS
SECTION 2.01. DURATION OF WARRANTS. Subject to the terms and
conditions established herein, the Warrants shall expire at 5:00 p.m., New York
City time, on April 1, 2008. The applicable date of expiration of a particular
Warrant is referred to herein as the "EXPIRATION DATE" of such Warrant. Each
Warrant may be exercised on any Business Day (as defined below) on or after the
Exercisability Date (as defined in Section 2.02) and on or prior to the close of
business on the Expiration Date.
Any Warrant not exercised before the close of business on the
Expiration Date shall become void, and all rights of the holder under the
Warrant Certificate evidencing such Warrant and under this Agreement shall
cease.
"BUSINESS DAY" shall mean any day on which (i) banks in The City of
New York, (ii) the principal U.S. securities exchange or market, if any, on
which any Common Stock is listed or admitted to trading and (iii) the principal
U.S. securities exchange or market, if any, on which the Warrants are listed or
admitted to trading, are open for business.
10
SECTION 2.02. EXERCISE, EXERCISE PRICE, SETTLEMENT AND DELIVERY.
(a) Subject to the provisions of this Agreement, a holder of a
Warrant shall have the right to purchase from the Company on or after the
Exercisability Date and on or prior to the close of business on the Expiration
Date 1,728,000 fully paid, registered and non-assessable Warrant Shares (and any
other securities or property purchasable or deliverable upon exercise of such
Warrant as provided in Article V), subject to adjustment in accordance with
Article V hereof, at the purchase price of $0.01 for each share purchased (the
"EXERCISE PRICE"). The number and amount of Warrant Shares issuable upon
exercise of a Warrant (the "EXERCISE RATE") shall be subject to adjustment from
time to time as set forth in Article V hereof.
"EXERCISABILITY DATE" means, with respect to each Warrant, the first
day on or after the Separability Date on which there shall have occurred an
Exercise Event (as defined herein).
"EXERCISE EVENT" means, with respect to each Warrant, the date of the
occurrence of the earliest of: (i) the time immediately prior to the occurrence
of a Change of Control (as such term is defined in the Indenture); (ii)(a) the
180th day (or such earlier date as determined by the Company in its sole
discretion) following the closing of an Initial Public Equity Offering (as
defined herein) or (b) upon the closing of an Initial Public Equity Offering,
but only in respect of Warrants, if any, required to be exercised to permit the
holders thereof to sell Warrant Shares pursuant to their respective registration
rights, (iii) a class of equity securities of the Company is listed on a
national securities exchange or authorized for quotation on The Nasdaq National
Market or is otherwise subject to registration under the Exchange Act, or
(iv) October 2, 1999.
"INITIAL PUBLIC EQUITY OFFERING" means a primary public offering
(whether or not underwritten, but excluding any offering pursuant to Form S-8
under the Securities Act or any other publicly registered offering pursuant to
the Securities Act pertaining to an issuance of shares of Common Stock or
securities exercisable therefor under any benefit plan, employee compensation
plan, or employee or director stock purchase plan) of Common Stock pursuant to
an effective registration statement under the Securities Act.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
(b) Warrants may be exercised on or after the date they are
exercisable hereunder by (i) surrendering at any Warrant Exercise Office the
Warrant Certificate evidencing such Warrants with the form of election to
purchase Warrant Shares set forth on the reverse side of the Warrant Certificate
(the "ELECTION TO EXERCISE") duly completed and signed by the registered holder
or holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney, and in the case of a transfer, such signature shall be
guaranteed by an eligible guarantor institution, and (ii) paying in full the
Exercise Price for each such Warrant exercised. Each Warrant may be exercised
only in whole.
(c) Simultaneously with the exercise of each Warrant, payment in full
of the aggregate Exercise Price may be made, at the option of the holder, (i) in
cash or by certified or official bank
11
check, (ii) by a Cashless Exercise (as defined below) or (iii) by any
combination of (i) and (ii), to the office or agency where the Warrant
Certificate is being surrendered. For purposes of this Agreement, a "CASHLESS
EXERCISE" shall mean an exercise of a Warrant in accordance with the immediately
following two sentences. To effect a Cashless Exercise, the holder may exercise
a Warrant or Warrants without payment of the Exercise Price in cash by
surrendering such Warrant or Warrants (represented by one or more Warrant
Certificates) and, in exchange therefor, receiving such number of shares of
Common Stock equal to the product of (1) that number of shares of Common Stock
for which such Warrant or Warrants are exercisable and which would be issuable
in the event of an exercise with payment in cash of the Exercise Price and (2)
the Cashless Exercise Ratio (as defined below). The "CASHLESS EXERCISE RATIO"
shall equal a fraction, the numerator of which is the excess of the Current
Market Value (calculated as set forth in this Agreement) per share of Common
Stock on the date of exercise over the Exercise Price per share of Common Stock
as of the date of exercise and the denominator of which is the Current Market
Value per share of Common Stock on the date of exercise. Upon surrender of a
Warrant Certificate representing more than one Warrant in connection with a
holder's option to elect a Cashless Exercise, such holder must specify the
number of Warrants for which such Warrant Certificate is to be exercised
(without giving effect to such Cashless Exercise). All provisions of this
Agreement shall be applicable with respect to a Cashless Exercise of a Warrant
Certificate for less than the full number of Warrants represented thereby. No
payment or adjustment shall be made on account of any distributions of dividends
on the Common Stock issuable upon exercise of a Warrant. If the Company has not
effected the registration under the Securities Act of the offer and sale of the
Warrant Shares by the Company to the holders of the Warrants on or prior to the
Exercise Date (as defined below) thereof, the Company may elect to require that
the holders of the Warrants effect the exercise thereof solely pursuant to the
Cashless Exercise option and may also amend the Warrants to eliminate the
requirement for payment of the Exercise Price with respect to such Cashless
Exercise option. The Warrant Agent shall have no obligation under this section
to calculate the Cashless Exercise Ratio.
(d) Upon surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Exercise Office (other than any
Warrant Exercise Office that also is an office of the Warrant Agent), such
Warrant Certificate and payment shall be promptly delivered to the Warrant
Agent. The "EXERCISE DATE" for a Warrant shall be the date when all of the
items referred to in the first sentence of paragraphs (b) and (c) of this
Section 2.02 are received by the Warrant Agent at or prior to 11:00 a.m., New
York City time, on a Business Day and the exercise of the Warrants will be
effective as of such Exercise Date. If any items referred to in the first
sentence of paragraphs (b) and (c) are received after 11:00 a.m., New York City
time, on a Business Day, the exercise of the Warrants to which such item relates
will be effective on the next succeeding Business Day. Notwithstanding the
foregoing, in the case of an exercise of Warrants on the Expiration Date, if all
of the items referred to in the first sentence of paragraphs (b) and (c) are
received by the Warrant Agent at or prior to 5:00 p.m., New York City time, on
the Expiration Date, the exercise of the Warrants to which such items relate
will be effective on the Expiration Date.
(e) Upon the exercise of a Warrant in accordance with the terms
hereof, the receipt of a Warrant Certificate and payment of the Exercise Price
(or election of the Cashless Exercise option), the Warrant Agent shall: (i)
except to the extent exercise of the Warrant has been
12
effected through a Cashless Exercise, cause an amount equal to the aggregate
Exercise Price to be paid to the Company by crediting such amount in immediately
available funds to the account designated by the Company in writing to the
Warrant Agent for that purpose; (ii) advise the Company immediately by telephone
of the amount so deposited to the Company's account and promptly confirm such
telephonic advice in writing; and (iii) as soon as practicable, advise the
Company in writing of the number of Warrants exercised in accordance with the
terms and conditions of this Agreement and the Warrant Certificates, the
instructions of each exercising holder of the Warrant Certificates with respect
to delivery of the Warrant Shares to which such holder is entitled upon such
exercise, and such other information as the Company shall reasonably request.
(f) Subject to Section 5.02 hereof, as soon as practicable after the
exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
registered holder of the Warrant Certificate evidencing such exercised Warrant
or Warrants, a certificate or certificates evidencing the Warrant Shares to
which such holder is entitled, in fully registered form, registered in such name
or names as may be directed by such holder pursuant to the Election to Exercise,
as set forth on the reverse of the Warrant Certificate. Such certificate or
certificates evidencing the Warrant Shares shall be deemed to have been issued
and any persons who are designated to be named therein shall be deemed to have
become the holders of record of such Warrant Shares as of the close of business
on the Exercise Date; the Warrant Shares may initially be issued in global form
(the "GLOBAL SHARES"). Such Global Shares shall represent such of the
outstanding Warrant Shares as shall be specified therein and each Global Share
shall provide that it represents the aggregate amount of outstanding Warrant
Shares from time to time endorsed thereon and that the aggregate amount of
outstanding Warrant Shares represented thereby may from time to time be reduced
or increased, as appropriate. Any endorsement of a Global Share to reflect any
increase or decrease in the amount of outstanding Warrant Shares represented
thereby shall be made by the registrar for the Warrant Shares and the Depositary
(referred to below) in accordance with instructions given by the holder thereof.
The Depository Trust Company shall (if possible) act as the Depositary with
respect to the Global Shares until a successor shall be appointed by the Company
and the registrar for the Warrant Shares. After exercise of any Warrant or
Warrant Shares, the Company shall also issue or cause to be issued to or upon
the written order of the registered holder of such Warrant Certificate, a new
Warrant Certificate, countersigned by the Warrant Agent pursuant to written
instruction, evidencing the number of Warrants, if any, remaining unexercised
unless such Warrants shall have expired.
SECTION 2.03. CANCELLATION OF WARRANT CERTIFICATES. In the event the
Company shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall at the Company's written instruction be canceled by it and
retired. The Warrant Agent shall cancel all Warrant Certificates properly
surrendered for exchange, substitution, transfer or exercise. Upon the
Company's written request, the Warrant Agent shall deliver such canceled Warrant
Certificates to the Company.
SECTION 2.04. NOTICE OF AN EXERCISE EVENT.
13
The Company shall, as soon as practicable after the occurrence of an
Exercise Event, send or cause to be sent to each holder of Warrants and to each
entitlement holder of the Warrants with respect to which such Exercise Event has
occurred to the extent that the Warrants are held of record by a depositary or
other agent (with a copy to the Warrant Agent), by first-class mail, at the
addresses appearing on the Warrant Register, a notice prepared by the Company
advising such holder of the Exercise Event which has occurred, which notice
shall describe the type of Exercise Event and the date of the occurrence
thereof, as applicable, and, in either case, the date of expiration of the right
to exercise the Warrants prominently set forth in the face of such notice.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. ENFORCEMENT OF RIGHTS.
(a) Notwithstanding any of the provisions of this Agreement, any
holder of any Warrant Certificate, without the consent of the Warrant Agent, the
holder of any Warrant Shares or the holder of any other Warrant Certificate,
may, in and for his own behalf, enforce, and may institute and maintain any
suit, action or proceeding against the Company suitable to enforce, his right to
exercise the Warrant or Warrants evidenced by his Warrant Certificate in the
manner provided in such Warrant Certificate and in this Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall entitle
the holders thereof to any of the rights of shareholders of the Company,
including, without limitation, the right to vote or to receive any dividends or
other payments or to consent or to receive notice as shareholders in respect of
the meetings of shareholders or for the election of directors of the Company or
any other matter, or any rights whatsoever as shareholders of the Company,
except as expressly provided in Section 5.03 hereof.
SECTION 3.02. OBTAINING STOCK EXCHANGE LISTINGS. The Company will
from time to time take all action which may be necessary so that the Warrant
Shares, immediately upon their issuance upon the exercise of Warrants, will be
listed on the principal securities exchanges and markets within the United
States (including The Nasdaq National Market), if any, on which other shares of
Common Stock are then listed.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrants and of the Warrant
Shares upon the exercise of Warrants; PROVIDED, HOWEVER, that the Company shall
not be required to pay any tax or other governmental charge which may be payable
in respect of any transfer or exchange of any Warrant Certificates or any
certificates for Warrant Shares in a name other than the registered holder of a
Warrant Certificate surrendered upon the exercise of a Warrant. In any such
case, no transfer or
14
exchange shall be made unless or until the person or persons requesting issuance
thereof shall have paid to the Company the amount of such tax or other
governmental charge or shall have established to the satisfaction of the Company
that such tax or other governmental charge has been paid or an exemption is
available therefrom.
SECTION 4.02. RULES 144 AND 144A. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules, regulations and policies adopted by the Securities
and Exchange Commission thereunder in a timely manner in accordance with the
requirements of the Securities Act and the Exchange Act and, if at any time the
Company is not required to file such reports, it will make available upon
request to each owner or entitlement holder of Warrants, such information as is
referred to in Rule 144A(d)(4) under the Securities Act.
SECTION 4.03. FORM OF INITIAL PUBLIC EQUITY OFFERING. The Company
agrees that it will not make an Initial Public Equity Offering of any class of
its Capital Stock (as defined below) (other than the class of Capital Stock into
which the Warrants are exercisable) without adopting any amendments to the terms
of the Company's articles of incorporation that may be necessary to provide that
the Warrant Shares are convertible into such class of Capital Stock subject to
the Initial Public Equity Offering (the "SUBJECT CLASS") on a share-for-share
basis or other equitable basis and that the rights, conditions and privileges of
the Subject Class shall not be adverse to the holders of the Warrant Shares.
SECTION 4.04. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
The Company will also agree to comply with all applicable laws, including the
Securities Act and any applicable state securities laws, in connection with the
offer and sale of Common Stock (and other securities and property deliverable)
upon exercise of the Warrants; PROVIDED, HOWEVER, that the Company shall not be
required in connection therewith to qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation, other
than as to matters and transactions relating to the Warrant Shares, in any
jurisdiction in which it is not now so subject.
SECTION 4.05. RESOLUTION OF PREEMPTIVE RIGHTS, IF ANY. The Warrant
Shares shall not be subject to any preemptive or similar rights.
ARTICLE V
ADJUSTMENTS
SECTION 5.01. ADJUSTMENT OF EXERCISE RATE; NOTICES. The Exercise
Rate is subject to adjustment from time to time as provided in this Section.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If, after the Issue Date
(as defined herein), the Company:
15
(i) pays a dividend or makes a distribution on shares of its
Common Stock payable in shares of its Common Stock or certain other Capital
Stock of the Company (other than any such dividend to the extent covered by
Section 5.03);
(ii) subdivides or splits any of its outstanding shares of
Common Stock into a greater number of shares;
(iii) combines any of its outstanding shares of Common Stock
into a smaller number of shares; or
(iv) issues by reclassification of any of its Common Stock or
any shares of any of its Capital Stock;
then the Exercise Rate in effect immediately prior to such action for each
Warrant then outstanding shall be adjusted so that the holder of a Warrant
thereafter exercised may receive the number of shares of Capital Stock of the
Company which such holder would have owned immediately following such action if
such holder had exercised the Warrant immediately prior to such action or
immediately prior to the record date applicable thereto, if any (regardless of
whether the Warrants then outstanding are then exercisable and without giving
effect to the Cashless Exercise option). If there are no outstanding shares of
Common Stock that are of the same class as the Warrant Shares at the time of any
such action and such action has therefore been taken only in respect of shares
of another class of Common Stock, such adjustment shall relate to the Warrant
Shares as Warrant Shares (and not in the form of shares of Common Stock) if it
would not frustrate the intent and purposes of this Section 5.01.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
In the event that such dividend or distribution is not so paid or made or such
subdivision, combination or reclassification is not effected, the Exercise Rate
shall again be adjusted to be the Exercise Rate which would then be in effect if
such record date or effective date had not been so fixed.
If after an adjustment a holder of a Warrant upon exercise of such
Warrant may receive shares of two or more classes of Capital Stock of the
Company, the Exercise Rate shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is contemplated by this Article V with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article V.
(b) ADJUSTMENT FOR SALE OF COMMON STOCK BELOW CURRENT MARKET VALUE.
If, after the Issue Date, the Company grants or sells to any Affiliate of the
Company (other than a wholly-owned subsidiary) any Common Stock or any
securities convertible into or exchangeable or exercisable for any Common Stock
(other than (1) pursuant to the exercise of the Warrants, (2) pursuant to any
security convertible into, or exchangeable or exercisable for, shares of Common
Stock outstanding as of the Issue Date, (3) upon the conversion, exchange or
exercise of any convertible, exchangeable or exercisable security as to which
upon the issuance thereof an adjustment pursuant to this Article V has been made
or which did not require any adjustment
16
pursuant to this Article V or (4) upon the conversion, exchange or exercise of
convertible, exchangeable or exercisable securities of the Company outstanding
on the Issue Date (to the extent in accordance with the terms of such securities
as in effect on such date)) at a price below the then Current Market Value
(calculated as set forth in Section 5.01(l) hereof), the Exercise Rate for each
Warrant then outstanding shall be adjusted in accordance with the formula:
E(1) = Ex (O + N)
---------------
(O + (N x PIM))
where:
E(1) = the adjusted Exercise Rate for each Warrant then outstanding;
E = the then current Exercise Rate for each Warrant then outstanding;
O = the number of shares of Common Stock outstanding immediately
prior to the sale of Common Stock or issuance of securities
convertible, exchangeable or exercisable for Common Stock;
N = the number of shares of Common Stock so sold or the maximum
stated number of shares of Common Stock issuable upon the
conversion, exchange or exercise of any such convertible,
exchangeable or exercisable securities, as the case may be;
P = the proceeds per share of Common Stock received by the Company,
which (i) in the case of shares of Common Stock is the amount
received by the Company in consideration for the sale and
issuance of such shares; and (ii) in the case of securities
convertible into or exchangeable or exercisable for shares of
Common Stock is the amount received by the Company in
consideration for the sale and issuance of such convertible or
exchangeable or exercisable securities, plus the minimum
aggregate amount of additional consideration, other than the
surrender of such convertible or exchangeable securities, payable
to the Company upon exercise, conversion or exchange thereof; and
M = the Current Market Value as of the Time of Determination (as
defined herein) or at the time of sale, as the case may be
(calculated as set forth in Section 5.01(l) hereof.
The adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive the rights,
warrants or options to which this paragraph (b) applies or upon consummation of
the sale of Common Stock, as the case may be. To the extent that shares of
Common Stock are not delivered after the expiration of such rights, warrants or
options, the Exercise Rate for each Warrant then outstanding shall be readjusted
to the Exercise Rate which would otherwise be in effect had the adjustment made
upon the issuance of such rights, warrants or options been made on the basis of
delivery of only the number of shares of Common Stock actually delivered. In
the event that such rights or warrants are not so issued, the Exercise Rate for
each Warrant then outstanding shall again be adjusted to be the
17
Exercise Rate which would then be in effect if such date fixed for determination
of shareholders entitled to receive such rights, warrants or options had not
been so fixed.
No adjustment shall be made under this paragraph (b) if the
application of the formula stated above in this paragraph (b) would result in a
value of E1 that is lower than the value of E.
No adjustment shall be made under this paragraph (b) for any
adjustment which is the subject of paragraphs (a) and (d) of this Section 5.01.
No adjustment in the Exercise Rate shall be made under this paragraph
(b) upon the grant, conversion, exchange or exercise of options to acquire
shares of Common Stock by officers, directors or employees of the Company;
PROVIDED that the exercise price of such options, at the time of issuance
thereof, was at least equal to the then Current Market Value of the Common Stock
underlying such options.
"AFFILIATE" has the meaning set forth in the Indenture.
"ISSUE DATE" means the date of the Indenture.
(c) NOTICE OF ADJUSTMENT. Whenever the Exercise Rate is adjusted,
the Company shall promptly mail to holders of Warrants then outstanding at the
addresses appearing on the Warrant Register a notice of the adjustment. The
Company shall file with the Warrant Agent and any other Registrar such notice
and a certificate from the Company's independent public accountants briefly
stating the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence that the adjustment is correct.
Neither the Warrant Agent nor any such Registrar shall be under any duty or
responsibility with respect to any such certificate except to exhibit the same
during normal business hours to any holder desiring inspection thereof.
(d) REORGANIZATION OF COMPANY; SPECIAL DISTRIBUTIONS.
(i) If the Company, in a single transaction or through a series
of related transactions, consolidates with or merges with or into any other
person or sells, assigns, transfers, leases, conveys or otherwise disposes of
all or substantially all of its properties and assets to another person or group
of affiliated persons or is a party to a merger or binding share exchange which
reclassifies or changes its outstanding Common Stock (a "FUNDAMENTAL
TRANSACTION"), as a condition to consummating any such transaction the person
formed by or surviving any such consolidation or merger if other than the
Company or the person to whom such transfer has been made (the "SURVIVING
PERSON") shall enter into a supplemental warrant agreement. The supplemental
warrant agreement shall provide (a) that the holder of a Warrant then
outstanding may exercise it for the kind and amount of securities, cash or other
assets which such holder would have received immediately after the Fundamental
Transaction if such holder had exercised the Warrant immediately before the
effective date of the transaction (whether or not the Warrants were then
exercisable and without giving effect to the Cashless Exercise option); it being
understood that the Warrants will remain exercisable only in accordance with
their terms so that conditions to exercise will remain applicable, such as
payment of Exercise Price, assuming (to the extent applicable) that such holder
(i) was not a constituent person or an affiliate of a constituent
18
person to such transaction, (ii) made no election with respect thereto, and
(iii) was treated alike with the plurality of non-electing holders, and (b) that
the Surviving Person shall succeed to and be substituted to every right and
obligation of the Company in respect of this Agreement and the Warrants. The
supplemental warrant agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article V. The Surviving Person shall mail to holders of Warrants at the
addresses appearing on the Warrant Register a notice briefly describing the
supplemental warrant agreement. If the issuer of securities deliverable upon
exercise of Warrants is an affiliate of the Surviving Person, that issuer shall
join in the supplemental warrant agreement.
(ii) Notwithstanding the foregoing, if the Company enters into
a Fundamental Transaction with another Person (other than a subsidiary of the
Company) and consideration is payable to holders of shares of Capital Stock (or
other securities or property) issuable or deliverable upon exercise of the
Warrants that are exercisable in exchange for such shares in connection with
such Fundamental Transaction which consists solely of cash, then the holders of
Warrants shall be entitled to receive distributions on the date of such event on
an equal basis with holders of such shares (or other securities issuable upon
exercise of the Warrants) as if the Warrants had been exercised immediately
prior to such event, less the aggregate Exercise Price therefor. Upon receipt
of such payment, if any, the rights of a holder of such Warrant shall terminate
and cease and such holder's Warrants shall expire.
(iii) If this paragraph (d) applies, it shall supersede the
application of paragraph (a) of this Section 5.01.
(e) COMPANY DETERMINATION FINAL. Any determination that the Company
or the board of directors of the Company must make pursuant to this Article V
shall be conclusive.
(f) WARRANT AGENT'S ADJUSTMENT DISCLAIMER. The Warrant Agent shall
have no duty to determine when an adjustment under this Article V should be
made, how it should be made or what it should be. The Warrant Agent shall have
no duty to determine whether a supplemental warrant agreement under paragraph
(d) need be entered into or whether any provisions of any supplemental warrant
agreement are correct. The Warrant Agent shall not be accountable for and makes
no representation as to the validity or value of any securities or assets issued
upon exercise of Warrants. The Warrant Agent shall not be responsible for the
Company's failure to comply with this Article V.
(g) ADJUSTMENT FOR TAX PURPOSES. In the event of a taxable
distribution to holders of shares of Common Stock which results in an adjustment
to the number of shares of Common Stock or other consideration for which such a
Warrant may be exercised, the holders of the Warrants may, in certain
circumstances, be deemed to have received a distribution subject to United
States federal income tax as a dividend.
(h) UNDERLYING WARRANT SHARES. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock or Common Stock held in the treasury of the Company,
for the purpose of effecting the exercise of Warrants, the full number of
Warrant Shares then deliverable upon the exercise of all Warrants
19
then outstanding and payment of the exercise price, and the shares so
deliverable shall be fully paid and nonassessable and free from all liens and
security interests.
(i) SPECIFICITY OF ADJUSTMENT. Regardless of any adjustment in the
number or kind of shares purchasable upon the exercise of the Warrants, Warrant
Certificates theretofore or thereafter issued may continue to express the same
number and kind of Warrant Shares per Warrant as are stated on the Warrant
Certificates initially issuable pursuant to this Agreement.
(j) VOLUNTARY ADJUSTMENT. The Company from time to time may increase
the Exercise Rate by any number and for any period of time (PROVIDED that such
period is not less than 20 Business Days). Whenever the Exercise Rate is so
increased, the Company shall mail to holders at the addresses appearing on the
Warrant Register and file with the Warrant Agent a notice of the increase. The
Company shall give the notice at least 15 days before the date the increased
Exercise Rate takes effect. The notice shall state the increased Exercise Rate
and the period it will be in effect. A voluntary increase in the Exercise Rate
shall not change or adjust the Exercise Rate otherwise in effect as determined
by this Section 5.01.
(k) MULTIPLE ADJUSTMENTS. After an adjustment to the Exercise Rate
for outstanding Warrants under this Article V, any subsequent event requiring an
adjustment under this Article V shall cause an adjustment to the Exercise Rate
for outstanding Warrants as so adjusted.
(l) DEFINITIONS.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock, whether
outstanding on the Issue Date or issued after the Issue Date, and any and all
rights (other than any evidence of Indebtedness), warrants or options
exchangeable for or convertible into such capital stock.
"CONVERTIBLE PREFERRED STOCK" shall mean any securities convertible or
exercisable or exchangeable into Common Stock of the Company, whether
outstanding on the Issue Date or thereafter issued.
"CURRENT MARKET VALUE" per share of Common Stock of the Company or any
other security at any date shall mean (i) if the security is not registered
under the Exchange Act, (a) the value of the security, determined in good faith
by the board of directors of the Company and certified in a board resolution,
based on the most recently completed arm's-length transaction between the
Company and a person other than an Affiliate of the Company and the closing of
which occurs on such date or shall have occurred within the six-month period
preceding such date, or (b) if no such transaction shall have occurred on such
date or within such six-month period, the fair market value of the security as
determined by a nationally recognized Independent Financial Expert (as defined
herein), including but not limited to Xxxxx Financial, Inc., (PROVIDED that, in
the case of the calculation of Current Market Value for determining the cash
value of fractional shares, any such determination within six months that is, in
the good faith judgment of the board of directors, a reasonable determination of
value, may be utilized) or (ii) (a) if the security is registered under the
Exchange Act, the average of the daily closing sales prices of the
20
securities for the 20 consecutive trading days immediately preceding such date,
or (b) if the security has been registered under the Exchange Act for less than
20 consecutive trading days before such date, then the average of the daily
closing sales prices for all of the trading days before such date for which
closing sales prices are available, in the case of each of (ii)(a) and (ii)(b),
as certified to the Warrant Agent by the chief executive officer, the president,
any executive vice president or the chief financial officer of the Company. The
closing sales price for each such trading day shall be: (A) in the case of a
security listed or admitted to trading on any U.S. national securities exchange
or quotation system, the closing sales price, regular way, on such day, or if no
sale takes place on such day, the average of the closing bid and asked prices on
such day, (B) in the case of a security not then listed or admitted to trading
on any U.S. national securities exchange or quotation system, the last reported
sale price on such day, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, as reported by a reputable
quotation source designated by the Company, (C) in the case of a security not
then listed or admitted to trading on any U.S. national securities exchange or
quotation system and as to which no such reported sale price or bid and asked
prices are available, the average of the reported high bid and low asked prices
on such day, as reported by a reputable quotation service, or a newspaper of
general circulation in the Borough of Manhattan, The City and State of New York,
customarily published on each Business Day, designated by the Company, or, if
there shall be no bid and asked prices on such day, the average of the high bid
and low asked prices, as so reported, on the most recent day (not more than 30
days prior to the date in question) for which prices have been so reported and
(D) if there are not bid and asked prices reported during the 30 days prior to
the date in question, the Current Market Value shall be determined as if the
securities were not registered under the Exchange Act.
"INDEPENDENT FINANCIAL EXPERT" means a U.S. investment banking firm of
national standing in the United States (i) which does not, and whose directors,
officers and employees or Affiliates do not, have a direct or indirect material
financial interest for its proprietary account in the Company or any of its
Affiliates and (ii) which, in the judgment of the board of directors of the
Company, is otherwise independent with respect to the Company and its Affiliates
and qualified to perform the task for which it is to be engaged.
"TIME OF DETERMINATION" means, (i) in the case of any distribution of
securities or other property to existing shareholders to which paragraph (b)
applies, the time and date of the determination of shareholders entitled to
receive such securities or property or (ii) in the case of any other issuance
and sale to which paragraph (b) applies, the time and date of such issuance or
sale.
(m) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment in the
Exercise Rate need be made unless the adjustment would require an increase of at
least 1% in the Exercise Rate. Any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustments. All
calculations under this Article V shall be made to the nearest 1/1000th of a
share, as the case may be.
SECTION 5.02. FRACTIONAL WARRANT SHARES. The Company shall not be
required to issue fractional Warrant Shares upon exercise of the Warrants or
distribute Warrant Certificates that evidence fractional Warrant Shares. In the
event a holder is required by Section 2.02(c) to
21
make a Cashless Exercise, the number of Warrant Shares issuable shall be rounded
up to the nearest whole number. In addition, in no event shall any holder of
Warrants be required to make any payment of a fractional cent. In lieu of
fractional Warrant Shares, there shall be paid to the registered holders of
Warrant Certificates at the time Warrants evidenced thereby are exercised as
herein provided an amount in cash equal to the same fraction of the Current
Market Value per Warrant Share on the Business Day preceding the date the
Warrant Certificates evidencing such Warrants are surrendered for exercise.
Such payments shall be made by check or by transfer to an account maintained by
such registered holder with a bank in The City of New York. If any holder
surrenders for exercise more than one Warrant Certificate, the number of Warrant
Shares deliverable to such holder may, at the option of the Company, be computed
on the basis of the aggregate amount of all the Warrants exercised by such
holder.
SECTION 5.03. CERTAIN DISTRIBUTIONS. If at any time after the
Exercisability Date, the Company grants, issues or sells options, convertible
securities, or rights to purchase Capital Stock, warrants or other securities
PRO RATA to the record holders of Common Stock (the "DISTRIBUTION RIGHTS") or,
without duplication, makes any dividend or otherwise makes any distribution,
including (subject to applicable law) pursuant to any plan of liquidation
("DISTRIBUTION") on shares of Common Stock (whether in cash, property, evidences
of indebtedness or otherwise), then the Company shall grant, issue, sell or make
to each registered holder of Warrants then outstanding the aggregate
Distribution Rights or Distribution, as the case may be, which such holder would
have acquired if such holder had held the maximum number of shares of Common
Stock acquirable upon complete exercise of each holder's Warrants (regardless of
whether the Warrants are then exercisable and without giving effect to the
Cashless Exercise option) immediately before the record date for the grant,
issuance or sale of such Distribution Rights or Distribution, as the case may
be, or, if there is no such record date, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of
such Distribution Rights or Distribution, as the case may be.
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. WARRANT AGENT. The Company hereby appoints American
Stock Transfer & Trust Company as Warrant Agent of the Company in respect of the
Warrants and the Warrant Certificates upon the terms and subject to the
conditions set forth herein and in the Warrant Certificates; and American Stock
Transfer & Trust Company hereby accepts such appointment. The Warrant Agent
shall have the powers and authority specifically granted to and conferred upon
it in the Warrant Certificates and hereby and such further powers and authority
to act on behalf of the Company as the Company may hereafter grant to or confer
upon it and it shall accept in writing. All of the terms and provisions with
respect to such powers and authority contained in the Warrant Certificates are
subject to and governed by the terms and provisions hereof. The Warrant Agent
may act through agents and shall not be responsible for the misconduct or
negligence of any such agent appointed with due care.
SECTION 6.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The Warrant
Agent accepts its obligations herein set forth upon the terms and conditions
hereof and in the Warrant
22
Certificates, including the following, to all of which the Company agrees and to
all of which the rights hereunder of the holders from time to time of the
Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to compensation to be agreed
upon with the Company in writing for all services rendered by it and the Company
agrees promptly to pay such compensation and to reimburse the Warrant Agent for
its reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel) incurred without gross negligence or willful misconduct on its part in
connection with the services rendered by it hereunder. The Company also agrees
to indemnify the Warrant Agent and any predecessor Warrant Agent, their
directors, officers, affiliates, agents and employees for, and to hold them and
their directors, officers, affiliates, agents and employees harmless against,
any loss, liability or expense of any nature whatsoever (including, without
limitation, reasonable fees and expenses of counsel) incurred without gross
negligence or willful misconduct on the part of the Warrant Agent, arising out
of or in connection with its acting as such Warrant Agent hereunder and its
exercise of its rights and performance of its obligations hereunder. The
obligations of the Company under this Section 6.02 shall survive the exercise
and the expiration of the Warrant Certificates and the resignation and removal
of the Warrant Agent.
(b) In acting under this Agreement and in connection with the Warrant
Certificates, the Warrant Agent is acting solely as agent of the Company and
does not assume any obligation or relationship of agency or trust for or with
any of the owners or holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel of its selection and
any advice or written opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with such advice or opinion.
(d) The Warrant Agent shall be fully protected and shall incur no
liability for or in respect of any action taken or omitted to be taken or thing
suffered by it in reliance upon any Warrant Certificate, notice, direction,
consent, certificate, affidavit, opinion of counsel, instruction, statement or
other paper or document reasonably believed by it to be genuine and to have been
presented or signed by the proper parties.
(e) The Warrant Agent, and its officers, directors, affiliates and
employees ("RELATED PARTIES"), may become the owners of, or acquire any interest
in, Warrant Certificates, shares or other obligations of the Company with the
same rights that it or they would have if it were not the Warrant Agent
hereunder and, to the extent permitted by applicable law, it or they may engage
or be interested in any financial or other transaction with the Company and may
act on, or as depositary, trustee or agent for, any committee or body of holders
of shares or other obligations of the Company as freely as if it were not the
Warrant Agent hereunder. Nothing in this Agreement shall be deemed to prevent
the Warrant Agent or such Related Parties from acting in any other capacity for
the Company.
23
(f) The Warrant Agent shall not be under any liability for interest
on, and shall not be required to invest, any monies at any time received by it
pursuant to any of the provisions of this Agreement or of the Warrant
Certificates.
(g) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement (or any term or provision hereof) or
the execution and delivery hereof (except the due execution and delivery hereof
by the Warrant Agent) or in respect of the validity or execution of any Warrant
Certificate (except its authentication thereof).
(h) The recitals and other statements contained herein and in the
Warrant Certificates (except as to the Warrant Agent's authentication thereon)
shall be taken as the statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of the same. The Warrant Agent does not make
any representation as to the validity or sufficiency of this Agreement or the
Warrant Certificates, except for its due execution and delivery of this
Agreement; PROVIDED, HOWEVER, that the Warrant Agent shall not be relieved of
its duty to authenticate the Warrant Certificates as authorized by this
Agreement. The Warrant Agent shall not be accountable for the use or
application by the Company of the proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrains from acting with
respect to any matter contemplated by this Warrant Agreement, it may require:
(1) an Officers' Certificate (as defined in the Indenture)
stating on behalf of the Company that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Warrant Agreement relating to
the proposed action have been complied with; and
(2) if reasonably necessary in the sole judgment of the
Warrant Agent, an opinion of counsel for the Company stating that, in the
opinion of such counsel, all such conditions precedent have been complied with,
PROVIDED that such matter is one customarily opined upon by counsel.
Each Officers' Certificate or, if requested, an opinion of counsel
with respect to compliance with a condition or covenant provided for in this
Warrant Agreement shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
24
(j) The Warrant Agent shall be obligated to perform such duties as
are specifically set forth herein and in the Warrant Certificates, and no
implied duties or obligations shall be read into this Agreement or the Warrant
Certificates against the Warrant Agent. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates duly authenticated by the Warrant Agent and
delivered by it to the Company pursuant to this Agreement. The Warrant Agent
shall have no duty or responsibility in case of any default by the Company in
the performance of its covenants or agreements contained in the Warrant
Certificates or in the case of the receipt of any written demand from a holder
of a Warrant Certificate with respect to such default, including, without
limiting the generality of the foregoing, any duty or responsibility to initiate
or attempt to initiate any proceedings at law or otherwise or, except as
provided in Section 7.02 hereof, to make any demand upon the Company.
(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from the Company
made or given under any provision of this Agreement shall be sufficient if
signed by its chief executive officer, its president, its chief financial
officer or any executive vice president of the Company signing alone, or by any
vice president signing together with the secretary, any assistant secretary, the
treasurer or any assistant treasurer of the Company.
(l) The Warrant Agent shall have no responsibility in respect of any
adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing by the Warrant
Agent of the provisions of this Agreement.
(n) The Warrant Agent is hereby authorized and directed to accept
written instructions with respect to the performance of its duties hereunder
from any one of the chief executive officer, the president, the chief financial
officer, any executive vice president alone, or any vice president together with
the secretary, assistant secretary, the treasurer or any assistant treasurer of
the Company or any other officer or official of the Company reasonably believed
to be authorized to give such instructions and to apply to such officers or
officials for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions with respect to any matter arising in connection
with the Warrant Agent's duties and obligations arising under this Agreement.
Such application by the Warrant Agent for written instructions from the Company
may, at the option of the Warrant Agent, set forth in writing any action
proposed to be taken or omitted by the Warrant Agent with respect to its duties
or obligations under this Agreement and the date on or after which such action
shall be taken and the Warrant Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall be not less than 10 Business
Days after the Company receives such application unless the Company consents to
a shorter period); PROVIDED that (i) such application includes a statement to
the effect that it is being made pursuant to this paragraph (n) and that unless
objected to prior to such date specified in the application, the Warrant Agent
will not be liable for any such action or omission to the extent set forth in
such paragraph (n) and (ii) prior to taking or omitting
25
any such action, the Warrant Agent has not received written instructions
objecting to such proposed action or omission.
(o) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed on behalf of the Company by any one of the
chief executive officer, the president, the chief financial officer, any
executive vice president alone, or any vice president together with the
secretary, assistant secretary, the treasurer or any assistant treasurer of the
Company or any other officer or official of the Company reasonably believed to
be authorized to give such instructions and delivered to the Warrant Agent; and
such certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(p) The Warrant Agent shall not be required to risk or expend its own
funds in the performance of its obligations and duties hereunder.
SECTION 6.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR. (a) The
Company agrees, for the benefit of the holders from time to time of the Warrant
Certificates, that there shall at all times be a Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective; PROVIDED,
HOWEVER, that such date shall be at least 60 days after the date on which such
notice is given unless the Company agrees to accept less notice. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
Warrant Agent, qualified as provided in Section 6.03(d) hereof, by written
instrument in duplicate signed on behalf of the Company, one copy of which shall
be delivered to the resigning Warrant Agent and one copy to the successor
Warrant Agent. As provided in Section 6.03(d) hereof, such resignation shall
become effective upon the earlier of (x) the acceptance of the appointment by
the successor Warrant Agent or (y) 60 days after receipt by the Company of
notice of such resignation. The Company may, at any time and for any reason,
and shall, upon any event set forth in the next succeeding sentence, remove the
Warrant Agent and appoint a successor Warrant Agent by written instrument in
duplicate, specifying such removal and the date on which it is intended to
become effective, signed on behalf of the Company, one copy of which shall be
delivered to the Warrant Agent being removed and one copy to the successor
Warrant Agent. The Warrant Agent shall be removed as aforesaid if it shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Warrant Agent or of its property shall be appointed, or any
public officer shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation. Any removal of
the Warrant Agent and any appointment of a successor Warrant Agent shall become
effective upon acceptance of appointment by the successor Warrant Agent as
provided in Section 6.03(d). As soon as practicable after appointment of the
successor Warrant Agent, the Company shall cause written notice of the change in
the Warrant Agent to be given to each of the registered holders of the Warrants
in the manner provided for in Section 7.04 hereof.
26
(c) Upon resignation or removal of the Warrant Agent, if the Company
shall fail to appoint a successor Warrant Agent within a period of 60 days after
receipt of such notice of resignation or removal, then the holder of any Warrant
Certificate or the retiring Warrant Agent may apply to a court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to the Warrant Agent, either by the Company or by
such a court, the duties of the Warrant Agent shall be carried out by the
Company.
(d) Any successor Warrant Agent, whether appointed by the Company or
by a court, shall be a bank or trust company or transfer agent in good standing,
incorporated under the laws of the United States of America or any State thereof
and having, at the time of its appointment, a combined capital surplus of at
least $10 million. Such successor Warrant Agent shall execute and deliver to
its predecessor and to the Company an instrument accepting such appointment
hereunder and all the provisions of this Agreement, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Warrant Agent hereunder,
and such predecessor shall thereupon become obligated to (i) transfer and
deliver, and such successor Warrant Agent shall be entitled to receive, all
securities, records or other property on deposit with or held by such
predecessor as Warrant Agent hereunder and (ii) upon payment of the amounts then
due it pursuant to Section 6.02(a) hereof, pay over, and such successor Warrant
Agent shall be entitled to receive, all monies deposited with or held by any
predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent hereunder
may be merged or converted, or any corporation or bank with which the Warrant
Agent may be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
corporation or bank to which the Warrant Agent shall sell or otherwise transfer
all or substantially all of its corporate trust business, shall be the successor
to the Warrant Agent under this Agreement (PROVIDED that such corporation or
bank shall be qualified as aforesaid) without the execution or filing of any
document or any further act on the part of any of the parties hereto.
(f) No Warrant Agent under this Warrant Agreement shall be personally
liable for any action or omission of any successor Warrant Agent.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENT. This Agreement and the terms of the
Warrants may be amended by the Company and the Warrant Agent, without the
consent of the holder of any Warrant Certificate, for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein, or to effect any assumptions
of the Company's obligations hereunder and thereunder by a successor corporation
under certain circumstances or in any other manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of the Warrant Certificates.
27
The Company and the Warrant Agent may amend, modify or supplement this
Agreement and the terms of the Warrants, and waivers to departures from the
terms hereof and thereof may be given, with the consent of the Requisite Warrant
Holders (as defined below) for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of this Agreement or
modifying in any manner the rights of the holders of the outstanding Warrants.
"REQUISITE WARRANT HOLDERS" means (i) in the case of any amendment,
modification, supplement or waiver affecting only Warrant Holders as such
holders of a majority in number of the outstanding Warrants, voting separately
as a class, or (ii) in the case of any amendment, modification, supplement or
waiver affecting Warrant Holders, a majority in number of Warrant Shares
represented by the Warrants that would be issuable assuming exercise thereof at
the time such amendment, modification, supplement or waiver is voted upon.
Notwithstanding any other provision of this Agreement, the Warrant Agent's
consent must be obtained regarding any supplement or amendment which alters the
Warrant Agent's rights or duties (it being expressly understood that the
foregoing shall not be in derogation of the right of the Company to remove the
Warrant Agent in accordance with Section 6.03 hereof). For purposes of any
amendment, modification or waiver hereunder, Warrants held by the Company or any
of its Affiliates shall be disregarded.
Any modification or amendment made in accordance with this Agreement
will be conclusive and binding on all present and future holders of Warrant
Certificates whether or not they have consented to such modification or
amendment or waiver and whether or not notation of such modification or
amendment is made upon such Warrant Certificates. Any instrument given by or on
behalf of any holder of a Warrant Certificate in connection with any consent to
any modification or amendment will be conclusive and binding on all subsequent
holders of such Warrant Certificate.
SECTION 7.02. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT AGENT.
If the Warrant Agent shall receive any notice or demand addressed to the Company
by the holder of a Warrant Certificate pursuant to the provisions hereof or of
the Warrant Certificates, the Warrant Agent shall promptly forward such notice
or demand to the Company.
SECTION 7.03. ADDRESSES FOR NOTICES TO PARTIES AND FOR TRANSMISSION
OF DOCUMENTS. All notices hereunder to the parties hereto shall be deemed to
have been given when sent by certified or registered mail, postage prepaid, or
by facsimile transmission, confirmed by first class mail, postage prepaid,
addressed to any party hereto as follows:
To the Company:
Convergent Communications, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
with copies to:
28
Xxxxxx, Xxxx & Xxxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
To the Warrant Agent:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
or at any other address of which either of the foregoing shall have notified the
other in writing.
SECTION 7.04. NOTICES TO HOLDERS. Notices to holders of Warrants
shall be mailed to such holders at the addresses of such holders as they appear
in the Warrant Register. Any such notice shall be sufficiently given if sent by
first-class mail, postage prepaid to the address of such holder.
SECTION 7.05. APPLICABLE LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.06. PERSONS HAVING RIGHTS UNDER AGREEMENT. Nothing in this
Agreement expressed or implied and nothing that may be inferred from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the Company, the Warrant Agent and the
holders of the Warrant Certificates and, with respect to Sections 4.03 and 4.04,
the holders of Warrant Shares issued pursuant to Warrants, any right, remedy or
claim under or by reason of this Agreement or of any covenant, condition,
stipulation, promise or agreement hereof; and all covenants (except for Section
4.03 which shall be for the benefit of all holders of Warrant Shares issued
pursuant to Warrants), conditions, stipulations, promises and agreements in this
Agreement contained shall be for the sole and exclusive benefit of the Company
and the Warrant Agent and their successors and of the holders of the Warrant
Certificates.
SECTION 7.07. HEADINGS. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 7.08. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
SECTION 7.09. INSPECTION OF AGREEMENT. A copy of this Agreement
shall be available during regular business hours at the principal corporate
trust office of the Warrant Agent, for
29
inspection by the holder of any Warrant Certificate. The Warrant Agent may
require such holder to submit his Warrant Certificate for inspection by it.
SECTION 7.10. AVAILABILITY OF EQUITABLE REMEDIES. Since a breach of
the provisions of this Agreement could not adequately be compensated by money
damages, holders of Warrants shall be entitled, in addition to any other right
or remedy available to them, to an injunction restraining such breach or a
threatened breach and to specific performance of any such provision of this
Agreement, and in either case no bond or other security shall be required in
connection therewith, and the parties hereby consent to such injunction and to
the ordering of specific performance.
SECTION 7.11. OBTAINING OF GOVERNMENTAL APPROVALS. The Company will
from time to time take all action required to be taken by it which may be
necessary to obtain and keep effective any and all permits, consents and
approvals of governmental agencies and authorities and securities acts filings
under U.S. federal and state laws, and the rules and regulations of all stock
exchanges on which the Warrants may become listed which may be or become
requisite in connection with the issuance, sale, transfer, and delivery of the
Warrant Certificates, the exercise of the Warrants or the issuance, sale,
transfer and delivery of the Warrant Shares issued upon exercise of the
Warrants.
[Signature Page Follows]
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
CONVERGENT COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: President
AMERICAN STOCK TRANSFER & TRUST
COMPANY
Warrant Agent
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
30
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
[THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN
AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S, (2) AGREES THAT IT WILL NOT
PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SHORTER PERIOD AS MAY BE PRESCRIBED
BY RULE 144(K) (OR ANY SUCCESSOR PROVISION THEREOF) UNDER THE SECURITIES ACT)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS
SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY AND (Y) SUCH
LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE
RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR
(E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL NOT ENGAGE IN HEDGING
TRANSACTIONS INVOLVING THIS SECURITY EXCEPT IN COMPLIANCE WITH THE SECURITIES
ACT AND (4) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THESE SECURITIES WITHIN THE TIME PERIOD REFERRED TO ABOVE,
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH
A-1
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE WARRANT AGENT. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.]
[THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF
AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF 13%
SENIOR NOTES DUE 2008 OF CONVERGENT COMMUNICATIONS, INC. (THE "NOTES") AND FOUR
WARRANTS, EACH WARRANT ENTITLING THE HOLDER THEREOF TO PURCHASE 2.7 SHARES OF
COMMON STOCK, NO PAR VALUE, OF CONVERGENT COMMUNICATIONS, INC. PRIOR TO THE
CLOSE OF BUSINESS UPON THE EARLIEST TO OCCUR OF (i) THE DATE THAT IS SIX MONTHS
AFTER THE INITIAL SALE OF THE UNITS; (ii) THE DATE ON WHICH A REGISTRATION
STATEMENT WITH RESPECT TO A REGISTERED EXCHANGE OFFER FOR THE NOTES IS DECLARED
EFFECTIVE UNDER THE SECURITIES ACT; (iii) THE OCCURRENCE OF AN EXERCISE EVENT
(AS DEFINED HEREIN), (iv) THE OCCURRENCE OF AN EVENT OF DEFAULT (AS DEFINED IN
THE INDENTURE); OR (v) SUCH EARLIER DATE AS DETERMINED BY XXXXXXX XXXXX (AS
DEFINED IN THE WARRANT AGREEMENT) IN ITS SOLE DISCRETION, THE WARRANTS EVIDENCED
BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY
BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE NOTES.](*)
---------------
* To be included on Warrant Certificates issued prior to the Separation Date.
A-2
CUSIP #[ ]
No. ___ [ ] Warrants
WARRANT CERTIFICATE
CONVERGENT COMMUNICATIONS, INC.
This Warrant Certificate certifies that [ ], or registered
assigns, is the registered holder of [ ] Warrants (the "WARRANTS") to
purchase shares of Common Stock, no par value, issuable upon exercise of the
Warrants (the "WARRANT SHARES") of CONVERGENT COMMUNICATIONS, INC., a Colorado
corporation (the "COMPANY," which term includes its successors and assigns).
Each Warrant entitles the holder to purchase from the Company at any time from
9:00 a.m. New York City time on or after the Exercisability Date until 5:00
p.m., New York City time, on April 1, 2008 (the "EXPIRATION DATE"),
fully paid, registered and non-assessable Warrant Shares, SUBJECT TO ADJUSTMENT
AS PROVIDED IN ARTICLE V OF THE WARRANT AGREEMENT, at an exercise price of $0.01
for each share purchased (the "EXERCISE PRICE"); upon surrender of this Warrant
Certificate and payment of the Exercise Price (i) in cash or by certified or
official bank check, (ii) by a Cashless Exercise or (iii) by any combination of
(i) and (ii), at any office or agency maintained for that purpose by the Company
(the "WARRANT EXERCISE OFFICE"), subject to the conditions set forth herein and
in the Warrant Agreement. For purposes of this Warrant, a "CASHLESS EXERCISE"
shall mean an exercise of a Warrant in accordance with the immediately following
two sentences. To effect a Cashless Exercise, the holder may exercise a Warrant
or Warrants without payment of the Exercise Price in cash by surrendering such
Warrant or Warrants (represented by one or more Warrant Certificates) and in
exchange therefor, receiving such number of shares of Common Stock equal to the
product of (1) that number of shares of Common Stock for which such Warrant or
Warrants are exercisable and which would be issuable in the event of an exercise
with payment of the Exercise Price and (2) the Cashless Exercise Ratio. The
"CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator of which is the
excess of the Current Market Value (calculated as set forth in this Warrant) per
share of Common Stock on the date of exercise over the Exercise Price per share
of Common Stock as of the date of exercise and the denominator of which is the
Current Market Value per share of Common Stock on the date of exercise. Upon
surrender of a Warrant Certificate representing more than one Warrant in
connection with the holder's option to elect a Cashless Exercise, the holder
must specify the number of Warrants for which such Warrant Certificate is to be
exercised (without giving effect to the Cashless Exercise). All provisions of
the Warrant Agreement shall be applicable with respect to a Cashless Exercise of
a Warrant Certificate for less than the full number of Warrants represented
thereby.
Capitalized terms used herein without being defined herein shall have
the definitions ascribed to such terms in the Warrant Agreement.
"CURRENT MARKET VALUE" per share of Common Stock of the Company or any
other security at any date shall mean (i) if the security is not registered
under the Exchange Act, (a) the value of the security, determined in good faith
by the board of directors of the Company and
A-3
certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a person other than an
Affiliate of the Company and the closing of which occurs on such date or shall
have occurred within the six-month period preceding such date, or (b) if no such
transaction shall have occurred on such date or within such six-month period,
the fair market value of the security as determined by a nationally or
regionally recognized Independent Financial Expert (as defined herein),
including but not limited to Xxxxx Financial, Inc. (provided that, in the case
of the calculation of Current Market Value for determining the cash value of
fractional shares, any such determination within six months that is, in the good
faith judgment of the board of directors, a reasonable determination of value,
may be utilized) or (ii) (a) if the security is registered under the Exchange
Act, the average of the daily closing sales prices of the securities for the 20
consecutive trading days immediately preceding such date, or (b) if the security
has been registered under the Exchange Act for less than 20 consecutive trading
days before such date, then the average of the closing sales prices for all of
the trading days before such date for which closing sales prices are available,
in the case of each of (ii)(a) and (ii)(b), as certified to the Warrant Agent by
[the chief executive officer, the president, any executive vice president or the
chief financial officer] of the Company. The closing sales price for each such
trading day shall be: (A) in the case of a security listed or admitted to
trading on any U.S. national securities exchange or quotation system, the
closing sales price, regular way, on such day, or if no sale takes place on such
day, the average of the closing bid and asked prices on such day, (B) in the
case of a security not then listed or admitted to trading on any U.S. national
securities exchange or quotation system, the last reported sale price on such
day, or if no sale takes place on such day, the average of the closing bid and
asked prices on such day, as reported by a reputable quotation source designated
by the Company, (C) in the case of a security not then listed or admitted to
trading on any U.S. national securities exchange or quotation system and as to
which no such reported sale price or bid and asked prices are available, the
average of the reported high bid and low asked prices on such day, as reported
by a reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, The City and State of New York, customarily published on
each Business Day, designated by the Company, or, if there shall be no bid and
asked prices on such day, the average of the high bid and low asked prices, as
so reported, on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported and (D) if there are not bid
and asked prices reported during the 30 days prior to the date in question, the
Current Market Value shall be determined as if the securities were not
registered under the Exchange Act.
"EXERCISE EVENT" means, with respect to each Warrant, the date of the
occurrence of the earliest of: (i) the time immediately prior to a Change of
Control (as such term is defined in the Indenture); (ii)(a) the 180th day (or
such earlier date as determined by the Company in its sole discretion) following
the closing of an Initial Public Equity Offering (as defined herein) or (b) upon
the closing of an Initial Public Equity Offering, but only in respect of
Warrants, if any, required to be exercised to permit the holders thereof to sell
Warrant Shares pursuant to their respective registration rights, (iii) a class
of equity securities of the Company is listed on a national securities exchange
or authorized for quotation on The Nasdaq National Market or is otherwise
subject to registration under the Exchange Act, or (iv) October 2, 1999.
"INDEPENDENT FINANCIAL EXPERT" means a U.S. investment banking firm of
national standing in the United States, (i) which does not, and whose directors,
officers and employees or Affiliates
A-4
do not, have a direct or indirect material financial interest for its
proprietary account in the Company or any of its Affiliates and (ii) which, in
the judgment of the board of directors of the Company, is otherwise independent
with respect to the Company and its Affiliates and qualified to perform the task
for which it is to be engaged.
"SEPARABILITY DATE" shall mean the earliest of: (i) the date that is
six months after the initial sale of the Units, (ii) the date on which a
registration statement under the Securities Act, with respect to a registered
exchange offer for the Notes is declared effective under the Securities Act,
(iii) the occurrence of an Exercise Event, (iv) the occurrence of an Event of
Default (as defined in the Indenture) or (v) such earlier date as determined by
Xxxxxxx Xxxxx in its sole discretion and specified to the Company and the
Warrant Agent in writing. Notwithstanding the foregoing, in the event a Change
of Control (as defined in the Indenture) is proposed and the Company commences a
Change of Control Offer (as defined in the Indenture) prior to the Separability
Date, as determined by the preceding sentence, the Separability Date shall be
such earlier date of commencement.
The Company has initially designated the principal corporate trust
office of the Warrant Agent in the Borough of Manhattan, The City of New York,
as the initial Warrant Agent Office. The number of shares of Common Stock
issuable upon exercise of the Warrants ("EXERCISE RATE") is subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York City
time, on April 1, 2008 shall thereafter be void.
If the Company, in a single transaction or through a series of related
transactions, consolidates with or merges with or into, or sells all or
substantially all of its property and assets to, another Person (other than a
subsidiary of the Company) solely for cash, the holders of Warrants which are
then exercisable shall be entitled to receive distributions on the date of such
event on an equal basis with holders of shares of Capital Stock (or other
securities issuable upon exercise of the Warrants) as if the Warrants had been
exercised immediately prior to such event less the aggregate Exercise Price
therefor.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Warrant Certificate shall not be valid unless authenticated by
the Warrant Agent, as such term is used in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
WITNESS the facsimile seal of the Company and facsimile signatures of
its duly authorized officers.
Dated: April 2, 1998
CONVERGENT COMMUNICATIONS, INC.
A-5
By:
---------------------------------
Name:
Title:
Attest:
By:
----------------------------------
Name:
Title:
Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Warrant Agreement:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
Warrant Agent
By:
----------------------------------
Authorized Signatory
A-6
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
CONVERGENT COMMUNICATIONS, INC.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring at 5:00 p.m., New York City time,
on April 1, 2008 (the "EXPIRATION DATE"), each of which represents the right
to purchase at any time on or after the Exercisability Date (as defined in
the Warrant Agreement) and on or prior to the Expiration Date ________
Warrant Shares, subject to adjustment as set forth in the Warrant Agreement.
The Warrants are issued pursuant to a Warrant Agreement dated as of April 2,
1998 (the "WARRANT AGREEMENT"), duly executed and delivered by the Company to
American Stock Transfer & Trust Company, as Warrant Agent (the "WARRANT
AGENT"), which Warrant Agreement is hereby incorporated by reference in and
made a part of this instrument and is hereby referred to for a description of
the rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the words
"HOLDERS" or "HOLDER" meaning the registered holders or registered holder) of
the Warrants.
Warrants may be exercised by (i) surrendering at any Warrant Exercise
Office this Warrant Certificate with the form of Election to Exercise set forth
hereon duly completed and executed and (ii) to the extent such exercise is not
being effected through a Cashless Exercise by paying in full the Warrant
Exercise Price for each such Warrant exercised and any other amounts required to
be paid pursuant to the Warrant Agreement.
If all of the items referred to in the last sentence of the preceding
paragraph are received by the Warrant Agent at or prior to 11:00 a.m., New York
City time, on a Business Day, the exercise of the Warrant to which such items
relate will be effective on such Business Day. If any items referred to in the
last sentence of the preceding paragraph are received after 11:00 a.m., New York
City time, on a Business Day, the exercise of the Warrants to which such item
relates will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Warrants on April
1, 2008, if all of the items referred to in the last sentence of the preceding
paragraph are received by the Warrant Agent at or prior to 5:00 p.m., New York
City time, on such Expiration Date, the exercise of the Warrants to which such
items relate will be effective on the Expiration Date.
As soon as practicable after the exercise of any Warrant or Warrants,
the Company shall issue or cause to be issued to or upon the written order of
the registered holder of this Warrant Certificate, a certificate or certificates
evidencing such Warrant Share or Warrant Shares to which such holder is
entitled, in fully registered form, registered in such name or names as may be
directed by such holder pursuant to the Election to Exercise, as set forth on
the reverse of this Warrant Certificate. Such certificate or certificates
evidencing the
Warrant Share or Warrant Shares shall be deemed to have been issued
and any persons who are designated to be named therein shall be deemed to have
become the holder of record of
A-7
such Warrant Share or Warrant Shares as of the close of business on the date
upon which the exercise of this Warrant was deemed to be effective as provided
in the preceding paragraph.
The Company shall not be required to issue fractional Warrant Shares
upon exercise of the Warrants or distribute Warrant Certificates that evidence
fractional Warrant Shares. In lieu of fractional Warrant Shares, there shall be
paid to the registered Holder of this Warrant Certificate at the time such
Warrant Certificate is exercised an amount in cash equal to the same fraction of
the Current Market Value per share of Common Stock on the Business Day preceding
the date this Warrant Certificate is surrendered for exercise.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder thereof in
person or by legal representative or attorney duly authorized in writing, may be
exchanged for a new Warrant Certificate or new Warrant Certificates evidencing
in the aggregate a like number of Warrants, in the manner and subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that purpose,
a new Warrant Certificate evidencing in the aggregate a like number of Warrants
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement, without charge
except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone) for the
purpose of any exercise hereof and for all other purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in The
City of New York, (ii) the principal U.S. securities exchange or market, if any,
on which the Common Stock is listed or admitted to trading and (iii) the
principal U.S. securities exchange or market, if any, on which the Warrants are
listed or admitted to trading, are open for business.
The Warrants and the Warrant Shares are entitled to the benefits of a
registration rights agreement relating to the Warrants and the Warrant Shares
(the "WARRANT REGISTRATION RIGHTS AGREEMENT"), pursuant to which the holders of
a number of Warrants, Warrant Shares and Registrable Securities (as defined in
the Warrant Registration Rights Agreement) equivalent to at least a majority of
the outstanding Warrants, Warrant Shares and
Registrable Securities have, at any time and from time to time on or
after (i) the time immediately prior to a Change of Control (as such term is
defined in the Indenture); (ii)(a) the 180th day (or such earlier date as
determined by the Company in its sole discretion) following the closing of an
Initial Public Equity Offering (as defined herein) or (b) upon the closing of an
Initial Public Equity Offering, but only in respect of Warrants, if any,
required to be exercised to permit the holders thereof to sell Warrant Shares
pursuant to their respective registration rights, (iii) a
A-8
class of equity securities of the Company is listed on a national securities
exchange or authorized for quotation on The Nasdaq National Market or is
otherwise subject to registration under the Exchange Act, or (iv) October 2,
1999, the right to require the Company to effect one demand registration of the
Warrants, Warrant Shares and Registrable Securities. The Warrant Registration
Rights Agreement also provides the holders of the Warrants, Warrant Shares and
Registrable Securities with the right, subject to the conditions and limitations
contained therein, to include the Warrants, Warrant Shares and Registrable
Securities in certain registration statements filed by the Company for its
account or for the account of any of its securityholders.
A-9
[FORM OF ELECTION TO EXERCISE]
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise [ ] of the
Warrants of Convergent Communications, Inc. represented by this Warrant
Certificate and purchase the whole number of Warrant Shares issuable upon the
exercise of such Warrants and herewith tenders payment for such Warrant Shares
as follows:
$__________ in cash or by certified or official bank check; or by
surrender of Warrants pursuant to a Cashless Exercise (as defined in the
Warrant Agreement) for [ ] shares of Common Stock at the current
Cashless Exercise Ratio.
i. The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws, and agrees that the following legend
may be affixed to the stock certificate for the Common Stock if not registered
or if Rule 144(k) is unavailable.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
SAID ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
SCOPE REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD
PURSUANT TO RULE 144(K) UNDER SAID ACT.
ii. The undersigned requests that a certificate representing such
Warrant Shares be registered in the name of ______________________ whose address
is _________________________ and that such shares be delivered to
_________________________ whose address is _______________________________. Any
cash payments to be paid in lieu of a fractional share of Common Stock should be
delivered to _________________________ whose address is _______________________
and the check representing payment thereof should be delivered to
_______________ whose address is _______________________________________.
Dated ,
----------- ----
A-10
Name of holder of
Warrant Certificate:
-------------------------------------------------
(Please Print)
Tax Identification or
Social Security Number:
----------------------------------------------
Address:
------------------------------------------------------------
Signature:
-----------------------------------------------------------
Note: The above signature must correspond with the name as
written upon the face of this Warrant Certificate in
every particular, without alteration or enlargement
or any change whatever and if the certificate
representing the Warrant Shares or any Warrant
Certificate representing Warrants not exercised is to
be registered in a name other than that in which this
Warrant Certificate is registered, or if any cash
payment to be paid in lieu of a fractional share is
to be made to a person other than the registered
holder of this Warrant Certificate, the signature of
the holder hereof must be guaranteed as provided in
the Warrant Agreement.
Signature Guaranteed:
-----------------------------------------------
A-11
[FORM OF ASSIGNMENT]
For value received __________________________ hereby sells, assigns
and transfers unto _____________________________ the within Warrant Certificate,
together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint __________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company, with full power of
substitution in the premises.
Dated ,
---------------- ----
Signature:
-------------------------------
Note: The above signature must
correspond with the name as
written upon the face of this
Warrant Certificate in every
particular, without alteration
or enlargement or any change
whatever.
Signature Guaranteed:
--------------------
A-12
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS *
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
Number of
Warrants of
this Global
Amount of Amount of Warrant Signature
decrease in increase in following of
Number of Number of such authorized
Warrants of Warrants of decrease officer of
Date of this Global this Global (or Warrant
Exchange Warrant Warrant increase) Agent
-------- ----------- ----------- ----------- ----------
----------------------------
* To be attached only to Global Warrants.
A-13
EXHIBIT B
FORM OF LEGEND FOR GLOBAL WARRANT
Any Global Warrant authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
B-1
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "WARRANTS") of CONVERGENT
COMMUNICATIONS, INC.
This Certificate relates to ____ Warrants held in* ___ book-entry or*
_______ certificated form by ______ (the "TRANSFEROR").
The Transferor:*
/ / has requested the Warrant Agent by written order to deliver in
exchange for its security entitlement in the Global Warrant held by the
Depositary a Warrant or Warrants in definitive, registered form of authorized
denominations and an aggregate number equal to its security entitlement in such
Global Warrant (or the portion thereof indicated above); or
/ / has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such
Warrant, the Transferor does hereby certify that the Transferor is familiar with
the Warrant Agreement relating to the above captioned Warrants and the
restrictions on transfers thereof as provided in Section 1.08 of such Warrant
Agreement, and that the transfer of this Warrant does not require registration
under the Securities Act of 1933, as amended (the "ACT") because:
/ / Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 1.08 (a)(y)(A) or Section 1.08
(d)(i)(A) of the Warrant Agreement).
/ / Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Act), in reliance on Rule 144A.
/ / Such Warrant is being transferred in reliance on Regulation S
under the Act.
/ / Such Warrant is being transferred in accordance with Rule 144
under the Act.
----------------------
* Check applicable box.
C-1
/ / Such Warrant is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act.
------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------------
Date:
---------------------
C-2
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION
WITH REGULATION S TRANSFERS
_________, 199_
American Stock Transfer & Trust Company
0000 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Ladies and Gentlemen:
In connection with our proposed sale of Warrants of Convergent
Communications, Inc. (the "COMPANY"), we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), and, accordingly, we represent
that:
(1) the offer of the Warrants was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting
on our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(a)(2) or Rule
904(a)(2) of Regulation S under the Securities Act, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer
restrictions applicable to the Warrants; and
(6) if the circumstances set forth in Rule 904(b) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if applicable) sending a confirmation
or other notice stating that the Warrants may be offered and sold
during the distribution compliance period specified in Rule 903(b)(2)
or (3), as applicable, in accordance with the provisions of Regulation
S; pursuant to registration of
D-1
the Warrants under the Securities Act; or pursuant to an available
exemption from the registration requirements under the Act.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S under the
Securities Act.
Very truly yours,
[Name of Transferor]
By:
---------------------------------
[Authorized Signature]
Upon transfer the Warrants would be registered in the name of the new
entitlement holder as follows:
Name:
------------------------------------
Address:
---------------------------------
Taxpayer ID Number:
----------------------
D-2
