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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 1, 2000
REGISTRATION NO. 333-95669
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
METRICOM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OF INCORPORATION)
77-0294597
(I.R.S. EMPLOYER IDENTIFICATION NO.)
980 UNIVERSITY AVENUE
LOS GATOS, CALIFORNIA 95030-2375
(408) 399-8200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
TIMOTHY A. DREISBACH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
METRICOM, INC.
980 UNIVERSITY AVENUE, LOS GATOS, CALIFORNIA 95030-2375
(408) 399-8200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
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KENNETH L. GUERNSEY JEREMY W. DICKENS
CYDNEY S. POSNER WEIL, GOTSHAL & MANGES LLP
LAURA RANDALL WOODHEAD 767 FIFTH AVENUE
COOLEY GODWARD LLP NEW YORK, NEW YORK 10153
ONE MARITIME PLAZA, 20TH FLOOR (212) 310-8000
SAN FRANCISCO, CALIFORNIA 94111
(415) 693-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the registration statement becomes effective
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act, as
amended, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(2)
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COMMON STOCK, $0.001 PAR VALUE PER SHARE(3)................. (4) (4)
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WARRANTS TO PURCHASE COMMON STOCK(5)........................ (4) (4)
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TOTAL.............................................. $500,000,000(6) $132,000
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(1) The proposed maximum aggregate offering price per class of security will be
determined from time to time by the registrant in connection with the
issuance by the registrant of the securities registered hereunder.
(2) Calculated pursuant to Rule 457(o) under the Securities Act. The amount of
the registration fee was paid in connection with the initial filing of the
registration statement.
(3) Subject to note (6) below, there is being registered hereunder an
indeterminate number of shares of common stock as may be sold from time to
time.
(4) Not required to be included in accordance with General Instruction II.D. of
Form S-3.
(5) Subject to note (6) below, there is being registered hereunder an
indeterminate amount and number of warrants to purchase common stock.
(6) Except as permitted by Rule 462 under the Securities Act, in no event will
the aggregate offering price of all securities issued from time to time
pursuant to this registration statement exceed $500,000,000. The securities
registered hereunder may be sold separately or with other securities
registered hereunder or with debt securities offered and sold by Metricom,
Inc. and Metricom Finance, Inc. pursuant to previously filed registration
statements (Nos. 333-91359 and 333-91359-01).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
PROSPECTUS
$500,000,000
[ricochet logo] METRICOM, INC.
COMMON STOCK
WARRANTS TO PURCHASE COMMON STOCK
We may offer shares of common stock or warrants to purchase common stock
from time to time at prices and on terms to be determined by market conditions
at the time we make the offer. These securities may be offered and sold
concurrently with the offer and sale of debt securities by us and our wholly
owned subsidiary, Metricom Finance, Inc., pursuant to a separate prospectus. We
will provide the specific terms of the warrants and common stock in supplements
to this prospectus. Before you invest in the securities, you should carefully
read this prospectus and the prospectus supplement related to the securities
offered.
Our common stock is traded on the Nasdaq National Market under the symbol
"MCOM." On January 27, 2000, the last reported sale price of the common stock on
the Nasdaq National Market was $103.50 per share.
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THE SECURITIES WE MAY OFFER INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON
PAGE 5.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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If we sell the securities through agents or underwriters, we will include
their names and the fees, commissions and discounts they will receive, as well
as the net proceeds to us, in the applicable prospectus supplement.
The date of this prospectus is February 1, 2000
RICHOCHET LOGO
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.................... 3
Risk Factors.......................... 5
Forward-Looking Information........... 5
Use of Proceeds....................... 5
Description of Capital Stock.......... 6
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PAGE
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Description of Warrants............... 9
Plan of Distribution.................. 9
Legal Matters......................... 10
Experts............................... 10
Where You Can Find More Information... 10
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No dealer, sales person or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the securities offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of its date.
Metricom(R) and Ricochet(R) are Metricom trademarks. Trade names and
trademarks of other companies appearing in this prospectus are the property of
their respective holders.
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PROSPECTUS SUMMARY
The following is a summary of our business. This summary highlights
selected information from this prospectus and does not contain all the
information that may be important to you. To understand the terms of the
securities, you should read this prospectus with the accompanying prospectus
supplement carefully. Together, these documents describe the specific terms of
the securities we are offering. You should also carefully read the section
entitled "Risk Factors" in this prospectus and the accompanying prospectus
supplement and the documents identified under the caption "Where You Can Find
More Information." References to "Metricom" refer to Metricom, Inc. and
references to "Metricom Finance" refers to Metricom Finance, Inc., a wholly
owned subsidiary of Metricom. Unless the context requires otherwise, references
to "we," "us" or "our" refer to Metricom.
We are a leading provider of mobile wireless data access to corporate
networks and the Internet. We have designed our new high speed service, marketed
under the Ricochet(R) brand name, to meet the needs of the growing number of
professionals who require full access to their corporate networks and the
Internet while away from the office. Our service will also appeal to consumers
who desire high-speed mobile access to the Internet. Simply by connecting a
wireless modem to a laptop computer or personal electronic device, users can
access their corporate networks and the Internet whenever they want and wherever
they are within our service areas, just as they would with a wired modem.
We were incorporated in California in December 1985 and reincorporated in
Delaware in April 1992. Our principal office is located at 980 University
Avenue, Los Gatos, California 95030-2375. Our telephone number at that location
is (408) 399-8200, and our Web sites are located at www.metricom.com and
www.ricochet.net. Information contained on these Web sites does not constitute
part of this prospectus.
THE SECURITIES WE MAY OFFER
We may offer shares of our common stock or warrants to purchase shares of
our common stock, from time to time under this prospectus at prices and on terms
to be determined by market conditions at the time of offering. This prospectus
provides you with a general description of the securities we may offer. Each
time we offer a type or series of securities, we will provide a prospectus
supplement that will describe the specific amounts, prices and other important
terms of the securities, including, to the extent applicable:
- aggregate offering price;
- rates and times of payment of dividends, if any;
- voting or other rights, if any;
- in the case of a warrant, procedures and limitations relating to the
exercise of the warrant, including its termination date, exercise price,
duration and anti-dilution provisions;
- in the case of a warrant offered under this prospectus concurrently with
the offer of a debt security issued by us or Metricom Finance pursuant
to a separate prospectus, if applicable, the date on and after which the
warrant may be transferred separately from the debt security, and
- important federal income tax considerations.
The prospectus supplement may also add, update or change information
contained in this prospectus or in documents we have incorporated by reference.
THIS PROSPECTUS MAY NOT BE USED TO COMPLETE ANY SALE OF SECURITIES UNLESS IT IS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
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We may sell the securities directly to or through agents, underwriters or
dealers. We, and our agents or underwriters, reserve the right to accept or
reject all or part of any proposed purchase of securities. If we do offer
securities through agents or underwriters, we will include in the applicable
prospectus supplement:
- the names of those agents or underwriters;
- applicable fees, discounts and commissions, to be paid to them; and
- the net proceeds to us.
We may also deliver this prospectus in connection with the sale of any
shares of common stock issued upon the exercise of any warrants to purchase
common stock we may issue or sell pursuant to the registration statement of
which this prospectus is a part.
Common Stock. We may offer our common stock from time to time. Holders of
common stock are entitled to one vote per share on all matters submitted to a
vote of stockholders, except those matters that are submitted solely to a vote
of the holders of preferred stock. Subject to any preferences of outstanding
shares of preferred stock, holders of common stock are entitled to dividends
when and if declared by the board of directors.
Warrants. We may offer warrants to purchase shares of common stock from
time to time. Unless provided otherwise in the relevant prospectus supplement,
holders of warrants will not generally be entitled to receive dividends paid on
the common stock. Holders of warrants will not be stockholders. We do not intend
to list the warrants on any securities exchange or to apply for their inclusion
for quotation on the Nasdaq Stock Market. If we offer warrants pursuant to this
prospectus concurrently with the offer of debt securities of us or Metricom
Finance pursuant to a separate prospectus, we may provide as a term of the
warrants that the warrants may not be transferred separately from the debt
securities for a period of time as specified in the applicable prospectus
supplement.
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RISK FACTORS
The prospectus supplement applicable to each type or series of securities
we offer will contain a discussion of risks applicable to an investment in
Metricom and to the particular types of securities that we are offering under
that prospectus supplement. Prior to making a decision about investing in our
securities, you should carefully consider the specific factors discussed under
the caption "Risk Factors" in the applicable prospectus supplement, together
with all of the other information contained in the prospectus supplement or
appearing or incorporated by reference in the registration statement of which
this prospectus is a part.
FORWARD-LOOKING INFORMATION
This prospectus contains forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, that are based on the current expectations that we have
about us and our industry. Words such as "expect," "anticipate," "estimate,"
"believe," "intend," "plan" and other similar expressions are used to identify
some forward-looking statements, but not all forward-looking statements include
these words. Some of these forward-looking statements relate to commercial
acceptance of our service. All forward-looking statements involve risks and
uncertainties. Our actual results may differ significantly from our expectations
and from the results expressed in or implied by these forward-looking
statements. The section captioned "Risk Factors" that appears in our annual
report on Form 10-K, as amended, for the year ended December 31, 1998 and our
current report on Form 8-K filed with the SEC on July 9, 1999, as subsequently
amended, as well as the section captioned "Risk Factors" that will appear in
prospectus supplements accompanying this prospectus describe some, but not
necessarily all, of the factors that could cause these differences. We urge you
to read those sections carefully. Except as may be required by law, we undertake
no obligation to publicly update any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.
USE OF PROCEEDS
Unless otherwise described in a prospectus supplement, we will use the net
proceeds from the offering of the securities for deployment and
commercialization of our network and for other general corporate purposes,
principally working capital, funding our operating losses, capital expenditures
and operating expenses. When we offer a particular type or series of securities,
the prospectus supplement relating to those securities will describe our
intended use of the net proceeds we will receive from the sale of those
securities. Unless otherwise described in a prospectus supplement, pending
application for specific purposes, the net proceeds of any offering of
securities may be invested in short-term investments and marketable securities.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
We have authorized capital stock of 150 million shares of common stock,
$0.001 par value per share, and 80 million shares of preferred stock, $0.001 par
value per share. As of December 31, 1999, there were 24,344,697 shares of our
common stock and 60 million shares of our preferred stock outstanding.
Our restated bylaws divide our board of directors into three classes as
nearly equal in size as possible with staggered three-year terms. The
classification of the board of directors could delay or deter a third party from
acquiring control of us.
We are currently subject to the provisions of Section 203 of the Delaware
General Corporation Law regulating corporate takeovers. Section 203 prevents
certain Delaware corporations, including those whose securities are listed on
the Nasdaq National Market, from engaging, under certain circumstances, in a
"business combination," which includes a merger or sale of more than 10% of the
corporation's assets, with any interested stockholder for three years following
the date that the stockholder became an interested stockholder. An interested
stockholder is a stockholder who acquired 15% or more of the corporation's
outstanding voting stock without the prior approval of the corporation's board
of directors. At our annual meeting of stockholders held on October 15, 1999,
our stockholders elected not to be governed by Section 203. The election will
become effective 12 months after adoption of the election.
The following summaries of certain provisions of our common stock and
preferred stock do not purport to be complete and are subject to, and are
qualified in their entirely, by the provisions of our restated certificate of
incorporation and amended and restated bylaws, which are incorporated by
reference into the registration statement of which this prospectus is a part.
COMMON STOCK
Subject to preferences that may apply to shares of preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available for the payment of
dividends at the times and in the amounts that the board of directors may
determine from time to time. Except as discussed below under the caption
"Preferred Stock," each stockholder is entitled to one vote for each share of
common stock held on all matters submitted to a vote of stockholders. Cumulative
voting for the election of directors is not provided for in our restated
certificate, which means that the holders of a majority of the shares voted can
elect all of the directors then standing for election (other than directors to
be elected solely by the holders of the series of preferred stock). The common
stock is not entitled to preemptive rights and is not subject to conversion or
redemption. Upon a liquidation, dissolution or winding-up, the assets legally
available for distribution to stockholders are distributable ratably among the
holders of the common stock and any participating preferred stock outstanding at
that time after payment of liquidation preferences, if any, on any outstanding
preferred stock and payment of other claims of creditors. Each outstanding share
of common stock is, and all shares of common stock to be outstanding upon
completion of this offering will be, validly issued, fully paid and
nonassessable.
The transfer agent and registrar for our common stock is Boston Equiserve.
PREFERRED STOCK
Our restated certificate authorizes 80 million shares of preferred stock,
of which 36 million shares are designated Series A1 preferred stock, 36 million
shares are designated Series A2 preferred stock and 8 million shares are not
currently designated. The material terms of the Series A1 and Series A2
preferred stock are summarized below. Our board of directors has the authority
to issue the remaining undesignated shares of preferred stock in additional
series and to fix the rights, preferences, privileges and restrictions of any
new series, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting any series or the designation of such series,
without further vote or action by our stockholders, subject to rights of the
holders of outstanding preferred stock. The preferred stock may have the effect
of delaying, deterring or preventing a change in our
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control without further action by our stockholders and may adversely affect the
voting and other rights of the holders of our common stock, including the loss
of voting control of others.
SERIES A1 AND A2 PREFERRED STOCK
Dividends. The holders of shares of each of the Series A1 preferred and
Series A2 preferred have the right to receive cumulative dividends payable, at
our option, in cash or additional shares of Series A1 preferred or Series A2
preferred, as the case may be, at the annual rate of 6.5% of the original issue
price of $10 per share, until November 15, 2002 after which date the right to
such cumulative dividends shall terminate, and holders of shares of each of the
Series A1 and Series A2 preferred stock shall be entitled to dividends only
when, as and if declared by the Board of Directors. Cumulative dividends payable
to the holders of Series A1 preferred stock will be prior and in preference to
any dividends payable to the holders of common stock and Series A2 preferred
stock. Cumulative dividends payable to the holders of Series A2 preferred stock
will be prior and in preference to the dividends payable to the holders of
common stock.
Voting Rights. For so long as more than 7.5 million shares of each of the
Series A1 preferred and Series A2 preferred are outstanding, the affirmative
vote of the holders of at least a majority of the outstanding shares of each of
the Series A1 and Series A2 preferred will be required to:
- amend any provision of our restated certificate that changes the rights
and preferences of that series so as to adversely affect the rights of
the Series A1 preferred or Series A2 preferred, as the case may be, in a
manner different from other classes or series of stock;
- issue any new class or series of stock ranking senior in liquidation
preference or dividends to the Series A1 preferred or Series A2
preferred, as the case may be;
- issue any debt securities convertible into equity securities at a price
lower than $10 per share, subject to adjustment for any stock dividend,
split, combination or other similar event;
- redeem or repurchase, under specified circumstances, any series of stock
junior to the Series A1 preferred or Series A2 preferred, as the case
may be; or
- declare or pay any dividend on outstanding common stock, subject to
specified exceptions.
In addition, for so long as more than 7.5 million shares of either of the
Series A1 preferred or Series A2 preferred are outstanding, the holders of
shares of those series of preferred stock, voting as separate classes, will be
entitled to elect one member of our board of directors to represent each series.
Holders of outstanding shares of Series A1 preferred may waive this right from
time to time and instead designate an observer to attend meetings of the board
of directors.
Liquidation Rights. If we are liquidated, dissolved or wound up, the
holders of Series A1 preferred and holders of Series A2 preferred will be
entitled to be paid out of our assets, before any distribution to the holders of
common stock, an amount equal to the greater of the original issue price plus
accrued but unpaid dividends or the amount the holders would have received if
the shares had been converted to common stock. For this purpose, "liquidation"
includes:
- a consolidation, merger or other reorganization in which our
stockholders prior to the transaction own less than 50% of our voting
power after such transaction or other transaction or series of
transactions to which we are party in which over 50% of our voting power
is transferred; or
- a sale, lease or other disposition of all or substantially all of our
assets.
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Redemption. On November 15, 2009, we must redeem all outstanding shares of
Series A1 and Series A2 preferred. In the event of a change of control or major
acquisition by us, each holder of Series A1 and Series A2 preferred will have
the right to require us to redeem all, but not less than all, of the shares of
preferred stock held by that holder. For purposes of this provision, a "change
of control" means an event by which any person or group, other than Vulcan
Ventures Incorporated, MCI WorldCom, Inc. and their respective affiliates:
- becomes a beneficial owner of more than 30% of our outstanding equity
securities, or
- acquires the right to elect at least 30% of our board of directors.
For purposes of this provision, a "major acquisition" means the
acquisition by us of more than 50% of the outstanding equity securities or all
or substantially all of the assets of any entity, or our merger with another
entity in which we are the surviving entity, in each case, for equity
consideration exceeding 25% of our outstanding equity securities.
Conversion. Holders of each of the Series A1 and Series A2 preferred have
the right to convert their shares into common stock, subject to the limitation
that Series A1 preferred shares do not become convertible until May 2002, at
which time 25% of the Series A1 preferred stock originally issued will become
convertible. Following each six-month period thereafter, an additional 25% of
the Series A1 preferred stock originally issued will become convertible. Each
share of Series A1 and Series A2 preferred is initially convertible into one
share of common stock. The conversion rates and prices for each of the Series A1
and Series A2 preferred will be adjusted in the event of any stock split or
combination, dividend payment or distribution on the common stock,
reclassification or other change to the common stock, or reorganization, merger
or sale of assets. Each of the Series A1 and Series A2 preferred will
automatically be converted into shares of common stock in the event that shares
of either series are transferred by the original purchaser to a person other
than Vulcan, MCI WorldCom or their respective affiliates. If the holders of the
Series A2 preferred stock exercise their right to convert their shares into
common stock, then upon conversion we must pay to those holders who convert all
accrued but unpaid dividends on the shares being converted. Dividends may not be
paid on Series A2 preferred stock until all dividends payable on Series A1
preferred stock are fully paid, or declared and funds set aside for payment.
Therefore, a conversion by holders of Series A2 preferred stock into common
stock will also require us to pay all accrued but unpaid dividends on the Series
A1 preferred stock and to declare and set aside funds for the then-current
dividend period.
Registration Rights. Under our Amended and Restated Registration Rights
Agreement, dated November 15, 1999, the holders of 60,000,000 shares of our
currently outstanding series of redeemable convertible preferred stock are
entitled to certain registration rights with respect to the shares of common
stock issuable upon conversion of the preferred stock. Subject to certain
exceptions, including our right to defer a demand registration under specified
conditions, holders that, in the aggregate, hold at least 500,000 shares of
registrable securities have the right to require that we use our best efforts to
register under the Securities Act their registrable securities, the anticipated
offering price of which, net of underwriting discounts and commissions, would
exceed $10,000,000. Additionally, in the event that we register any of our
common stock, either for our own account or for the account of any other
stockholder, we are required to notify holders of registrable securities and,
subject to certain limitations, to include in that registration the registrable
securities of holders requesting registration. Registrable securities need not
be included in registration statements relating to employee benefit plans or
with respect to corporate reorganizations or other transactions under Rule 145
of the Securities Act. We are also required, subject to certain limitations, to
give notice of and effect certain short-term registrations upon request of
holders of registrable securities. We are not required to effect more than two
registrations on Form S-3 in any 12-month period unless the registration is
requested by Vulcan Ventures or MCI WorldCom or certain of their affiliates;
however we are not required to effect this registration if it has effected one
or more registrations upon one of these holders' requests within the preceding
12-month period.
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DESCRIPTION OF WARRANTS
GENERAL
We may issue warrants to purchase shares of our common stock. We may issue
these warrants independently or together with one or more series of debt
securities or shares of common stock offered and sold by us and Metricom Finance
pursuant to a separate prospectus. These warrants may be attached to those debt
securities or shares of common stock or may be issued separately from those
securities. We will issue each series of warrants under a separate warrant
agreement entered into with Boston Equiserve or another bank or trust company,
as warrant agent, all as set forth in the applicable prospectus supplement. Any
warrant agent will act solely as our agent and will not assume any obligation or
relationship of agency or trust for or with any holders of warrants or
beneficial owners of warrants. The following is a summary of the material
provisions of the warrant agreement and warrants; however, we urge you to review
the forms of warrant agreement and warrants, which we have filed as exhibits to
the registration statement of which this prospectus is a part.
TERMS OF THE WARRANTS
The prospectus supplement relating to the particular issue of warrants
will set forth the terms of those warrants, including, where applicable, the
following:
- the number of shares of common stock purchasable upon exercise of the
warrants and the exercise price per share;
- the date on which the right to exercise the warrants will commence and
the date on which the right to exercise the warrants will expire;
- any material U.S. federal income taxes applicable to the warrants;
- procedures and limitations relating to the exercise of the warrants;
- the other terms of the warrants, including whether they will be issued in
registered or global form; and
- in the case of a warrant offered under this prospectus concurrently with
the offer of a debt security issued by us or Metricom Finance pursuant to
a separate prospectus, if applicable, the date on and after which the
warrant may not be transferred separately from the debt security.
Each warrant will entitle the holder to purchase a number of shares of
common stock at the exercise price specified in, or calculable from, the
applicable prospectus supplement. The exercise price of the warrants may be
subject to adjustment upon the occurrence of events specified in the applicable
prospectus supplement. After the close of business on the last day on which a
holder may exercise any warrant, unexercised warrants will become void. The
applicable prospectus supplement will describe the place or places where, and
the manner in which, holders may exercise warrants.
WARRANTHOLDERS
Unless otherwise specified in the applicable prospectus supplement, prior
to the exercise of any warrants, holders of warrants will not have any rights of
holders of common stock, including the right to receive payments of dividends,
if any. Moreover, prior to the exercise of the warrants, holders of warrants
will not have any right to vote on matters submitted to a vote of common
stockholders.
PLAN OF DISTRIBUTION
We may sell the securities being offered by this prospectus directly or
through agents, underwriters or dealers.
Agents designated by us from time to time may solicit offers to purchase
the securities offered by this prospectus. Any agent involved in the offer or
sale of those securities may be deemed to be an underwriter
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under the Securities Act and we will name that agent and describe any
commissions payable by us to that agent in a prospectus supplement. Any agent
appointed by us will be acting on a reasonable efforts basis for the period of
its appointment or, if indicated in the applicable prospectus supplement, on a
firm commitment basis. We may be obligated under agreements with these agents to
indemnify them against civil liabilities, including liabilities under the
Securities Act. These agents may also engage in transactions with or perform
services for us in the ordinary course of business.
If we utilize any underwriters in any sale of the securities in respect of
which this prospectus is delivered, we will enter into an underwriting agreement
with those underwriters at the time of sale to them, and the names of the
underwriters and the terms of the transaction will be set forth in the
prospectus supplement. That prospectus supplement will be used by the
underwriters to make resales of the securities in respect of which this
prospectus is delivered to the public. We may be obligated under the
underwriting agreements with these underwriters to indemnify them against civil
liabilities, including liabilities under the Securities Act. These underwriters
may also engage in transactions with or perform services for us in the ordinary
course of business.
If we utilize a dealer in any sale of the securities in respect of which
the prospectus is delivered, we will sell the securities to the dealer, as
principal. The dealer may then resell those securities to the public at varying
prices to be determined by the dealer at the time of resale. We may be obligated
under agreements with these dealers to indemnify them against civil liabilities,
including liabilities under the Securities Act. These dealers may also engage in
transactions with or perform services for us in the ordinary course of business.
If so indicated in the applicable prospectus supplement, we will authorize
agents, underwriters or dealers to solicit offers from purchasers to purchase
the securities from us at the public offering price set forth in the prospectus
supplement under delayed delivery contracts providing for payment and delivery
of those securities on a specified date in the future. These delayed delivery
contracts will be subject to only those conditions set forth in the prospectus
supplement, and we will set forth the commission payable for solicitation of
these offers in the prospectus supplement.
If we sell any warrants pursuant to this prospectus and an applicable
prospectus supplement, we may deliver the prospectus in connection with the sale
of our common stock upon the exercise of the applicable warrants.
LEGAL MATTERS
Cooley Godward LLP, San Francisco, California will provide us with an
opinion as to the legality of the securities we are offering. Weil, Gotshal &
Manges LLP, New York, New York, will serve as counsel to underwriters, dealers
or agents purchasing any of the securities we are offering by this prospectus.
Attorneys with Cooley Godward LLP own an aggregate of 1,675 shares of our common
stock.
EXPERTS
The audited financial statements and schedules incorporated by reference
in this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. We have filed with the SEC a registration statement on
Form S-3 under the Securities Act. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits to the
registration statement. For further information with respect to us and the
securities we are offering under this prospectus, we refer you to the
registration statement and the exhibits and schedules filed as a part of the
10
<PAGE> 12
registration statement. You may read and copy the registration statement, as
well as our reports, proxy statements and other information at the SEC's public
reference rooms at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as
well as at the SEC's regional offices at 500 West Madison Street, Suite 1400,
Chicago, Illinois, 60661 and at Seven World Trade Center, New York, New York
10048. You can request copies of these documents by writing to the SEC and
paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for
more information about the operation of the public reference rooms. Our SEC
filings are also available at the SEC's web site at "http://www.sec.gov." In
addition, you can read and copy our SEC filings at the office of the National
Association of Securities Dealers, Inc at 1735 K Street, N.W., Washington, D.C.
20006.
The SEC allows us to "incorporate by reference" information that we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus. This prospectus and the information that
we file later with the SEC may update and supersede the information incorporated
by reference. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the termination of the offering of
all securities to which this prospectus relates:
- Annual Report on Form 10-K for the year ended December 31, 1998, as
amended;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
- Quarterly Report on Form 10-Q for the quarter ended June 30, 1999;
- Quarterly Report on Form 10-Q for the quarter ended September 30, 1999;
- Current Report on Form 8-K filed with the SEC on July 9, 1999, as
subsequently amended;
- Current Report on Form 8-K filed with the SEC on January 28, 2000; and
- The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on February 28, 1992.
You may request of copy of these filings at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
Metricom, Inc.
980 University Avenue
Los Gatos, California 94030
(408) 399-8200
11
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated costs and expenses, other
than the underwriting discounts and commissions, payable by the registrant in
connection with the offering of the securities being registered. All the amounts
shown are estimates, except for the registration fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $132,000
Accounting fees and expenses................................ 20,000
Legal fees and expenses..................................... 50,000
Miscellaneous............................................... 48,000
--------
Total............................................. $250,000
========
</TABLE>
We will pay all fees and expenses associated with filing this registration
statement.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law, or the DGCL,
authorizes a court to award or a corporation's board of directors to grant
indemnification to directors and officers in terms sufficiently broad to permit
such indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. Our
Restated Bylaws provide for mandatory indemnification of our directors and
executive officers and permissive indemnification of other officers, employees
and other agents to the maximum extent permitted by the DGCL. We have entered
into indemnification agreements with our directors and certain officers. The
indemnification agreements provide our directors with further indemnification to
the maximum extent permitted by the DGCL. We also have obtained directors and
officers insurance to insure our directors and officers against certain
liabilities, including liabilities under the securities laws.
The form of underwriting agreement filed as Exhibit 1.1 to the
registration statement provides for indemnification by the underwriters of the
registrant and its officers and directors for certain liabilities under the
Securities Act or otherwise.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement.**
4.1 Restated Certificate of Incorporation of Metricom, Inc.***
4.2 Form of Warrant Agreement, including form of warrant
certificate.
5.1 Opinion of Cooley Godward LLP.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).*
24.1 Power of Attorney (included in the signature page).*
</TABLE>
- ---------------
* Previously filed.
** To be filed by amendment or incorporated by reference from reports filed
under the Securities Exchange Act of 1934.
*** Filed as Exhibit 4.1 to the Registration Statements filed by Metricom and
Metricom Finance on Form S-3, as amended (Nos. 333-91359 and 333-91359-01)
and incorporated herein by reference.
II-1
<PAGE> 14
ITEM 17. UNDERTAKINGS.
The undersigned registrant undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the provisions described in Item 15 or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned registrant further undertakes that:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933,
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement, and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Forms S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
II-2
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
amendment to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Gatos, State of
California, on February 1, 2000.
Metricom, Inc.
By: /s/ DALE W. MARQUART
--------------------------------------
Dale W. Marquart
Senior Vice President of
Administration
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ TIMOTHY A. DREISBACH* President and Chief February 1, 2000
- ----------------------------------------------------- Executive Officer (Principal
Timothy A. Dreisbach Executive Officer) and
Director
/s/ JAMES E. WALL* Chief Financial Officer February 1, 2000
- ----------------------------------------------------- (Principal Financial and
James E. Wall Accounting Officer)
/s/ ROBERT S. CLINE* Director February 1, 2000
- -----------------------------------------------------
Robert S. Cline
/s/ RALPH DERRICKSON* Director February 1, 2000
- -----------------------------------------------------
Ralph Derrickson
/s/ ROBERT P. DILWORTH* Director February 1, 2000
- -----------------------------------------------------
Robert P. Dilworth
/s/ JUSTIN L. JASCHKE* Director February 1, 2000
- -----------------------------------------------------
Justin L. Jaschke
/s/ DAVID MOORE* Director February 1, 2000
- -----------------------------------------------------
David Moore
/s/ WILLIAM D. SAVOY* Director February 1, 2000
- -----------------------------------------------------
William D. Savoy
*By: /s/ DALE W. MARQUART
---------------------------------------------------
Senior Vice President of Administration
Attorney-in-Fact
</TABLE>
II-3
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
1.1 Form of Underwriting Agreement.**
4.1 Restated Certificate of Incorporation of Metricom, Inc.***
4.2 Form of Warrant Agreement, including form of warrant
certificate.
5.1 Opinion of Cooley Godward LLP.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).*
24.1 Power of Attorney (included in the signature page).*
</TABLE>
- -------------------------
* Previously filed
** To be filed by amendment or incorporated by reference from reports filed
under the Securities and Exchange Act of 1934.
*** Filed as Exhibit 4.1 to the Registration Statements filed by Metricom and
Metricom Finance on Form S-3, as amended (Nos. 333-91359 and 333-91359-01)
and incorporated herein by reference.
<PAGE> 1
EXHIBIT 4.2
FORM OF
WARRANT AGREEMENT
Dated as of
-----------, -----
between
METRICOM, INC.
and
---------------------------
as Warrant Agent
Warrants for
Common Stock of
METRICOM, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
Definitions
SECTION 1.1. Definitions 1
SECTION 1.2. Other Definitions 15
ARTICLE 2
Warrant Certificates
SECTION 2.1. Form and Dating 6
SECTION 2.2. Legends 8
SECTION 2.3. Execution and Countersignature 15
SECTION 2.4. Certificate Register 16
SECTION 2.5. Separation of Warrants and Notes 16
SECTION 2.6. Transfer and Exchange 16
SECTION 2.7. Replacement Certificates 18
SECTION 2.8. Temporary Certificates 18
SECTION 2.9. Cancellation 18
ARTICLE 3
Exercise Terms
SECTION 3.1. Exercise Price 19
SECTION 3.2. Exercise Periods; Restrictions on Exercise 19
SECTION 3.3. Expiration 19
SECTION 3.4. Manner of Exercise 20
SECTION 3.5. Issuance of Warrant Shares 20
SECTION 3.6. Fractional Warrant Shares 21
SECTION 3.7. Reservation of Warrant Shares 21
SECTION 3.8. Compliance with Law 22
ARTICLE 4
Antidilution Provisions
SECTION 4.1. Changes in Common Stock 22
SECTION 4.2. Cash Dividends and Other Distributions 23
SECTION 4.3. Rights Issue to All Holders of Common Stock 23
SECTION 4.4. Other Issuances of Common Stock or Rights 24
SECTION 4.5. Combination; Liquidation 25
SECTION 4.6. Other Events 26
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4.7. Superseding Adjustment 26
SECTION 4.8. Minimum Adjustment 27
SECTION 4.9. Notice of Adjustment 27
SECTION 4.10. Notice of Certain Transactions 28
SECTION 4.11. Adjustment to Warrant Certificate 28
SECTION 4.12. Exceptions to Antidilution Provisions 29
ARTICLE 5
Warrant Agent
SECTION 5.1. Appointment of Warrant Agent 39
SECTION 5.2. Right and Duties of Warrant Agent 40
SECTION 5.3. Individual Rights of Warrant Agent 41
SECTION 5.4. Warrant Agent's Disclaimer 41
SECTION 5.5. Compensation and Indemnity 41
SECTION 5.6. Successor Warrant Agent 41
ARTICLE 6
Miscellaneous
SECTION 6.1. Financial Statements and Reports of the Company 44
SECTION 6.2. Third Party Beneficiaries 44
SECTION 6.3. Rights of Holders 44
SECTION 6.4. Amendment 44
SECTION 6.5. Notices 45
SECTION 6.6. Governing Law 46
SECTION 6.7. Successors 46
SECTION 6.8. Multiple Originals 46
SECTION 6.9. Table of Contents 46
SECTION 6.10. Severability 46
</TABLE>
EXHIBIT A Form of Face of Warrant Certificate
APPENDIX A List of Financial Experts
3
<PAGE> 4
WARRANT AGREEMENT dated as of _________, _____ (this
"Agreement"), between METRICOM, INC., a Delaware corporation (the "Company"),
and _____________________, as Warrant Agent (the "Warrant Agent").
The Company desires to issue the warrants (the "Warrants" and
each a "Warrant") described herein which will initially entitle the holders
thereof (the "Holders") to purchase an aggregate of ___________ shares of common
stock, par value $0.01 per share (the "Common Stock"), of the Company at a
purchase price of $_______ per share subject to the adjustments described
herein, in connection with an offering of (i) $__________ aggregate principal
amount of ________________ (collectively, the "Notes" and each $1,000 principal
amount thereof a "Note") issued by the Company and Metricom Finance, Inc., a
Delaware corporation and wholly owned subsidiary of the Company ("Finance Sub"
and together with the Company, the "Issuers"), pursuant to the provisions of the
Indenture (as defined below), and (ii) ___________ Warrants initially entitling
the Holder to purchase _________ shares of Common Stock, subject to adjustment
as provided herein. In connection with the sale of the Notes, each purchaser of
a Note is required to purchase a Warrant, resulting in an aggregate of _______
Warrants to be issued to the purchasers of the Notes.
Each Note will be transferable only along with the corresponding
Warrant forming a unit and will not become separately transferable until the
earliest to occur of (i) ____________________, (ii) an Exercise Event or (iii)
such other date, as Lehman Brothers Inc. shall determine (the "Separation
Date").
The Company further desires the Warrant Agent to act on behalf
of the Company in connection with the issuance of the Warrants as provided
herein and the Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of Warrants:
ARTICLE 1
Definitions
Any capitalized terms not otherwise defined herein shall have
the meaning attributed such term in the Indenture.
SECTION 1.1. Definitions.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control" and
correlative meanings, the terms "controlling," "controlled by" and "under common
control with," as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
4
<PAGE> 5
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Board of Directors" means (1) in respect of a limited liability
company, the board of advisors of that company; (2) in respect of a corporation,
the board of directors of the corporation, or any authorized committee thereof;
and (3) in respect of any other Person, the board or committee of that Person
serving a similar function.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents, however designated,
whether voting or non-voting, in equity of such Person, whether now outstanding
or issued after the date hereof, including, without limitation, all Common Stock
and Preferred Stock.
"Cashless Exercise Ratio" means a fraction, the numerator of
which is the excess of the Current Market Value per share of Common Stock on the
Exercise Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
"Change of Control" means such time as (1) a "person" or
"group," within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act,
other than a Permitted Holder, becomes the ultimate "beneficial owner," as
defined in Rule 13d-3 under the Exchange Act, of more than 50% of the total
voting power of the then outstanding Voting Stock of either Issuer on a fully
diluted basis; (2) individuals who at the beginning of any period of two
consecutive calendar years constituted the Board of Directors of either Issuer,
together with any directors who are members of such Board of Directors on the
date hereof and any new directors whose election by the Board of Directors or
whose nomination for election by the stockholders of such Issuer was approved by
a vote of at least two-thirds of the members of the Board of Directors then
still in office who either were members of the Board of Directors at the
beginning of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
members of such Board of Directors then in office; (3) the sale, lease,
transfer, conveyance or other disposition, other than by way of merger or
consolidation, in one or a series of related transactions, of all or
substantially all of the assets of the Issuers and their Subsidiaries taken as a
whole to any such "person" or "group," other than to a Permitted Holder or a
Restricted Subsidiary of an Issuer; (4) the merger or consolidation of an Issuer
with or into another corporation or the merger of another corporation with or
into an Issuer with the effect that immediately after such transaction any such
"person" or "group" of persons or entities, other than a Permitted Holder, shall
have become the ultimate beneficial owner of securities of the surviving
corporation of such merger or consolidation representing more than 50% of the
total voting power of the then outstanding Voting Stock of the surviving
corporation; or (5) the approval by the holders of the Capital Stock of an
Issuer of a plan relating to the liquidation or dissolution of such
5
<PAGE> 6
Issuer. In no event shall the consummation of a Holding Company Reorganization
constitute a Change of Control.
"Combination" means an event (other than the Holding Company
Reorganization) in which the Company consolidates with, merges with or into, or
sells all or substantially all of its assets to another Person.
"Current Market Value" per share of Common Stock or any other
security of the Company at any date means: (i) if the security is not of a class
registered under the Exchange Act, (a) the value of the security, determined in
good faith by the Board of Directors and certified in a resolution of the Board
of Directors, based on the most recently completed arm's-length transaction
between the Company and a Person other than an Affiliate of the Company, the
closing of which occurred on such date or within the six-month period preceding
such date, or (b) if no such transaction shall have occurred on such date or
within such six-month period, the value of the security as determined by an
independent Financial Expert; or (ii) if the security is of a class registered
under the Exchange Act, the average of the last reported sale price of the
Common Stock (or the equivalent in an over-the-counter market) for each Business
Day during the period commencing 15 Business Days before such date and ending on
the date one day prior to such date, or if the security of a class registered
under the Exchange Act for less than 15 consecutive Business Days before such
date, the average of the daily closing bid prices (or such equivalent) for all
of the Business Days before such date for which daily closing bid prices are
available (provided, however, that if the closing bid price is not determinable
for at least 10 Business Days in such period, then clause (i) above and not this
clause (ii) shall be used to determine Current Market Value; provided, however,
that if the Warrant Shares requested to be included in a Demand Registration
Statement shall be underlying an unexercised Warrant, then Current Market Value
shall be calculated as aforesaid, but shall have deducted therefrom the exercise
price of the related Warrant.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Date" means, for a given Warrant, the day on which
such Warrant is exercised pursuant to Section 3.4.
"Exercise Event" means, with respect to each Warrant as to which
such event is applicable, the earlier of: (i) a Change of Control and (ii) any
date when the Company (A) consolidates or merges into or with another Person
(but only where holders of Common Stock receive consideration in exchange for
all or part of such Common Stock other than common stock in the surviving
Person) if the Common Stock (or other securities) thereafter issuable upon
exercise of the Warrants will not be registered under the Exchange Act or (B)
sells all or substantially all of its assets to another Person if the Common
Stock (or other securities) thereafter issuable upon exercise of the Warrants
will not be registered under the Exchange Act; provided, that the events in (A)
and (B) will not be deemed to have occurred if the consideration for the Common
Stock in either such transaction consists solely of cash. Notwithstanding
anything herein to the contrary, the consummation of the Holding Company
Reorganization shall not constitute an Exercise Event.
6
<PAGE> 7
"Financial Expert" means one of the Persons listed in Appendix A
hereto.
"Holding Company Reorganization" has the meaning set forth in
the Indenture.
"Indenture" means the Senior Notes Indenture dated as of
December 28, 1999, between the Company and the Trustee, with respect to the
Notes, as supplemented by the First Supplemental Indenture dated as of February
__, 2000, and as it may be amended or supplemented from time to time.
"Independent Financial Expert" means a Financial Expert that
does not, and whose directors, executive officers and 5% stockholders do not,
have a direct or indirect financial interest in the Company or any of its
subsidiaries or Affiliates, which has not been for at least five years and, at
the time it is called upon to give independent financial advice to the Company,
is not (and none of its directors, executive officers or 5% stockholders is) a
promoter, director, or officer of the Company or any of its subsidiaries or
Affiliates. The Independent Financial Expert may be compensated and indemnified
by the Company for opinions or services it provides as an Independent Financial
Expert.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Issue Date" means __________, ______.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.
"Officer" means the Chairman of the Board of Directors, the
President, any Vice President, the Treasurer, or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Company.
"Participant" means, with respect to DTC or its nominee, an
institution that has an account therewith.
"Permitted Holder" means either MCI Worldcom or Vulcan Ventures,
or any majority owned Affiliate thereof.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents, however designated,
whether voting or non-voting, of that Person's equity that have a preference as
to the payment of dividends or as to payments upon a
7
<PAGE> 8
liquidation of that Person, whether now outstanding or issued after the date
hereof, including without limitation, all series and classes of such equity.
"Person" means any natural person, limited liability company,
corporation, partnership, government, agency or instrumentality of a government,
or any other entity.
"Restricted Subsidiary" has the meaning set forth in the
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Trustee" means Banc One Trust Company, N.A., or any successor
trustee under the Indenture.
"Voting Stock" of any Person as of any date means the Capital
Stock of that Person that is at the time entitled to vote in the election of
directors or similar individuals of that Person.
"Warrant Certificates" mean the registered certificates
(including without limitation, the global certificates) issued by the Company
under this Agreement representing the Warrants.
"Warrant Shares" mean the shares of Common Stock (and any other
securities) for which the Warrants are exercisable.
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
- --------------------------------------------- ----------
<S> <C>
"Agreement" ................................. Recitals
"Cashless Exercise" ......................... 3.4
"Certificate Register" ...................... 2.4
"Common Stock" .............................. Recitals
["Communications Act" ....................... 3.2(b)]
"Company" ................................... Recitals
"Delivering Seller" ......................... 5.7(a)
"DTC" or "Depository" ....................... 2.2(b)
"Exercise Price" ............................ 3.1
"Expiration Date" ........................... 3.2(c)
["FCC Rules" ................................ 3.2(b)]
"Finance Sub" ............................... Recitals
"Global Warrants" ........................... 2.1
"Holders" ................................... Recitals
"Issuers" ................................... Recitals
"Notes" ..................................... Recitals
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C>
"Participants" .............................. 2.6(b)
"Reference Security" ........................ 4.12(vi)
"Separability Legend" ....................... 2.2(a)
"Separation Date" ........................... Recitals
"Successor Company" ......................... 4.5(a)
"Transfer Agent" ............................ 3.5
"Warrant Agent" ............................. Recitals
"Warrant" and "Warrants" .................... Recitals
</TABLE>
All terms used herein with their initial letters capitalized and
not otherwise defined herein are used herein with the meaning given those terms
in the Indenture.
SECTION 1.3. Rules of Construction. Unless the text otherwise
requires:
(i) a defined term has the meaning assigned to
it;
(ii) an accounting term not otherwise defined
has the meaning assigned to it in accordance with
generally accepted accounting principles as in effect
from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without
limitation; and
(v) words in the singular include the plural and
words in the plural include the singular.
ARTICLE 2
Warrant Certificates
SECTION 2.1. Form and Dating. Each Warrant Certificate shall be
issued in registered form only, substantially in the form of Exhibit A. The
Warrant Certificates may have notations, legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject, if any, or
usage (including CUSIP numbers) (provided that any such notation, legend or
endorsement is in a form acceptable to the Company) and shall bear the legends
required by Section 2.2. Each Warrant Certificate shall be dated the date of its
countersignature.
The terms and provisions contained in the form of Warrant
annexed hereto as Exhibit A shall constitute, and are hereby expressly made, a
part of this Warrant Agreement. To the extent applicable, the Company and the
Warrant Agent, by their execution and delivery of this Warrant Agreement, agree
to such terms and provisions and to be bound thereby.
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Warrants offered and sold shall be issued initially in the form
of one or more permanent global Warrant Certificates in registered form,
substantially in the form set forth in Exhibit A (the "Global Warrants"),
registered in the name of the Depositary or the nominee of the Depositary,
deposited with the Warrant Agent, as custodian for the Depositary, duly executed
by the Company and countersigned by the Warrant Agent as hereinafter provided.
The aggregate number of Warrants represented by the Global Warrant may from time
to time be increased or decreased by adjustments made on the records of the
Warrant Agent, as custodian for the Depositary or its nominee, in accordance
with the instructions given by the Holder thereof, as hereinafter provided.
Warrants in definitive form may be issued in exchange for
interests in the Global Warrant pursuant to such procedures as the Company and
the Warrant Agent shall reasonably agree upon and shall be issued in the form of
permanent certificated Warrants in registered form in substantially the form set
forth in Exhibit A.
Ownership of beneficial interests in Global Warrants will be
limited to Participants or Indirect Participants.
The definitive Warrant Certificates shall be typed, printed,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Warrants may be listed, all as determined by the officers
executing such Warrant Certificates, as evidenced by their execution of such
Warrant Certificates.
SECTION 2.2. Legends. (a) Each Warrant Certificate issued prior
to the Separation Date shall bear the following legend (the "Separability
Legend"):
UNTIL THE SEPARATION DATE (AS DEFINED), THIS WARRANT HAS BEEN ISSUED AS,
AND MUST BE TRANSFERRED AS, A UNIT TOGETHER WITH THE ASSOCIATED __%
SENIOR NOTES DUE 2010 (THE "NOTES") OF METRICOM, INC. AND METRICOM
FINANCE, INC.. EACH UNIT CONSISTS OF $1,000 PRINCIPAL AMOUNT OF NOTES
AND A WARRANT TO PURCHASE __________ SHARES OF COMMON STOCK OF THE
COMPANY, SUBJECT TO ADJUSTMENT UNDER CERTAIN CIRCUMSTANCES. A COPY OF
THE WARRANT AGREEMENT PURSUANT TO WHICH THE WARRANTS HAVE BEEN ISSUED IS
AVAILABLE FROM THE COMPANY UPON REQUEST.
The Company shall give written notice to the Warrant Agent of the
occurrence of the Separation Date.
(b) Each Global Warrant issued in global form and deposited with
DTC shall bear the following legend:
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UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC
OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE WARRANT AGREEMENT REFERRED
TO HEREIN.
[(c) Each Warrant Certificate shall bear the following legend:
THE EXERCISE OF THIS WARRANT (AND THE OWNERSHIP OF
COMMON STOCK ISSUABLE UPON THE EXERCISE THEREOF) MAY BE
LIMITED BY METRICOM, INC. IN ORDER TO ENSURE COMPLIANCE
WITH THE RULES, REGULATIONS AND POLICIES OF THE FEDERAL
COMMUNICATIONS COMMISSION, AND THIS WARRANT WILL NOT BE
EXERCISABLE BY ANY HOLDER IF SUCH EXERCISE WOULD CAUSE
METRICOM, INC. TO BE IN VIOLATION OF THE COMMUNICATIONS
ACT OF 1934 OR THE RULES, REGULATIONS AND POLICIES OF
THE FEDERAL COMMUNICATIONS COMMISSION.]
SECTION 2.3. Execution and Countersignature. Two Officers shall
sign the Warrant Certificates for the Company by manual or facsimile signature.
If an Officer whose signature is on a Warrant Certificate no longer holds that
office at the time the Warrant Agent countersigns the Warrant Certificate, the
Warrant Certificate shall nevertheless be valid. A Warrant Certificate shall not
be valid until an authorized signatory of the Warrant Agent manually
countersigns the Warrant Certificate. Such authorized signature shall be
conclusive evidence that the Warrant Certificate has been countersigned under
this Agreement.
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The Warrant Agent shall initially countersign and deliver
Warrant Certificates entitling the Holders thereof to purchase in the aggregate
not more than __________ Warrant Shares upon a written order of the Company
signed by two Officers.
The Warrant Agent may appoint an agent reasonably acceptable to
the Company to countersign the Warrant Certificates. Unless limited by the terms
of such appointment, such agent may countersign Warrant Certificates whenever
the Warrant Agent may do so. Each reference in this Agreement to
countersignature by the Warrant Agent includes countersignature by such agent.
Such agent will have the same rights as the Warrant Agent for service of notices
and demands.
SECTION 2.4. Certificate Register. The Warrant Agent shall keep
a register ("Certificate Register") of the Warrant Certificates and of their
transfer and exchange. The Certificate Register shall show the names and
addresses of the respective Holders and the date and number of Warrants
represented on the face of each Warrant Certificate. The Company and the Warrant
Agent may deem and treat the Person in whose name a Warrant Certificate is
registered as the absolute owner of such Warrant Certificate for all purposes
whatsoever and neither the Company nor the Warrant Agent shall be affected by
notice to the contrary.
SECTION 2.5. Separation of Warrants and Notes. (a) Prior to the
Separation Date no Warrant may be sold, assigned or otherwise transferred to any
Person unless, simultaneously with such transfer, the Warrant Agent receives
confirmation from the Trustee for the Notes that the Holder thereof has
requested a transfer of the related Notes to the same transferee.
(b) On or after the Separation Date, the holder of a Warrant
Certificate containing a Separability Legend may surrender such Warrant
Certificate accompanied by a written application to the Warrant Agent, duly
executed by the Holder thereof, for a new Warrant Certificate or certificates
not containing the Separability Legend.
SECTION 2.6. Transfer and Exchange. (a) The Warrant Certificates
shall be issued in registered form only and shall be transferable only upon the
surrender of such Warrant Certificate for registration of transfer. When a
Warrant Certificate is presented to the Warrant Agent with a request to register
a transfer, the Warrant Agent shall register the transfer as requested if the
reasonable requirements of the Warrant Agent and of Section 8-401(1) of the
Uniform Commercial Code as in effect in the State of New York are met; provided,
however, that prior to the Separation Date the Warrant Agent shall not register
a transfer of a Warrant Certificate and such transfer will be void and of no
effect unless the Notes that are a part of the same Unit as the Warrants
represented by the Warrant Certificate to be transferred are simultaneously
transferred to the same transferee. To permit the registration of transfers and
exchanges, the Company shall execute and the Warrant Agent shall countersign
Warrant Certificates at the Warrant Agent's request. All Warrant Certificates
issued upon any registration of transfer or exchange of Warrant Certificates
shall be valid obligations of the Company, entitled to the same benefits under
this Agreement as the Warrant Certificates surrendered upon such registration of
transfer or exchange. No service charge will be made to a Holder for any
registration of transfer or exchange upon surrender of any Warrant Certificate
at the office of the
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Warrant Agent maintained for that purpose. However, the Company may require
payment of a sum sufficient to cover any tax, assessment or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Warrant Certificates but not for any exchange or original issuance
(not involving a transfer) pursuant to Section 2.8, 3.4 or 3.5.
(b) Notwithstanding any other provisions of this Section 2.6,
unless and until it is exchanged in whole or in part for Warrants in definitive
registered form, the Global Warrant may not be transferred except as a whole by
DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC
or by DTC or any such nominee to a successor depositary or a nominee of such
successor depositary. Interests of beneficial owners in the Global Warrant may
be transferred in accordance with the rules and procedures of DTC. Members of,
or participants in, DTC ("Participants") shall have no rights under this
Agreement with respect to the Global Warrant held on their behalf by DTC or the
Warrant Agent as its custodian, and DTC may be treated by the Company, the
Warrant Agent and any agent of the Company or the Warrant Agent as the absolute
owner of such Global Warrant for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Warrant Agent or any
agent of the Company or the Warrant Agent from giving effect to any written
certification, proxy or other authorization furnished by DTC or impair, as
between DTC and its Participants, the operation of customary practices governing
the exercise of the rights of a Holder of any Warrants. The registered holder of
the Global Warrant may grant proxies and otherwise authorize any person,
including Participants and persons that may hold interests through Participants,
to take any action which a Holder is entitled to take under this Agreement or
the Warrants.
If DTC notifies the Company that it is unwilling or unable to
continue as depositary for the Global Warrant or Warrants or if at any time DTC
shall no longer be eligible under the next sentence of this paragraph, the
Company shall appoint a successor depositary with respect to the Warrants. Each
depositary appointed pursuant to this Section 2.6 must, at the time of its
appointment and at all times while it serves as depositary, be a clearing agency
registered under the Exchange Act and any other applicable statute or
regulation. The Company will execute, and the Warrant Agent, upon receipt of
written instructions from the Company, will countersign and deliver, Warrants in
definitive registered form in any authorized denominations, in an aggregate
amount equal to the amount of the Global Warrant or Warrants representing such
Warrants in exchange for such Global Warrant or Warrants if DTC notifies the
Company that it is unwilling or unable to continue as depositary for the Global
Warrant or Warrants or if at any time DTC shall no longer be eligible to serve
as depositary and a successor depositary for the Warrants is not appointed by
the Company within 60 days after the Company receives such notice or becomes
aware of such ineligibility.
SECTION 2.7. Replacement Certificates. If a mutilated Warrant
Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue and the Warrant Agent shall
countersign a replacement Warrant Certificate if the reasonable requirements of
the Warrant Agent and of Section 8-405 of the Uniform Commercial Code as in
effect in the State of New York are met. Such Holder shall furnish an indemnity
bond sufficient in the judgment of the Company and the Warrant Agent to protect
the Company and the Warrant Agent from any loss
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which either of them may suffer if a Warrant Certificate is replaced. The
Company and the Warrant Agent may charge the Holder for their expenses in
replacing a Warrant Certificate. Every replacement Warrant Certificate is an
additional obligation of the Company.
SECTION 2.8. Temporary Certificates. Until definitive Warrant
Certificates are ready for delivery, the Company may prepare and the Warrant
Agent shall countersign temporary Warrant Certificates. Temporary Warrant
Certificates shall be substantially in the form of definitive Warrant
Certificates but may have variations that the Company considers appropriate for
temporary Warrant Certificates. Without unreasonable delay, the Company shall
prepare and the Warrant Agent shall countersign definitive Warrant Certificates
and deliver them in exchange for temporary Warrant Certificates.
SECTION 2.9. Cancellation. (a) In the event the Company shall
purchase or otherwise acquire Warrant Certificates, the same shall thereupon be
delivered to the Warrant Agent for cancellation.
(b) The Warrant Agent and no one else shall cancel and may, but
shall not be required to, destroy all Warrant Certificates surrendered for
transfer, exchange, replacement, exercise or cancellation unless the Company
directs the Warrant Agent to deliver canceled Warrant Certificates to the
Company. The Company may not issue new Warrant Certificates to replace Warrant
Certificates to the extent they represent Warrants which have been exercised or
Warrants which the Company has purchased or otherwise acquired.
ARTICLE 3
Exercise Terms
SECTION 3.1. Exercise Price. Each Warrant shall initially
entitle the Holder thereof, subject to adjustment pursuant to the terms of this
Agreement, to purchase _________ shares of Common Stock for a per share exercise
price (the "Exercise Price") of $_____.
SECTION 3.2. Exercise Periods; Restrictions on Exercise. (a)
Subject to the terms and conditions set forth herein, the Warrants shall be
exercisable at any time or from time to time after _____________.
(b) [Notwithstanding anything to the contrary in this Agreement
or the Warrants, the Company shall have the right not to allow an exercise of
the Warrants (or any portion thereof) to the extent necessary in order to ensure
compliance with the rules, regulations and policies of the Federal
Communications Commission ("FCC Rules"), and Warrants will not be exercisable by
any Holder if such exercise would cause the Company to be in violation of the
Communications Act of 1934 (the "Communications Act") or FCC Rules. The Company
will have the right prior to the exercise of any Warrant to require the Holder
thereof to furnish the Company with such certificates or other information as it
may reasonably be to confirm that such exercise would not cause the Company to
be in violation of the Communications Act or FCC Rules.
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(c)] No Warrant shall be exercisable after February __, 2010
(the "Expiration Date").
SECTION 3.3. Expiration. Each Warrant shall terminate and become
void as of the earlier of (i) the close of business on the Expiration Date or
(ii) the date such Warrant is exercised. The Company shall give notice not less
than 90 and not more than 120 days prior to the Expiration Date to the Holders
of all then outstanding Warrants to the effect that the Warrants will terminate
and become void as of the close of business on the Expiration Date; provided,
however, that if the Company fails to give notice as provided in this Section
3.3, the Warrants will nevertheless expire and become void on the Expiration
Date.
SECTION 3.4. Manner of Exercise. Warrants may be exercised upon
(i) surrender to the Warrant Agent at the principal corporate trust office of
the Warrant Agent of the related Warrant Certificate, together with the form of
election to purchase Common Stock on the reverse thereof duly filled in and
signed by the Holder thereof, and (ii) payment to the Warrant Agent, for the
account of the Company, of the Exercise Price for each Warrant Share issuable
upon the exercise of such Warrants then exercised. Such payment shall be made
(i) in cash or by certified or official bank check payable to the order of the
Company or by wire transfer of funds to an account designated by the Company for
such purpose or (ii) without the payment of cash, by reducing the number of
shares of Common Stock obtainable upon the exercise of a Warrant so as to yield
a number of shares of Common Stock upon the exercise of such Warrant equal to
the product of (a) the number of shares of Common Stock issuable as of the
Exercise Date upon the exercise of such Warrant (if payment of the Exercise
Price were being made in cash) and (b) the Cashless Exercise Ratio. An exercise
of a Warrant in accordance with the immediately preceding sentence is herein
called a "Cashless Exercise". Upon surrender of a Warrant Certificate
representing more than one Warrant in connection with the holder's option to
elect a Cashless Exercise, the number of shares of Common Stock deliverable upon
a Cashless Exercise shall be equal to the number of shares of Common Stock
issuable upon the exercise of Warrants that the Holder specifies are to be
exercised pursuant to a Cashless Exercise multiplied by the Cashless Exercise
Ratio. All provisions of this Agreement shall be applicable with respect to a
surrender of a Warrant Certificate pursuant to a Cashless Exercise for less than
the full number of Warrants represented thereby. Subject to Section 3.2, the
rights represented by the Warrants shall be exercisable at the election of the
Holders thereof either in full at any time or from time to time in part and in
the event that a Warrant Certificate is surrendered for exercise of less than
all the Warrants represented by such Warrant Certificate at any time prior to
the Expiration Date, a new Warrant Certificate representing the remaining
Warrants shall be issued. The Warrant Agent shall countersign and deliver the
required new Warrant Certificates, and the Company, at the Warrant Agent's
request, shall supply the Warrant Agent with Warrant Certificates duly signed on
behalf of the Company for such purpose.
SECTION 3.5. Issuance of Warrant Shares. Subject to Section 2.6,
upon the surrender of Warrant Certificates and payment of the per share Exercise
Price, as set forth in Section 3.4, the Company shall issue and cause the
Warrant Agent or, if appointed, a transfer agent for the Common Stock ("Transfer
Agent") to countersign and deliver to or upon the written
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<PAGE> 16
order of the Holder and in such name or names as the Holder may designate a
certificate or certificates for the number of full Warrant Shares so purchased
upon the exercise of such Warrants or other securities or property to which it
is entitled, registered or otherwise, to the Person or Persons entitled to
receive the same, together with cash as provided in Section 3.6 in respect of
any fractional Warrant Shares otherwise issuable upon such exercise. Such
certificate or certificates shall be deemed to have been issued and any Person
so designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the per share Exercise Price, as aforesaid;
provided, however, that if, at such date, the transfer books for the Warrant
Shares shall be closed, the certificates for the Warrant Shares in respect of
which such Warrants are then exercised shall be issuable as of the date on which
such books shall next be opened and until such date the Company shall be under
no duty to deliver any certificates for such Warrant Shares; provided further,
however, that such transfer books, unless otherwise required by law, shall not
be closed at any one time for a period longer than 20 calendar days.
SECTION 3.6. Fractional Warrant Shares. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be exercised in full at the same time by the same Holder,
the number of full Warrant Shares which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable pursuant thereto. If any fraction of a Warrant Share would, except
for the provisions of this Section 3.6, be issuable on the exercise of any
Warrant (or specified portion thereof), the Company shall pay at the time of
exercise an amount in cash equal to the Current Market Value per Warrant Share,
as determined on the day immediately preceding the date the Warrant is
exercised, multiplied by such fraction, computed to the nearest whole cent.
SECTION 3.7. Reservation of Warrant Shares. The Company shall at
all times keep reserved out of its authorized shares of Common Stock a number of
shares of Common Stock sufficient to provide for the exercise of all outstanding
Warrants. The registrar for the Common Stock shall at all times until the
Expiration Date reserve such number of authorized shares as shall be required
for such purpose. The Company will keep a copy of this Agreement on file with
the Transfer Agent. All Warrant Shares which may be issued upon exercise of
Warrants shall, upon issue, be fully paid, nonassessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issue thereof. The Company will supply such Transfer Agent with
duly executed stock certificates for such purpose and will itself provide or
otherwise make available any cash which may be payable as provided in Section
3.6. The Company will furnish to such Transfer Agent a copy of all notices of
adjustments (and certificates related thereto) transmitted to each Holder.
Before taking any action which would cause an adjustment
pursuant to Article 4 to reduce the Exercise Price below the then par value (if
any) of the Common Stock, the Company shall take any and all corporate action
which may, in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and nonassessable shares of Common
Stock at the Exercise Price as so adjusted.
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The Company covenants that all shares of Common Stock which may
be issued upon exercise of Warrants will, upon issue, be fully paid,
nonassessable, free of preemptive rights, free from all taxes and free from all
liens, charges and security interests, created by or through the Company, with
respect to the issue thereof.
SECTION 3.8. Compliance with Law. Notwithstanding anything in
this Agreement to the contrary, in no event shall a Holder be entitled to
exercise a Warrant unless (i) a registration statement filed under the
Securities Act in respect of the issuance of the Warrant Shares is then
effective or (ii) in the opinion of counsel to the Company addressed to the
Warrant Agent the exercise of such Warrants is exempt from the registration
requirements of the Securities Act and such securities are qualified for sale or
exempt from qualification under the applicable securities laws of the States or
other jurisdictions in which such holders reside.
SECTION 3.9 Listing of Warrant Shares. The Company shall use its
reasonable best efforts to the Warrant Shares to be approved for listing in the
Nasdaq Stock Market by ____________.
ARTICLE 4
Antidilution Provisions
SECTION 4.1. Changes in Common Stock. In the event that at any
time or from time to time the Company shall (i) pay a dividend or make a
distribution on its Common Stock payable in shares of its Common Stock or other
equity interests of the Company, (ii) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock or (iv) increase or decrease the number of shares of Common Stock
outstanding by reclassification of its Common Stock, then the number of shares
of Common Stock issuable upon exercise of each Warrant immediately after the
happening of such event shall be adjusted to a number determined by multiplying
the number of shares of Common Stock that such holder would have owned or have
been entitled to receive upon exercise had such Warrants been exercised
immediately prior to the happening of the events described above (or, in the
case of a dividend or distribution of Common Stock or other shares of capital
stock, immediately prior to the record date therefor) by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately after the happening of the events described above and
the denominator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the happening of the events described above;
and subject to Section 4.8, the Exercise Price for each Warrant shall be
adjusted to a number determined by dividing the Exercise Price immediately prior
to such event by the aforementioned fraction. An adjustment made pursuant to
this Section 4.1 shall become effective immediately after the effective date of
such event, retroactive to the record date therefor in the case of a dividend or
distribution in shares of Common Stock or other shares of the Company's capital
stock.
SECTION 4.2. Cash Dividends and Other Distributions. In the
event that at any time or from time to time the Company shall distribute to all
holders of Common Stock (i) any dividend or other distribution of cash,
evidences of its indebtedness, shares of its capital stock or
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any other assets, properties or debt securities or (ii) any options, warrants or
other rights to subscribe for or purchase any of the foregoing (other than, in
each case, (w) the issuance of any rights under a shareholder rights plan, (x)
any dividend or distribution described in Section 4.1, (y) any rights, options,
warrants or securities described in Section 4.3 and (z) any cash dividends or
other cash distributions from current or retained earnings), then the number of
shares of Common Stock issuable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number of shares of Common
Stock issuable upon the exercise of such Warrant immediately prior to the record
date for any such dividend or distribution by a fraction, the numerator of which
shall be the Current Market Value per share of Common Stock on the record date
for such dividend or distribution and the denominator of which shall be such
Current Market Value per share of Common Stock on the record date for such
dividend or distribution less the sum of (x) the amount of cash, if any,
distributed per share of Common Stock and (y) the fair value (as determined in
good faith by the Board of Directors, whose determination shall be evidenced by
a board resolution filed with the Warrant Agent, a copy of which will be sent to
Holders upon request) of the portion, if any, of the distribution applicable to
one share of Common Stock consisting of evidences of indebtedness, shares of
stock, securities, other assets or property, warrants, options or subscription
or purchase rights; and, subject to Section 4.8, the Exercise Price shall be
adjusted to a number determined by dividing the Exercise Price immediately prior
to such record date by the aforementioned fraction. Such adjustments shall be
made whenever any distribution is made and shall become effective as of the date
of distribution, retroactive to the record date for any such distribution;
provided, however, that the Company is not required to make an adjustment
pursuant to this Section 4.2 if at the time of such distribution the Company
makes the same distribution to Holders of Warrants as it makes to holders of
Common Stock pro rata based on the number of shares of Common Stock for which
such Warrants are exercisable (whether or not currently exercisable). No
adjustment shall be made pursuant to this Section 4.2 which shall have the
effect of decreasing the number of shares of Common Stock issuable upon exercise
of each Warrant or increasing the Exercise Price.
SECTION 4.3. Rights Issue to All Holders of Common Stock. In the
event that at any time or from time to time the Company shall issue to all
holders of Common Stock without any charge, rights, options or warrants
entitling the holders thereof to subscribe for shares of Common Stock, or
securities convertible into or exchangeable or exercisable for Common Stock,
entitling such holders to subscribe for or purchase shares of Common Stock at a
price per share that is lower at the record date for such issuance than the then
Current Market Value per share of Common Stock other than in connection with the
adoption of a shareholder rights plan by the Company, then the number of shares
of Common Stock issuable upon the exercise of each Warrant shall be increased to
a number determined by multiplying the number of shares of Common Stock
theretofore issuable upon exercise of each Warrant by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding on the date
of issuance of such rights, options, warrants or securities plus the number of
additional shares of Common Stock offered for subscription or purchase or into
or for which such securities that are issued are convertible, exchangeable or
exercisable, and the denominator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights, options,
warrants or securities plus the total number of shares of Common Stock which the
aggregate consideration expected to be received by the Company (assuming the
exercise or conversion of all such rights,
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options, warrants or securities) would purchase at the then Current Market Value
per share of Common Stock. Subject to Section 4.8, in the event of any such
adjustment, the Exercise Price shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such date of issuance by the
aforementioned fraction. Such adjustment shall be made immediately after such
rights, options or warrants are issued and shall become effective, retroactive
to the record date for the determination of stockholders entitled to receive
such rights, options, warrants or securities. Notwithstanding anything to the
contrary in this Article IV, no adjustment to the number of Warrant Shares
issuable upon exercise of the Warrants or to the Exercise Price shall be made as
a result of the offering by the Company to all holders of its Common Stock of
rights, options or warrants entitling the holders thereof to subscribe for
Common Stock or securities convertible into or exchangeable or exercisable for
shares of Common Stock, resulting from the operation of any anti-dilution
provision in any warrant or other security of the Company convertible into,
exercisable or exchangeable for Common Stock of the Company, which such warrant
or security is outstanding on the date of this Agreement. No adjustment shall be
made pursuant to this Section 4.3 which shall have the effect of decreasing the
number of shares of Common Stock purchasable upon exercise of each Warrant or of
increasing the Exercise Price.
SECTION 4.4. Other Issuances of Common Stock or Rights. In the
event that at any time or from time to time the Company shall issue (i) shares
of Common Stock (subject to the provisions below), (ii) rights, options or
warrants entitling the holder thereof to subscribe for shares of Common Stock
(provided, however, that no adjustment shall be made upon the exercise of such
rights, options or warrants), or (iii) securities convertible into or
exchangeable or exercisable for Common Stock (provided, however, that no
adjustment shall be made upon the conversion, exchange or exercise of such
securities (other than issuances specified in (i), (ii) or (iii) which are made
as the result of anti- dilution adjustments in such securities)), at a price per
share at the record date of such issuance that is less than the then Current
Market Value per share of Common Stock, then the number of shares of Common
Stock issuable upon the exercise of each Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock theretofore
issuable upon exercise of each Warrant by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately after such
sale or issuance plus the number of additional shares of Common Stock offered
for subscription or purchase or into or for which such securities that are
issued are convertible, exchangeable or exercisable, and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such sale or issuance plus the total number of shares of Common Stock
which the aggregate consideration expected to be received by the Company
(assuming the exercise or conversion of all such rights, options, warrants or
securities, if any) would purchase at the then Current Market Value per share of
Common Stock, and subject to Section 4.8 the Exercise Price shall be adjusted to
a number determined by dividing the Exercise Price immediately prior to such
date of issuance by the aforementioned fraction; provided, however, that no
adjustment to the number of Warrant Shares issuable upon the exercise of the
Warrants or to the Exercise Price shall be made as a result of (i) the issuance
of shares of Common Stock under any warrants, options or other rights existing
on the date hereof, (ii) the issuance of shares of Common Stock in bona fide
public or private offerings that are underwritten or in which a placement agent
is retained by the Company or (iii) the issuance of options, rights or shares of
Common Stock pursuant to any option, under any employee benefit plans approved
by the Board
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of Directors. Such adjustments shall be made whenever such rights, options or
warrants or convertible securities are issued. No adjustment shall be made
pursuant to this Section 4.4 which shall have the effect of decreasing the
number of shares of Common Stock issuable upon exercise of each warrant or of
increasing the Exercise Price. For purposes of Section 4.4 only, any issuance of
Common Stock, or rights, options or warrants to subscribe for, or other
securities convertible into or exercisable or exchangeable for, Common Stock,
which issuance (or agreement to issue) (A) is in exchange for or otherwise in
connection with the bona fide acquisition of property (excluding any such
exchange exclusively for cash) of any Person and (B) is at a price per share
determined by the Board of Directors to be equal to the fair market value
thereof at the time an agreement in principle is reached or at the time a
definitive agreement is entered into, shall be deemed to have been made at a
price per share equal to the Current Market Value per share at the record date
with respect to such issuance (the time of closing or consummation of such
exchange or acquisition) if such definitive agreement is entered into within 90
days of the date of such agreement in principle.
SECTION 4.5. Combination; Liquidation. (a) Except as provided in
Section 4.5(b), in the event of a Combination, each Holder shall have the right
to receive upon exercise of the Warrants the kind and amount of shares of
capital stock or other securities or property which such Holder would have been
entitled to receive upon or as a result of such Combination had such Warrant
been exercised immediately prior to such event. Unless paragraph (b) is
applicable to a Combination, the Company shall provide that the surviving or
acquiring Person (the "Successor Company") in such Combination will enter into
an agreement with the Warrant Agent confirming the Holders' rights pursuant to
this Section 4.5(a) and providing for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
4. The provisions of this Section 4.5(a) shall similarly apply to successive
Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to the
holders of Common Stock in exchange for their shares is payable solely in cash
or (ii) the dissolution, liquidation or winding-up of the Company, the holders
of the Warrants shall be entitled to receive, upon surrender of their Warrant
Certificates, distributions on an equal basis with the holders of Common Stock
or other securities, issuable upon exercise of the Warrants, as if the Warrants
had been exercised immediately prior to such event, less the Exercise Price.
In case of any Combination described in this Section 4.5(b), the
surviving or acquiring Person and, in the event of any dissolution, liquidation
or winding-up of the Company, the Company shall deposit promptly with the
Warrant Agent the funds, if any, necessary to pay to the holders of the Warrants
the amounts to which they are entitled as described above. After such funds and
the surrendered Warrant Certificates are received, the Warrant Agent is required
to deliver a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holders
surrendering such Warrants.
SECTION 4.6. Other Events. If any event occurs as to which the
foregoing provisions of this Article 4 are not strictly applicable or, if
strictly applicable, would not, in the
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<PAGE> 21
good faith judgment of the Board of Directors, fairly and adequately protect the
purchase rights of the Warrants in accordance with the essential intent and
principles of such provisions, then such Board of Directors shall make such
adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of such Board of Directors, to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
increasing the Exercise Price or decreasing the number of shares of Common Stock
issuable upon exercise of any Warrant.
SECTION 4.7. Superseding Adjustment. Upon the expiration of any
rights, options, warrants or conversion or exchange privileges which resulted in
adjustments pursuant to this Article 4, if any thereof shall not have been
exercised, the number of Warrant Shares issuable upon the exercise of each
Warrant shall be readjusted pursuant to the applicable section of Article 4 as
if (A) the only shares of Common Stock issuable upon exercise of such rights,
options, warrants, conversion or exchange privileges were the shares of Common
Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (B) shares of Common Stock
actually issued, if any, were issuable for the consideration actually received
by the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange privileges whether or not
exercised and the Exercise Price shall be readjusted inversely; provided,
however, that no such readjustment shall (except by reason of an intervening
adjustment under Section 4.1) have the effect of decreasing the number of
Warrant Shares purchasable upon the exercise of each Warrant or increase the
Exercise Price by an amount in excess of the amount of the adjustment initially
made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion or exchange privileges.
SECTION 4.8. Minimum Adjustment. The adjustments required by the
preceding Sections of this Article 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the Exercise Price or the number of shares of Common Stock issuable upon
exercise of Warrants that would otherwise be required shall be made unless and
until such adjustment either by itself or with other adjustments not previously
made increases or decreases by at least 1% the Exercise Price or the number of
shares of Common Stock issuable upon exercise of Warrants immediately prior to
the making of such adjustment. Any adjustment representing a change of less than
such minimum amount shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Article 4 and not
previously made, would result in a minimum adjustment. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence. In computing adjustments under this
Article 4, fractional interests in Common Stock shall be taken into account to
the nearest one-hundredth of a share.
SECTION 4.9. Notice of Adjustment. Whenever the Exercise Price
or the number of shares of Common Stock and other property, if any, issuable
upon exercise of the Warrants is adjusted, as herein provided, the Company shall
deliver to the Warrant Agent a certificate of a firm of independent accountants
selected by the Board of Directors (who may be the regular accountants employed
by the Company) setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated (including a
description of
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<PAGE> 22
the basis on which (i) the Board of Directors determined the fair value of any
evidences of indebtedness, other securities or property or warrants, options or
other subscription or purchase rights and (ii) the Current Market Value of the
Common Stock was determined, if either of such determinations were required),
and specifying the Exercise Price and the number of shares of Common Stock
issuable upon exercise of Warrants after giving effect to such adjustment. The
Company shall promptly cause the Warrant Agent to mail a copy of such
certificate to each Holder in accordance with Section 7.6. The Warrant Agent
shall be entitled to rely on such certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the same
from time to time, to any Holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under any
duty or responsibility to any Holder to determine whether any facts exist which
may require any adjustment of the Exercise Price or the number of shares of
Common Stock or other stock or property issuable on exercise of the Warrants, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment or the validity or
value of any shares of Common Stock, evidences of indebtedness, warrants,
options, or other securities or property.
SECTION 4.10. Notice of Certain Transactions. In the event that
the Company shall propose to (a) pay any dividend payable in securities of any
class to the holders of its Common Stock or to make any other non-cash dividend
or distribution to the holders of its Common Stock, (b) offer the holders of its
Common Stock rights to subscribe for or to purchase any securities convertible
into shares of Common Stock or shares of stock of any class or any other
securities, rights or options, (c) issue any (i) shares of Common Stock, (ii)
rights, options or warrants entitling the holders thereof to subscribe for
shares of Common Stock, or (iii) securities convertible into or exchangeable or
exercisable for Common Stock (in the case of (i), (ii) and (iii), if such
issuance or adjustment would result in an adjustment hereunder), (d) effect any
capital reorganization, reclassification, consolidation or merger, (e) effect
the voluntary or involuntary dissolution, liquidation or winding-up of the
Company or (f) make a tender offer or exchange offer with respect to the Common
Stock, the Company shall within 5 days send to the Warrant Agent and the Warrant
Agent shall within 5 days send the Holder a notice (in such form as shall be
furnished to the Warrant Agent by the Company) of such proposed action or offer.
Such notice shall be mailed by the Warrant Agent to the Holders at their
addresses as they appear in the Certificate Register, which shall specify the
record date for the purposes of such dividend, distribution or rights, or the
date such issuance or event is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, and
shall briefly indicate the effect of such action on the Common Stock and on the
number and kind of any other shares of stock and on other property, if any, and
the number of shares of Common Stock and other property, if any, issuable upon
exercise of each Warrant and the Exercise Price after giving effect to any
adjustment pursuant to Article 4 which will be required as a result of such
action. Such notice shall be given as promptly as possible and (x) in the case
of any action covered by clause (a) or (b) above, at least 10 days prior to the
record date for determining holders of the Common Stock for purposes of such
action or (y) in the case of any other such action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of Common Stock, whichever shall be the earlier.
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<PAGE> 23
SECTION 4.11. Adjustment to Warrant Certificate. The form of
Warrant Certificate need not be changed because of any adjustment made pursuant
to this Article 4, and Warrant Certificates issued after such adjustment may
state the same Exercise Price and the same number of shares of Common Stock
issuable upon exercise of the Warrants as are stated in the Warrant Certificates
initially issued pursuant to this Agreement. The Company, however, may at any
time in its sole discretion make any change in the form of Warrant Certificate
that it may deem appropriate to give effect to such adjustments and that does
not affect the substance of the Warrant Certificate, and any Warrant Certificate
thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant Certificate or otherwise, may be in the form as so changed.
SECTION 4.12. Exceptions to Antidilution Provisions. Without
limiting any other exception contained in this Article 4, and in addition
thereto, no adjustment need be made for:
(i) grants or exercises of rights granted to employees,
directors or consultants of the Company or any of its subsidiaries or
shares of Common Stock issued or granted to such persons under
equity-based incentive or corporation plans or otherwise, whether or not
upon the exercise, exchange or conversion of any such rights;
(ii) options, warrants or other agreements or rights to purchase
capital stock of the Company entered into prior to the date of the
issuance of the Warrants and any issuance of shares of Common Stock in
connection therewith;
(iii) rights to purchase shares of Common Stock pursuant to a
Company plan for reinvestment of dividends or interest;
(iv) a change in the par value of shares of Common Stock
(including a change from par value to no par value or vice versa);
(v) the consummation of the Reorganization; and
(vi) bona fide public offerings or private placements pursuant
to Section 4(2) of the Securities Act, Regulation D thereunder or
Regulation S of any security trading on any national securities
exchange, the Nasdaq system or in the over the counter market, or of a
security directly or indirectly convertible or exchangeable for any such
security (the latter security being a "Reference Security"), involving
at least one investment bank of national reputation, if such security is
sold to investors at a price equal to the closing sale, bid or ask price
(whichever is customary)(less such discount, if any, as such investment
bank shall reasonably determine is necessary to permit the consummation
of such public offering or private placement) of such security or the
Reference Security on the date of the public offering or private
placement.
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<PAGE> 24
ARTICLE 5
Warrant Agent
SECTION 5.1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the express provisions of this Agreement and the Warrant Agent hereby accepts
such appointment.
SECTION 5.2. Right and Duties of Warrant Agent. (a) Agent for
the Company. In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent for the
Company and does not assume any obligation or relationship or agency or trust
for or with any of the holders of Warrant Certificates or beneficial owners of
Warrants.
(b) The Warrant Agent may consult with counsel satisfactory to
it (who may be counsel to the Company), and the advice of such counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
advice of such counsel.
(c) The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken or thing suffered by it in
reliance upon any Warrant Certificate, notice, direction, consent, certificate,
affidavit, statement, opinion or other paper or document reasonably believed by
it to be genuine and to have been presented or signed by the proper parties.
(d) The Warrant Agent shall be obligated to perform only such
duties as are specifically set forth herein and in the Warrant Certificates, and
no implied duties or obligations of the Warrant Agent shall be read into this
Agreement or the Warrant Certificates. The Warrant Agent shall not be under any
obligation to take any action hereunder which may tend to involve it in any
expense or liability for which it does not receive indemnity if such indemnity
is reasonably requested. The Warrant Agent shall not be accountable or under any
duty or responsibility for the use by the Company of any of the Warrant
Certificates countersigned by the Warrant Agent and delivered by it to the
Holders or on behalf of the Holders pursuant to this Agreement or for the
application by the Company of the proceeds of the Warrants. The Warrant Agent
shall have no duty or responsibility in case of any default by the Company in
the performance of its covenants or agreements contained herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.
(e) The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist that may
require an adjustment of the number of shares of Common Stock issuable upon
exercise of each Warrant or the Exercise Price, or with respect to the nature or
extent of any adjustment when made or with respect to the method employed or
provided to be employed herein or in any supplemental agreement in making the
same. The Warrant Agent shall not be accountable with respect to the validity or
value of any shares of Common Stock or of any securities or property which may
at any time be issued or
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<PAGE> 25
delivered upon the exercise of any Warrant or upon any adjustment pursuant to
Article 4, and it makes no representation with respect thereto. The Warrant
Agent shall not be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of Common Stock or stock
certificates upon the surrender of any Warrant Certificate for the purpose of
exercise or upon any adjustment pursuant to Article 4, or to comply with any of
the covenants of the Company contained in Article 4.
SECTION 5.3. Individual Rights of Warrant Agent. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities of the Company
or its affiliates or become pecuniarily interested in transactions in which the
Company or its affiliates may be interested, or contract with or lend money to
the Company or its affiliates or otherwise act as fully and freely as though it
were not the Warrant Agent under this Agreement. Nothing herein shall preclude
the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
SECTION 5.4. Warrant Agent's Disclaimer. The Warrant Agent shall
not be responsible for and makes no representation as to the validity or
adequacy of this Agreement or the Warrant Certificates and it shall not be
responsible for any statement in this Agreement or the Warrant Certificates
other than its countersignature thereon.
SECTION 5.5. Compensation and Indemnity. The Company and the
Warrant Agent have entered into an agreement pursuant to which the Company
agrees to pay the Warrant Agent from time to time compensation for its services
and to reimburse the Warrant Agent upon request for all reasonable out-of-pocket
expenses incurred by it, including the reasonable compensation and expenses of
the Warrant Agent and its directors, officers, agents and counsel. The Company
shall indemnify the Warrant Agent and its directors, officers, agents and
counsel against any and all loss, liability, damage, claim or expense (including
agents' and attorneys' fees and expenses) incurred by the Warrant Agent without
negligence, bad faith or willful misconduct on its part arising out of or in
connection with the acceptance or performance of its duties under this
Agreement. The Warrant Agent shall notify the Company promptly of any claim for
which it may seek indemnity. The Company need not reimburse any expense or
indemnify against any loss or liability incurred by the Warrant Agent through
wilful misconduct, negligence or bad faith. The Company's payment obligations
pursuant to this Section 6.5 shall survive the termination of this Agreement.
To secure the Company's payment obligations under this
Agreement, the Warrant Agent shall have a lien prior to the Holders on all money
or property held or collected by the Warrant Agent.
SECTION 5.6. Successor Warrant Agent. The Company agrees for the
benefit of the Holders that there shall at all times be a Warrant Agent
hereunder until all the Warrants have been exercised or are no longer
exercisable.
(a) The Warrant Agent may at any time resign by giving written
notice to the Company of such intention on its part, specifying the date on
which its desired resignation shall
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become effective; provided, however, that such date shall not be less than 60
days after the date on which such notice is given unless the Company otherwise
agrees. The Warrant Agent hereunder may be removed at any time by the filing
with it of an instrument in writing signed by or on behalf of the Company and
specifying such removal and the date when it shall become effective, which date
shall not be less than 60 days after such notice is given unless the Warrant
Agent otherwise agrees. Any removal under this Section 6.6 shall take effect
upon the appointment by the Company as hereinafter provided of a successor
Warrant Agent (which shall be a bank or trust company authorized under the laws
of the jurisdiction of its organization to exercise corporate trust powers) and
the acceptance of such appointment by such successor Warrant Agent. If a
successor Warrant Agent does not take office within 60 days after the retiring
Warrant Agent resigns or is removed, the retiring Warrant Agent or the Holders
of 10% of the Warrants may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor.
(b) In the event that at any time the Warrant Agent shall
resign, or shall be removed, or shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or shall commence a voluntary case under
Federal bankruptcy laws, as now or hereafter constituted, or under any other
applicable Federal or state bankruptcy, insolvency or similar law, or shall
consent to the appointment of or taking possession by a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Warrant Agent or its property or affairs, or shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or shall take corporate action in furtherance of
any such action, or a decree or order for relief by a court having jurisdiction
in the premises shall have been entered in respect of the Warrant Agent in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or State bankruptcy, insolvency or
similar law, or a decree or order by a court having jurisdiction in the premises
shall have been entered for the appointment of a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or similar official) of the Warrant
Agent or of its property or affairs, or any public officer shall take charge or
control of the Warrant Agent or of its property or affairs for the purpose of
rehabilitation, conservation, winding up or liquidation, a successor Warrant
Agent, qualified as aforesaid, shall be appointed by the Company by an
instrument in writing filed with the successor Warrant Agent. Upon the
appointment as aforesaid of a successor Warrant Agent and acceptance by the
successor Warrant Agent of such appointment, the Warrant Agent shall cease to be
the Warrant Agent hereunder; provided, however, that in the event of the
resignation of the Warrant Agent hereunder, such resignation shall be effective
on the earlier of (i) the date specified in the Warrant Agent's notice of
resignation and (ii) the appointment and acceptance of a successor Warrant Agent
hereunder.
(c) Any successor Warrant Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the rights and obligations of such predecessor with like effect as if
originally named as Warrant Agent hereunder, and such predecessor, upon payment
of its charges and disbursements then unpaid, shall thereupon become obligated
to transfer, deliver and pay over, and such successor Warrant Agent shall be
entitled to receive, all
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<PAGE> 27
monies, securities and other property on deposit with or held by such
predecessor, as Warrant Agent hereunder.
(d) Any corporation into which the Warrant Agent hereunder may
be merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation to
which the Warrant Agent shall sell or otherwise transfer all or substantially
all the corporate trust or stock transfer assets and business of the Warrant
Agent, provided that it shall be qualified as aforesaid, shall be the successor
Warrant Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
ARTICLE 8
Miscellaneous
SECTION 8.1. Financial Statements and Reports of the Company.
The Company agrees (a) to provide to each Holder, without cost to such Holder,
copies of the annual and quarterly reports and documents that the Company files
with the Securities and Exchange Commission (to the extent such filings are
accepted by the Commission and whether or not the Company has a class of
securities registered under the Exchange Act or that the Company would be
required to file were it subject to Section 13 or 15 of the Exchange Act, within
15 days after the date of such filing or the date on which the Company would be
required to file such reports or documents, and all such annual or quarterly
reports shall include the geographic segment financial information as has
heretofore been disclosed by the Company in its public filings with the
Securities and Exchange Commission, and (b) if filing such reports and documents
is not accepted by the Securities and Exchange Commission or is prohibited under
the Exchange Act, to supply at the Company's expense copies of such reports and
documents to any prospective Holder promptly upon request.
SECTION 8.2. Third Party Beneficiaries. The Holders shall be
third party beneficiaries to the agreements made hereunder between the Company,
on the one hand, and the Warrant Agent, on the other hand, and each Holder shall
have the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
SECTION 8.3. Rights of Holders. Holders of unexercised Warrants
are not entitled to (i) receive dividends or other distributions, (ii) receive
notice of or vote at any meeting of the stockholders, (iii) consent to any
action of the stockholders, (iv) receive notice as stockholders of any other
proceedings of the Company, (v) exercise any preemptive rights or (vi) exercise
any other rights whatsoever as stockholders of the Company.
SECTION 8.4. Amendment. This Agreement may be amended by the
parties hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as the
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Company and the Warrant Agent may deem necessary or desirable (including without
limitation any addition or modification to provide for compliance with the
transfer restrictions set forth herein); provided, however, that such action
shall not adversely affect the rights of any of the Holders. Any amendment or
supplement to this Agreement that has an adverse effect on the interests of the
Holders shall require the written consent of the Holders of a majority of the
then outstanding Warrants. The consent of each Holder affected shall be required
for any amendment pursuant to which the Exercise Price would be increased or the
number of Warrant Shares issuable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided herein) or the exercise period with
respect to the Warrants would be shortened. In determining whether the Holders
of the required number of Warrants have concurred in any direction, waiver or
consent, Warrants owned by the Company or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company shall be disregarded and deemed not to be outstanding, except that, for
the purpose of determining whether the Warrant Agent shall be protected in
relying on any such direction, waiver or consent, only Warrants which the
Warrant Agent actually knows are so owned shall be so disregarded. Also, subject
to the foregoing, only Warrants outstanding at the time shall be considered in
any such determination.
SECTION 8.5. Notices. Any notice or communication shall be in
writing and delivered in Person or mailed by first-class mail addressed as
follows:
if to the Company:
Metricom, Inc. or
980 University Avenue
Los Gatos, California
Attention: Chief Financial Officer
Telecopy No.: 408-354-1024
With copies to:
Cooley Godward LLP
1 Maritime Plaza
San Francisco, California
Attention: Kenneth Guernsey, Esq.
Telecopy No.: 415-951-3699
If to the Trustee:
Bank One Trust Company, N.A.
One North State Street
9th Floor
Chicago, Illinois 60602
Telecopy No.: 312-407-1708
Attention: Corporate Trust Administration
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The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to the Holder at the Holder's address as it appears on the Certificate Register
and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 8.6. Governing Law. The laws of the State of New York
shall govern this Agreement and the Warrants.
SECTION 8.7. Successors. All agreements of the Company in this
Agreement and the Warrant Certificates shall bind its successors. All agreements
of the Warrant Agent in this Agreement shall bind its successors.
SECTION 8.8. Multiple Originals. The parties may sign any number
of copies of this Agreement. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Agreement.
SECTION 8.9. Table of Contents. The table of contents and
headings of the Articles and Sections of this Agreement have been inserted for
convenience of reference only, are not intended to be considered a part hereof
and shall not modify or restrict any of the terms or provisions hereof.
SECTION 8.10. Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
METRICOM, INC.
by
Name:
Title:
[WARRANT AGENT]
as Warrant Agent
by
Name:
Title:
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<PAGE> 30
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
[UNTIL THE SEPARATION DATE (AS DEFINED), THIS NOTE HAS BEEN
ISSUED AS, AND MUST BE TRANSFERRED AS, A UNIT TOGETHER WITH THE ASSOCIATED
WARRANTS TO PURCHASE COMMON STOCK OF THE COMPANY. EACH UNIT CONSISTS OF $1,000
PRINCIPAL AMOUNT OF NOTES AND A WARRANT TO PURCHASE _________ SHARES OF COMMON
STOCK OF THE COMPANY, SUBJECT TO ADJUSTMENT UNDER CERTAIN CIRCUMSTANCES. A COPY
OF THE WARRANT AGREEMENT PURSUANT TO WHICH THE WARRANTS HAVE BEEN ISSUED IS
AVAILABLE FROM THE COMPANY UPON REQUEST.](2)
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
WARRANT AGREEMENT REFERRED TO HEREIN.](3)
[THE EXERCISE OF THIS WARRANT (AND THE OWNERSHIP OF COMMON STOCK
ISSUABLE UPON THE EXERCISE THEREOF) MAY BE LIMITED BY METRICOM, INC. IN ORDER TO
ENSURE COMPLIANCE WITH THE RULES, REGULATIONS AND POLICIES OF THE FEDERAL
COMMUNICATIONS COMMISSION, AND THIS WARRANT WILL NOT BE EXERCISABLE BY ANY
HOLDER IF SUCH EXERCISE WOULD CAUSE METRICOM, INC. TO BE IN VIOLATION OF THE
COMMUNICATIONS ACT OF 1934 OR THE RULES, REGULATIONS AND POLICIES OF THE FEDERAL
COMMUNICATIONS COMMISSION.]
- --------------------
(2) To be included on Warrants issued before the Separation Date.
(3) To be included on Global Warrants.
30
<PAGE> 31
No. Certificate for _____ Warrants
WARRANTS TO PURCHASE COMMON STOCK OF METRICOM, INC.
THIS CERTIFIES THAT __________, or its registered assigns, is
the registered holder of the number of Warrants set forth above (the
"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), at its
option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from Metricom, Inc., a Delaware
corporation (the "Company"), _______ shares of Common Stock, par value of $0.01
per share, of the Company (the "Common Stock") at the per share exercise price
of $_____ (the "Exercise Price"), or by Cashless Exercise referred to below.
This Warrant Certificate shall terminate and become void as of the close of
business on __________, ______ (the "Expiration Date") or upon the exercise
hereof as to all the shares of Common Stock subject hereto. The number of shares
issuable upon exercise of the Warrants and the Exercise Price per share shall be
subject to adjustment from time to time as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with
a Warrant Agreement dated as of _____________ (the "Warrant Agreement"), between
the Company and ______________ (the "Warrant Agent", which term includes any
successor Warrant Agent under the Warrant Agreement), and is subject to the
terms and provisions contained in the Warrant Agreement, to all of which terms
and provisions the Holder of this Warrant Certificate consents by acceptance
hereof. The Warrant Agreement is hereby incorporated herein by reference and
made a part hereof. Reference is hereby made to the Warrant Agreement for a full
statement of the respective rights, limitations of rights, duties and
obligations of the Company, the Warrant Agent and the Holders of the Warrants.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Warrant Agreement. A copy of the Warrant Agreement may be
obtained for inspection by the Holder hereof upon written request to the Warrant
Agent at Bank One Trust Company, N.A., One North State Street, 9th Floor,
Chicago, Illinois 60602, Telecopy No.: 312-407-1708, Attention: Corporate Trust
Administration.
Subject to the terms of the Warrant Agreement, the Warrants may
be exercised in whole or in part (i) by presentation of this Warrant Certificate
with the Election to Purchase attached hereto duly executed and with the
simultaneous payment of the Exercise Price in cash (subject to adjustment) to
the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose. Payment by Cashless Exercise shall be made without the payment of cash
by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Current
Market Value per share of Common Stock on the Exercise
31
<PAGE> 32
Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
This Warrant requires the Holder to comply with certain certification
and opinion delivery requirements under certain circumstances in order to
validly exercise the Warrant.
As provided in the Warrant Agreement and subject to the terms
and conditions therein set forth, the Warrants shall be exercisable at any time
on or after ____________, ____; provided, however, that no Warrant shall be
exercisable after ____________, _____. This Warrant is entitled to the benefit
of certain registration rights contained in the Warrant Agreement.
In the event the Company enters into a Combination, the Holder
hereof will be entitled to receive upon exercise of the Warrants the kind and
amount of shares of capital stock or other securities or other property of such
surviving entity as the Holder would have been entitled to receive upon or as a
result of the combination had the Holder exercised its Warrants immediately
prior to such Combination; provided, however, that in the event that, in
connection with such Combination, consideration to holders of Common Stock in
exchange for their shares is payable solely in cash or in the event of the
dissolution, liquidation or winding-up of the Company, the Holder hereof will be
entitled to receive such cash distributions as the Holder would have received
had the Holder exercised its Warrants immediately prior to such Combination,
less the Exercise Price.
As provided in the Warrant Agreement, the number of shares of
Common Stock issuable upon the exercise of the Warrants and the Exercise Price
are subject to adjustment upon the happening of certain events.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with the transfer
or exchange of the Warrant Certificates pursuant to Section 2.6 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the issuance of the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate
representing those Warrants which were not exercised. This Warrant Certificate
may be exchanged at the office of the Warrant Agent by presenting this Warrant
Certificate properly endorsed with a request to exchange this Warrant
Certificate for other Warrant Certificates evidencing an equal number of
Warrants. No fractional Warrant Shares will be issued upon the exercise of the
Warrants, but the Company shall pay an amount in cash equal to the Current
Market Value per Warrant Share on the day immediately preceding the date the
Warrant is exercised, multiplied by the fraction of a Warrant Share that would
be issuable on the exercise of any Warrant.
32
<PAGE> 33
All shares of Common Stock issuable by the Company upon the
exercise of the Warrants shall, upon such issue, be duly and validly issued and
fully paid and non-assessable.
The holder in whose name the Warrant Certificate is registered
may be deemed and treated by the Company and the Warrant Agent as the absolute
owner of the Warrant Certificate for all purposes whatsoever and neither the
Company nor the Warrant Agent shall be affected by notice to the contrary.
The Warrants do not entitle any holder hereof to any of the
rights of a shareholder of the Company.
This Warrant shall be governed by the laws of the State of New
York.
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
METRICOM, INC.
By
By
DATED:
Countersigned:
- --------------------------
as Warrant Agent,
By: Authorized Signatory
33
<PAGE> 34
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
METRICOM, INC.
The undersigned hereby irrevocably elects to exercise Warrants
at an exercise price per Warrant (subject to adjustment) of $______ to acquire
_____ shares of Common Stock, par value $0.01 per share, of Metricom, Inc. on
the terms and conditions specified within the Warrant Certificate and the
Warrant Agreement therein referred to, surrenders this Warrant Certificate and
all right, title and interest therein to Metricom, Inc. and directs that the
shares of Common Stock deliverable upon the exercise of such Warrants be
registered or placed in the name and at the address specified below and
delivered thereto.
Date:____________, _____
----------------------------------------
(Signature of Owner)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
----------------------------------------
Signature must be guaranteed by an
eligible Guarantor Institution (banks,
stock brokers, savings and loan
associations and credit unions)
with membership in an approved
guarantee medallion program
pursuant to Securities and
Exchange Commission
Rule 17Ad-5
- --------------------------
The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed.
34
<PAGE> 35
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
--------------------------------------------
Street Address:
----------------------------------
City, State and Zip Code:
------------------------
Any unexercised Warrants represented by the Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:
--------------------------------------------
Street Address:
----------------------------------
City, State and Zip Code:
------------------------
35
<PAGE> 36
APPENDIX A
LIST OF FINANCIAL EXPERTS
----------------
BT Alex. Brown
Bear, Stearns & Co., Inc.
Chase Securities Inc.
Credit Suisse First Boston Corporation
Donaldson, Lufkin & Jenrette Securities Corporation
ING Baring (U.S.) Securities Corporation
Goldman, Sachs & Co.
Lazard Freres & Co.
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley, Dean Witter & Co. Incorporated
Oppenheimer & Co., Inc.
Prudential Securities Inc.
Salomon Smith Barney Inc.
SBC Warburg Dillon Read Inc.
36
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 1, 1999 (except with respect to the matter discussed in Note 12, as to
which the date is November 17, 1999) included in the Company's Form 10-K for
the year ended December 31, 1998, as amended by Form 10-K/A, and all references
to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Jose, California
February 1, 2000
