Exhibit
4.1


 


WARRANT
AGREEMENT


 


Dated as of
December 3, 2003


 


by and among


 


ABOVENET,
INC.


 


and


 


AMERICAN
STOCK TRANSFER & TRUST COMPANY


 

















 


WARRANT AGREEMENT


 


TABLE OF CONTENTS*


 


	
  SECTION 1.

  	
  Certain Definitions; General Interpretative
  Principles

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  Appointment of Warrant Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  Issuance of Warrants: Warrant Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  Execution of Warrant Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  Registration and Countersignature

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  Registration of Transfers and Exchanges.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  Terms of Warrants: Exercise of Warrants

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  Payment of Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  Mutilated or Missing Warrant Certificates.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  Reservation of Warrant Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
  Adjustment of Exercise Price and Number of
  Warrant Shares Issuable

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
  Statement on Warrants

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
  Fractional Interests

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
  Notice to Warrant Holders

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
  Merger, Consolidation or Change of Name of
  Warrant Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
  Warrant Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 17.

  	
  Resignation and Removal of Warrant Agent;
  Appointment of Successor

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
  Notices to Company and Warrant Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 19.

  	
  Supplements and Amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
  Successors

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 21.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 22.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 23.

  	
  Benefits of This Warrant Agreement.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 24.

  	
  Counterparts

  	
   

  



 


 












*             
This Table of
Contents does not constitute a part of this Warrant Agreement or have any
bearing upon the interpretation of any of its terms or provisions.


 

















 


WARRANT
AGREEMENT


 


WARRANT
AGREEMENT dated
as of December 3, 2003 (the “Warrant Agreement”) between AboveNet, Inc.,
a Delaware corporation (the “Company”), and American Stock Transfer
& Trust Company, as warrant agent (the “Warrant Agent”).


 


WHEREAS, the Company is
required to issue Common Stock Purchase Warrants, as hereinafter described (the
“Warrants”), to purchase up to an aggregate of 709,459 shares of Common
Stock (as defined below), in accordance with that certain Second Amended Plan
of Reorganization of the Company, as amended and supplemented, dated July 1,
2003 (the “Plan”) and the order confirming the Plan dated and entered
August 21, 2003 by the Honorable Adlai S. Hardin, Jr. United States Bankruptcy
Judge in proceedings before the United States Bankruptcy Court for the Southern
District of New York.


 


WHEREAS, the Company
desires the Warrant Agent to act on behalf of the Company, and the Warrant
Agent is willing to so act, in connection with the issuance of Warrant
Certificates (as defined below) and other matters as provided herein.


 


NOW, THEREFORE, in
consideration of the premises and the mutual Warrant Agreements herein set
forth, and for the purpose of defining the respective rights and obligations of
the Company, the Warrant Agent and the Holders (as defined below), the parties
hereto agree as follows:


 


SECTION
1.           Certain Definitions;
General Interpretive Principles.


 


(a)          
Certain
Definitions.  As used in this Warrant Agreement, the following
terms shall have the following respective meanings:


 


“Bankruptcy Code”
means the Bankruptcy Reform Act of 1978, as codified in Title 11 of the United
States Code, 11 U.S.C. §§ 101-1331, as amended.


 


“Commission” means
the Securities and Exchange Commission.


 


“Common Shares”
means shares of Common Stock.


 


“Common Stock”
means the common stock, par value $.01 per share, of the Company, and any other
capital stock of the Company into which such common stock may be converted or
reclassified or that may be issued in respect of, in exchange for, or in
substitution for, such common stock by reason of any stock splits, stock
dividends, distributions, mergers, consolidations or other like events.


 


“Company” means
AboveNet, Inc., a Delaware corporation, and its successors and assigns.


 


“Exchange Act”
means the Securities Exchange Act of 1934, as amended.


 


“Effective Date”
means September 8, 2003.


 


“Exercise Price”
means the purchase price per Common Shares to be paid upon the exercise of each
Warrant in accordance with the terms hereof, which price shall initially be
$20.00 per share, subject to adjustment from time to time pursuant to Section
11 hereof.


 

















 


“Expiration Date”
means September 8, 2008.


 


“Holder” means a
person registered as the owner of the Warrants.


 


“person” means any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.


 


“Securities Act”
means the Securities Act of 1933, as amended.


 


“Warrant Agent”
means American Stock Transfer & Trust Company or the successor or
successors of such Warrant Agent appointed in accordance with the terms hereof.


 


“Warrant Shares”
means the Common Shares issued or issuable upon the exercise of the Warrants.


 


(b)          
General
Interpretative Principles.  For purposes of this Warrant Agreement,
except as otherwise expressly provided or unless the context otherwise
requires:


 


(i)           
the
terms defined herein include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;


 


(ii)          
accounting
terms not otherwise defined herein have the meanings given to them in
accordance with generally accepted accounting principles;


 


(iii)         
references
herein to “Articles”, “Sections”, “Subsections”, “Paragraphs”, and other
subdivisions without reference to a document are to designated Articles,
Sections, Subsections, Paragraphs and other subdivisions hereof;


 


(iv)         
a
reference to a Subsection without further reference to a Section is a reference
to such Subsection as contained in the same Section in which the reference
appears, and this rule shall also apply to Paragraphs and other subdivisions;


 


(v)          
the
words “herein”, “hereof”, “hereunder” and other words of similar import refer
to this Warrant Agreement as a whole and not to any particular provision;


 


(vi)         
the
words “include” and “including” shall mean without limitation by reason of
enumeration; and


 


(vii)        
the
headings in this Warrant Agreement are solely for convenience of reference and
shall be given no effect in the construction or interpretation of this Warrant
Agreement.


 


SECTION
2.           Appointment of Warrant
Agent.  The Company hereby appoints the Warrant Agent to act as agent
for the Company in accordance with the instructions set forth hereinafter in
this Warrant Agreement, and the Warrant Agent hereby accepts such appointment.


 


SECTION
3.           Issuance of Warrants;
Warrant Certificates.  The Warrants will be issued in global form (the “Global
Warrants”), substantially in the form of Exhibit A (including as footnoted)
and in definitive form (the “Definitive Warrants”), substantially in the
form of Exhibit A (not including as footnoted).  Each Global Warrant shall
represent such of the


 


4

















 


outstanding Warrants as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Warrants from time to time endorsed thereon and that the aggregate amount of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate.  Any endorsement of a Global Warrant to reflect
the amount of any increase or decrease in the amount of outstanding Warrants
represented thereby shall be made by the Warrant Agent and the depositary with
respect to the Global Warrants (the “Depositary”) in accordance with
instructions given by the Holder thereof.  The Depository Trust Company
shall act as the Depositary until a successor shall be appointed by the Company
and the Warrant Agent.  Upon request, a Holder may receive from the
Depositary and the Warrant Agent separate Definitive Warrants as set forth in
Section 6 below.  Any certificates (the “Warrant Certificates”)
evidencing the Global Warrants or the Definitive Warrants to be delivered
pursuant to this Warrant Agreement shall be substantially in the form set forth
in Exhibit A attached hereto.


 


SECTION
4.           Execution of Warrant
Certificates.  Warrant Certificates shall be signed on behalf of
the Company by its Chairman of the Board or its President and Chief Executive
Officer or a Senior Vice President and by its Secretary or an Assistant
Secretary under its corporate seal.  Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President and Chief Executive Officer, Senior
Vice President, Secretary or Assistant Secretary and may be imprinted or
otherwise reproduced on the Warrant Certificates and for that purpose the
Company may adopt and use the facsimile signature of any person who shall have
been Chairman of the Board, President and Chief Executive Officer, Senior Vice
President, Secretary or Assistant Secretary, notwithstanding the fact that at
the time the Warrant Certificates shall be countersigned and delivered or
disposed of such person shall have ceased to hold such office.  The seal
of the Company may be in the form of a facsimile thereof and may be impressed,
affixed, imprinted or otherwise reproduced on the Warrant Certificates.


 


In case any officer of
the Company who shall have signed any of the Warrant Certificates shall cease
to be such officer before the Warrant Certificates so signed shall have been
countersigned by the Warrant Agent, or disposed of by the Company, such Warrant
Certificates nevertheless may be countersigned and delivered or disposed of as
though such person had not ceased to be such officer of the Company; and any
Warrant Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Warrant Certificate, shall be a
proper officer of the Company to sign such Warrant Certificate, although at the
date of the execution of this Warrant Agreement any such person was not such
officer.


 


Warrant Certificates
shall be dated the Effective Date.


 


SECTION
5.           Registration and
Countersignature.  The Warrant Agent, on behalf of the Company, shall
number and register the Warrant Certificates in a register as they are issued
by the Company.


 


Warrant Certificates
shall be countersigned manually or by facsimile by the Warrant Agent and shall
not be valid for any purpose unless so countersigned.  The Warrant Agent
shall, upon written instructions of the Chairman of the Board, the President
and Chief Executive Officer or a Senior Vice President of the Company,
initially countersign, issue and


 


5

















 


deliver Warrants entitling the Holders thereof to
purchase not more than the number of Warrant Shares referred to above in the
first recital hereof and shall countersign and deliver Warrants as otherwise
provided in this Warrant Agreement.


 


The Company and the
Warrant Agent may deem and treat the Holder(s) of the Warrant Certificates as
the absolute owner(s) thereof (notwithstanding any notation of ownership or
other writing thereon made by anyone), for all purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.


 


SECTION
6.           Registration of
Transfers and Exchanges.


 


(a)          
Transfer
and Exchange of Definitive Warrants.  When Definitive Warrants
are presented to the Warrant Agent with a request:


 


(i)           
to
register the transfer of the Definitive Warrants; or


 


(ii)          
to
exchange such Definitive Warrants for an equal number of Definitive Warrants of
other authorized denominations,


 


the Warrant Agent shall register the transfer or make
the exchange as requested if its requirements for such transactions are met; provided, however, that the Definitive
Warrants presented or surrendered for registration of transfer or exchange:


 


(x)           
shall
be duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Warrant Agent, duly executed by the Holder thereof or by
his attorney, duly authorized in writing; and


 


(y)          
in
the case of any Restricted Warrant (as defined below), such request shall be
accompanied by evidence, including an opinion of counsel if requested,
reasonably satisfactory to the Company (and its counsel) that either:


 


(A)         
the
Restricted Warrant is being delivered to the Warrant Agent by a Holder for
registration in the name of such Holder, without transfer; or


 


(B)          
the
Restricted Warrant is being transferred in reliance on an exemption from the
registration requirements of the Securities Act.


 


The term “Restricted Warrant”
means any Warrant which is evidenced by a Warrant Certificate bearing the
Securities Act Legend (as defined below).


 


(b)          
Exchange
of a Definitive Warrant for a Beneficial Interest in a Global Warrant.  A Restricted
Warrant may not be exchanged for a beneficial interest in a Global
Warrant.  Upon receipt by the Warrant Agent of a Definitive Warrant that
is not a Restricted Warrant, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Warrant Agent, together
with, written instructions directing the Warrant Agent to make, or to direct
the Depositary to make, an endorsement on the Global Warrant to reflect an
increase in the number of Warrants and Warrant Shares represented by the Global
Warrant, then the Warrant Agent shall cancel such Definitive Warrant and cause,
or direct the Depositary to cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Warrant Agent, the
number of Warrants and Warrant Shares represented by the Global Warrant to be
increased accordingly.  If no Global Warrants are then


 


6

















 


outstanding, the Company shall issue and the Warrant
Agent shall countersign a new Global Warrant representing the appropriate
number of Warrants and Warrant Shares.


 


(c)          
Transfer
and Exchange of Global Warrants.  The transfer and exchange
of Global Warrants or beneficial interests therein shall be effected through
the Depositary, in accordance with this Warrant Agreement and the procedures of
the Depositary therefor.


 


(d)          
Exchange
of a Beneficial Interest in a Global Warrant for a Definitive Warrant.


 


(i)           
Any
person having a beneficial interest in a Global Warrant may, upon written
request to the Warrant Agent, exchange such beneficial interest for a
Definitive Warrant.  Upon receipt by the Warrant Agent of written
instructions or such other form of instructions as is customary for the
Depositary from the Depositary or its nominee on behalf of any person having a
beneficial interest in a Global Warrant, the Warrant Agent shall cause, in
accordance with the standing instructions and procedures existing between the
Depositary and Warrant Agent, the number of Warrants and Warrant Shares
represented by the Global Warrant to be reduced and, following such reduction,
the Company shall execute and the Warrant Agent shall countersign, a Definitive
Warrant.


 


(ii)          
Definitive
Warrants issued in exchange for a beneficial interest in a Global Warrant
pursuant to this Section 6(d) shall be registered in such names as the
Depositary, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Warrant Agent.  The Warrant Agent shall
deliver such Definitive Warrants to the persons in whose names such Warrants
are so registered.


 


(e)          
Restrictions
on Transfer and Exchange of Global Warrants.  Notwithstanding any other
provisions of this Warrant Agreement (other than the provisions set forth in
Subsection (f) of this Section 6), a Global Warrant may not be transferred as a
whole except by the Depositary to a nominee of the Depositary or by a nominee
of the Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary.


 


(f)           
Countersigning
of Definitive Warrants in Absence of Depositary.  If at any time:


 


(i)           
the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for the Global Warrants and a successor Depositary for the Global
Warrants is not appointed by the Company within 90 days after delivery of such
notice; or


 


(ii)          
the
Company, in its sole discretion, notifies the Warrant Agent in writing that it
elects to cause the issuance of Definitive Warrants under this Warrant
Agreement,


 


then the Company shall execute, and the Warrant Agent,
upon written instructions signed by two officers of the Company, shall
countersign and deliver Definitive Warrants, in an aggregate number equal to
the number of Warrants represented by Global Warrants, in exchange for such
Global Warrants.


 


7

















 


(g)          
Securities
Act Legend; Shareholder Agreement Legend.


 


(i)           
Except
as provided in Subsection 6(g)(iv) below, all Warrant Certificates evidencing
any Warrants issued (x) in a private placement under Section 4(2) of the
Securities Act or (y) to a statutory underwriter in accordance with Section
1145(b) of the Bankruptcy Code shall bear the Securities Act Legend.


 


(ii)          
Except
as provided in Subsection 6(g)(iv) below, any Warrants, Warrant Shares and any
other securities issued or issuable with respect to any Restricted Warrants or
restricted Warrant Shares by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise shall bear the Securities
Act Legend.


 


(iii)         
The
Securities Act Legend shall be in substantially the following form:


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER AND PURSUANT TO REGISTRATION OR
QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR EXEMPTION
THEREFROM.


 


(iv)         
Upon
any sale or transfer of a Restricted Warrant pursuant to an effective
registration statement under the Securities Act, pursuant to Rule 144 under the
Securities Act or pursuant to an opinion of counsel reasonably satisfactory to
the Company that no Securities Act Legend is required, the Warrant Agent shall
permit the Holder thereof to exchange such Restricted Warrant for a Warrant
that does not bear the Securities Act Legend and rescind any restriction on the
transfer of such Restricted Warrant; and


 


(v)          
Any
Warrants, Warrant Shares and any other securities issued or issuable with
respect to the Warrants or the Warrant Shares by way of a stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise issued to (x) John
W. Kluge, (y) the trust established pursuant to that certain Trust Agreement,
dated May 30, 1984, as amended and restated and supplemented, between John
W. Kluge, as Grantor and Stuart Subotnick, John W. Kluge and Chase Manhattan
Bank as Trustees and (z) Stuart Subotnick shall bear a legend in substantially
the following form:


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE


 


8

















 


ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER
CONDITIONS, AS SPECIFIED IN THE STANDSTILL AGREEMENT DATED AS OF AUGUST 14,
2003, COPIES OF WHICH ARE ON FILE AT THE OFFICE OF THE COMPANY AND WILL BE
FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON WRITTEN REQUEST.


 


Such securities shall bear the above legend until
receipt by the Company of evidence reasonable satisfactory to it that the
legend is no longer required.


 


(h)          
Cancellation
of Global Warrant.  At such time as all beneficial interests in Global
Warrants have either been exchanged for Definitive Warrants, exercised,
redeemed, repurchased or cancelled, all Global Warrants shall be returned to or
retained and cancelled by the Warrant Agent.


 


(i)           
Obligations
with respect to Transfers and Exchanges of Warrants.


 


(i)           
To
permit registrations of transfers and exchanges, the Company shall execute and
the Warrant Agent is hereby authorized to countersign, in accordance with the
provisions of Section 5 and this Section 6, Definitive Warrants and Global
Warrants as required pursuant to the provisions of this Section 6.


 


(ii)          
All
Definitive Warrants and Global Warrants issued upon any registration of
transfer or exchange of Definitive Warrants or Global Warrants shall be the
valid obligations of the Company, entitled to the same benefits under this
Warrant Agreement, as the Definitive Warrants or Global Warrants surrendered
upon such registration of transfer or exchange.


 


(iii)         
Prior
to due presentment for registration of transfer of any Warrant, the Warrant
Agent and the Company may deem and treat the person in whose name any Warrant
is registered as the absolute owner of such Warrant and neither the Warrant
Agent, nor the Company shall be affected by notice to the contrary.


 


(iv)         
No
service charge shall be made to a Holder for any registration, transfer or
exchange.


 


SECTION
7.           Terms of Warrants;
Exercise of Warrants.  Subject to the terms of this Warrant Agreement, and
compliance with any applicable law, the registered Holder shall have the right,
until 5:00 p.m., New York City time on the Expiration Date to exercise each
Warrant for fully paid and non-assessable Common Share(s) of the Company upon
the exercise of each Warrant and payment of the Exercise Price (as hereinafter
defined) then in effect.


 


A Warrant may be
exercised upon surrender to the Company at the principal office of the Warrant
Agent of the certificate or certificates evidencing the Warrant to be exercised
with the form of election to purchase on the reverse thereof duly filled in and
signed, which signature shall be guaranteed by a bank or trust company having
an office or correspondent in the United States or a broker or dealer which is
a member of a registered securities exchange or the National Association of
Securities Dealers, Inc., and upon payment to the Warrant Agent for the account
of the Company of the Exercise Price as adjusted as herein


 


9

















 


provided, for each of the Warrant Shares in respect of
which such Warrant is then exercised.  Payment of the aggregate Exercise
Price shall be made in cash or by certified or official bank check, payable to
the order of the Company.  In the alternative, each Holder may exercise
its right to receive Warrant Shares on a net basis, such that without the
exchange of any funds, the Holder receives that number of Warrant Shares
otherwise issuable upon exercise of its Warrants less that number of Warrant
Shares having a fair market value equal to the aggregate Exercise Price that would
otherwise have been paid by the Holder of the Warrant Shares.  For
purposes of the foregoing sentence, “fair market value” of the Warrant Shares
shall be the Current Market Price of the Warrant Shares on the date immediately
preceding the date of payment of the Exercise Price as determined by the
procedures set forth in Section 11(e).  The exercise of Warrants by
Holders of beneficial interest in Global Warrants shall be effected in
accordance with this Warrant Agreement and the procedures of the Depositary
therefor.


 


If on the day which is 60
days prior to the Expiration Date, the Current Market Price of one Common Share
is greater than the Exercise Price, the Company shall within 5 business days
thereafter cause to be given to the Warrant Agent and cause the Warrant Agent
to give to each Holder written notice stating that on the Expiration Date the
Warrants will be deemed to have been exercised by the Holder pursuant to the
net exercise provisions of this Section 7 and the Company will, in accordance with
this Section 7, issue and cause to be delivered to such Holder a certificate or
certificates for the full number of Warrant Shares issuable upon such exercise,
as calculated in accordance with this Section 7, unless the Holder
elects, by written notice provided to the Company no less than 5 business days
before the Expiration Date, to have those Warrants held by it not exercised, in
which case such Warrants shall become void and all rights thereunder and all
rights in respect thereof shall cease as of such time.  The Company, in
its sole discretion, may require any Holder to surrender the Warrants.


 


Subject to the provisions
of Section 8 hereof, upon surrender of Warrants and payment of the Exercise
Price as provided above, the Warrant Agent shall thereupon promptly notify the
Company, and the Company shall promptly transfer to the Holder of such Warrant
Certificate a certificate or certificates for the appropriate number of Warrant
Shares or, if required by this Warrant Agreement, other securities or property
(including any money) to which the Holder is entitled, registered or otherwise
placed in, or payable to the order of, such name or names as may be directed in
writing by the Holder, and shall deliver such certificate or certificates
representing the Warrant Shares and any other securities or property (including
any money) to the person or persons entitled to receive the same, together with
an amount in cash in lieu of any fraction of a share as provided in Section
13.  Any such certificate or certificates representing the Warrant Shares
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 such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise Price.


 


The Warrants shall be
immediately exercisable, at the election of the Holders thereof, either in full
or from time to time in part and, in the event that a certificate evidencing
Warrants is exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will
be issued, and the Warrant Agent is hereby irrevocably authorized to
countersign and to deliver the required new Warrant Certificate or Certificates
pursuant to the provisions of this Section and of Section 4 hereof, and the
Company, whenever 


 


10

















 


required by the Warrant Agent, will supply the Warrant
Agent with Warrant Certificates duly executed on behalf of the Company for such
purpose.


 


All Warrant Certificates
surrendered upon exercise of Warrants shall be cancelled by the Warrant
Agent.  Such cancelled Warrant Certificates shall then be disposed of by
the Warrant Agent in a manner satisfactory to the Company.  The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the Company all monies received by the Warrant Agent
for the purchase of the Warrant Shares through the exercise of such Warrants.


 


The Warrant Agent shall
keep copies of this Warrant Agreement and any notices given or received
hereunder by or from the Company available for inspection by the Holders during
normal business hours at its office.  The Company shall supply the Warrant
Agent from time to time with such numbers of copies of this Warrant Agreement
as the Warrant Agent may request.


 


SECTION
8.           Payment of Taxes.  No service
charge shall be made to the Holder for any exercise, exchange or registration
of transfer of a Warrant Certificate, and the Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer involved
in the issue of any new certificates evidencing the Warrants or any
certificates for Warrant Shares in a name other than that of the registered
Holder upon the exercise of Warrants, and the Company or the Warrant Agent
shall not be required to issue or deliver such new certificates evidencing the
Warrants or certificates for Warrant Shares unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.


 


SECTION
9.           Mutilated or Missing
Warrant Certificates. If any Warrant Certificate shall be mutilated, lost,
stolen or destroyed, the Company may in its discretion issue and the Warrant
Agent may countersign in exchange and substitution for, and upon cancellation
of, the Warrant Certificate, if mutilated or in lieu of and substitution for
the Warrant Certificate, if lost, stolen or destroyed, a new certificate of
like tenor evidencing an equal number of Warrants, but only upon receipt of
evidence reasonably satisfactory to the Company and Warrant Agreement of such
loss, theft or destruction and indemnity and security therefor, if requested,
also satisfactory to the Company and the Warrant Agent.  Applicants for
such substitute Warrant Certificate shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company or
Warrant Agent may prescribe.


 


SECTION
10.         Reservation of Warrant
Shares.  The Company will at all times reserve and keep available, free
from preemptive rights, or any other actual contingent purchase rights of
persons other than the Holders out of the aggregate of its authorized but
unissued Common Shares, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum
number of Common Shares which may then be deliverable upon the exercise of all
outstanding Warrants.


 


The transfer agent for
the Common Stock (the “Transfer Agent”) and every subsequent transfer
agent for any shares of the Company’s capital stock issuable upon the exercise
of any of the rights of purchase aforesaid will be irrevocably authorized and
directed at


 


11

















 


all times to 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 and with every subsequent
transfer agent for any shares of the Company’s capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants.  The
Warrant Agent is hereby irrevocably authorized to requisition from time to time
from such Transfer Agent the stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this
Agreement.  The Company will supply such Transfer Agent with duly executed
certificates for such purposes. The Company will furnish such Transfer Agent a
copy of all notices of adjustments and certificates related thereto,
transmitted to each Holder of the Warrants pursuant to this Warrant Agreement.


 


Before taking any action
which would cause an adjustment pursuant to Section 11 hereof to reduce the
Exercise Price below the then par value (if any) of the Warrant Shares, the
Company will take all corporate action necessary, in the opinion of its counsel
(which may be counsel employed by the Company), in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.


 


The Company covenants
that all Warrant Shares which may be issued upon exercise of Warrants will be,
upon payment or other satisfaction of the Exercise Price and issuance thereof,
fully paid, nonassessable, free of preemptive rights and free from all taxes,
liens, charges and security interests with respect to the issue thereof.


 


SECTION
11.         Adjustment of Exercise
Price and Number of Warrant Shares Issuable.  The Exercise Price and the
number and kind of shares of capital stock issuable upon the exercise of each
Warrant are subject to adjustment from time to time upon the occurrence of the
events enumerated in this Section 11.


 


(a)          
Adjustment
for Change in Common Shares.


 


If the Company:


 


(i)           
pays
a dividend or makes a distribution on its outstanding Common Shares in shares
of its capital stock or any other class of capital stock payable in Common
Shares;


 


(ii)          
splits
or subdivides its outstanding Common Shares into a greater number of shares;


 


(iii)         
combines
its outstanding Common Shares into a smaller number of shares; or


 


(iv)         
issues
by reclassification of its Common Shares any shares of any class of its capital
stock,


 


then the Exercise Price
and/or the number and kind of shares of capital stock of the Company issuable
upon the exercise of a Warrant (as in effect immediately prior to such action)
shall be proportionately adjusted so that the Holder of any Warrant thereafter
exercised may receive the aggregate number and kind of shares of capital stock
of the Company which he would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action.


 


Such adjustment shall be
made successively whenever any event listed above shall occur and shall become
effective immediately after the record date in the case of a dividend


 


12

















 


or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.


 


(b)          
Adjustment
for Rights Issue.


 


If the Company shall
issue any rights, options or warrants entitling all of the holders of Common
Shares to subscribe for or purchase Common Shares, then, and in such event, the
Holder may subscribe for or purchase such amount of rights, options or warrants
in proportion to such Holder’s proportionate diluted ownership interest in the
Company assuming the exercise of all Warrants and other securities convertible
into or exchangeable for Common Shares outstanding at the time of such
issuance.


 


The adjustment shall be
made successively whenever any such rights, options or warrants are issued.


 


(c)          
Adjustment
for Other Distributions.


 


If the Company
distributes to all holders of its Common Shares any of its assets or debt
securities or any rights or warrants to purchase debt securities, assets or
other securities of the Company (other than (i) cash dividends payable out of
consolidated earnings or earned surplus or (ii) distributions referred to in
Subsection 11(a) or 11(b)), the Exercise Price shall be adjusted in accordance
with the following formula:


 


	
  E’

  	
  =

  	
  E x M - F

  
	
   

  	
   

  	
  M

  



 


where:


 


E’    =     
the adjusted Exercise
Price per share.


 


E      =      the current Exercise Price per share.


 


M    =     
the Ninety-Day
Current Market Price per Common Share on the record date mentioned in the
immediately succeeding paragraph.


 


F      =      the fair market value on the record date of the
assets, securities, rights or warrants applicable to one Common Share. 
The fair market value shall be determined by the good faith business judgment
of the Company’s Board of Directors, whose determination shall be conclusive.


 


The adjustment shall be
made successively whenever any such distribution is made and shall become
effective at the opening of business on the day next following the record date
for the determination of shareholders entitled to receive such dividend or
distribution.


 


(d)          
Events
Pursuant to which this Section 11 Does not Apply.


 


Subsections 11(b) and
11(c) do not apply to the issuance of rights by the Company as contemplated by
the Rights Offering in the Plan.


 


(e)          
Current
Market Price, Ninety-Day Current Market Price and Trading Day.


 


“Current Market Price”
at any date shall be with respect to Common Shares (i) the closing sale price
per share thereof as officially reported for the 30 consecutive Trading Days
ending one day prior to the date in question as reported (x) by the
principal national securities


 


13

















 


exchange on which the Common Shares are listed or
admitted to trading or (y) on the NASDAQ Stock Market or similar organization
if NASDAQ is no longer reporting such information, (ii) if the Common Shares
are not listed or quoted on a national securities exchange or the NASDAQ Stock
Market, the average of the closing bid and ask prices of the Common Shares in
the over-the-counter market as officially reported by the National Association
of Securities Dealers, Inc., (iii) or if the Common Shares are not so reported,
as reported in the “Pink Sheet” by the National Quotation Bureau Incorporated
(or any similar organizations or agencies succeeding its functions of reporting
prices) for the 30 consecutive Trading Days ending one day prior to the date in
question or such other relevant period as determined by the Company or
(iv) if the Common Shares are not so quoted or no longer traded, the fair
market value of a Common Share as determined in good faith business judgment of
the Company’s Board of Directors, whose determination shall be conclusive.


 


“Ninety-Day Current
Market Price” at any date shall be with respect to Common Shares (i) the
closing sale price per share thereof as officially reported for the 90
consecutive Trading Days ending one day prior to the date in question as reported
(x) by the principal national securities exchange on which the Common
Shares are listed or admitted to trading or (y) on the NASDAQ Stock Market or
similar organization if NASDAQ is no longer reporting such information, (ii) if
the Common Shares are not listed on a national securities exchange or the
NASDAQ Stock Market, the average of the closing bid and ask prices of the
Common Shares in the over-the-counter market as officially reported by the
National Association of Securities Dealers, Inc., (iii) or if the Common Shares
are not so reported, as reported in the “Pink Sheet” by the National Quotation
Bureau Incorporated (or any similar organizations or agencies succeeding its
functions of reporting prices) for the 90 consecutive Trading Days ending one day
prior to the date in question or such other relevant period as determined by
the Company or (iv) if the Common Shares are not so quoted or no longer
traded, the fair market value of a Common Share as determined in good faith
business judgment of the Company’s Board of Directors, whose determination
shall be conclusive.


 


“Trading Day”
shall mean (i) a day on which the Common Shares are traded on the
principal national securities exchange or NASDAQ Market on which the Common
Shares have been listed or quoted, or (ii) if the Common Shares are not
listed or quoted on any principal national securities exchange or market, a day
on which the Common Shares are traded in the over-the-counter market, as
officially reported by the National Association of Securities Dealers, Inc., or
(iii) if the Common Shares are not so reported, a day on which the Common
Shares are quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organizations or agencies succeeding
its functions of reporting prices).


 


(f)           
When
De Minimis Adjustment May Be Deferred.


 


No adjustment in the
Exercise Price need be made unless the adjustment would require an increase or
decrease of at least 1% in the Exercise Price.  Any adjustments that are
not made shall be carried forward and taken into account in any subsequent
adjustment.


 


All calculations under
this Section 11 shall be made to the nearest cent or to the nearest 1/100th of
a share, as the case may be.


 


(g)          
When
No Adjustment Required.


 


No adjustment need be
made for a change in the par value, or from par value to no


 


14

















 


par value, or from no par value to par value, of the
Common Shares...


 


(h)          
Notice
of Adjustment.


 


Whenever the Exercise
Price is adjusted, the Company shall provide the notices required by
Section 14 hereof.


 


(i)           
Voluntary
Reduction.


 


The Company from time to
time may, as the Company’s Board of Directors deems appropriate, reduce the
Exercise Price by any amount for any period of time if the period is at least
20 days and if the reduction is irrevocable during the period; provided
that in no event may the Exercise Price be less than the par value of a Common
Share.


 


Whenever the Exercise
Price is reduced, the Company shall mail to the Holders a notice of the
reduction.  The Company shall mail the notice at least 15 days before the
date the reduced Exercise Price takes effect.  The notice shall state the
reduced Exercise Price and the period for which it will be in effect.


 


A voluntary reduction of
the Exercise Price pursuant to this Section 11(i), other than a reduction which
the Company has irrevocably committed will be in effect for as long as any
Warrants are outstanding, does not change or adjust the Exercise Price
otherwise in effect for purposes of this Section 11.


 


(j)           
Reorganization
of the Company.


 


(i)           
If
the Company consolidates or merges with or into, or transfers or leases all or
substantially all of its assets to, any person or reclassifies its Common
Shares, upon consummation of such event, the Warrants shall automatically
become exercisable for the kind and amount of securities, cash or other assets
which the Holder would have owned immediately after the consolidation, merger,
transfer, lease or reclassification if the Holder had exercised the Warrants
immediately before the effective date of the transaction.


 


(ii)          
If,
and at the time that, this Subsection (j) applies, then Subsections (a), (b)
and (c) of this Section 11 and the adjustment events thereunder will not
apply with respect to the event specified in this Subsection (j).


 


(k)          
Company
Determination Final.  Any determination that the Company or the Company’s
board of directors must make pursuant to this Section 11 shall be
conclusive to the extent made in good faith provided in this Section 11


 


SECTION
12.         Statement on Warrants.  Irrespective
of any adjustment in the number or kind of shares issuable upon the exercise of
the Warrants or the Exercise Price, Warrants theretofore or thereafter issued
may continue to express the same number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Warrant Agreement.


 


SECTION
13.         Fractional Interests.  The Company
shall not be required to issue fractional Warrant Shares upon the exercise of
Warrants.  If more than one Warrant shall be presented for exercise at the
same time by the Holder, the full number of Warrant Shares which shall be
issuable upon the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented.  If any fraction


 


15

















 


of a Warrant Share would, except for the provisions of
this Section 13, be issuable on the exercise of any Warrant (or specified
portion thereof), the Company shall pay to the Holder an amount in cash equal
to the product of (i) such fraction of a Warrant Share multiplied by (ii) the
difference of the Current Market Price of a Common Share over the Exercise
Price.


 


SECTION
14.         Notice to Warrant
Holders.  Upon any adjustment of the Exercise Price pursuant to Section
11 hereof, the Company shall within 15 days thereafter give to the Warrant
Agent and use commercially reasonable efforts to cause the Warrant Agent to
give to each Holder at the Holder’s address appearing in the Warrant register
written notice of such adjustments which notice shall specify, in reasonable
detail, the type of adjustments made and the calculations performed in making
such adjustments by first-class mail, postage prepaid.  Where appropriate,
such notice may be given in advance and included as a part of the notice
required to be mailed under the other provisions of this Section 14.


 


(a)          
In
case:


 


(i)           
the
Company shall authorize the issuance to all holders of Common Shares of rights,
options or warrants to subscribe for or purchase Common Shares or any other
subscription of rights or warrants;


 


(ii)          
the
Company shall authorize the issuance to all holders of Common Shares of
evidences of its indebtedness or assets (other than cash dividends or cash
distributions payable out of consolidated earnings or earned surplus or
dividends payable in Common Shares or distributions referred to in Subsection
(a) of Section 11 hereof);


 


(iii)         
of
any consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or of the conveyance,
transfer or lease of the properties and assets of the Company substantially as
an entirety, or of any reclassification or change of Common Shares issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a subdivision
or combination), or a tender offer or exchange offer for Common Shares;


 


(iv)         
of
the voluntary or involuntary dissolution, liquidation or winding up of the
Company; or


 


(v)          
the
Company proposes to take or takes any action (other than actions of the
character described in Section 11(a)) which would require an adjustment of the
Exercise Price pursuant to Section 11;


 


and if, and only if, the
Company has provided similar notice to holders of record of Common Stock, then
the Company shall give to the Warrant Agent and use commercially reasonable
efforts to cause the Warrant Agent to give to the Holder at his, her or its
address appearing in the Warrant register, at least 10 days prior (or such
shorter period if a shorter period is provided to holders of record of Common
Stock) to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by first-class mail, postage
prepaid, a written notice stating (A) the date as of which the holders of
record of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, or (B) the initial expiration
date set forth in any tender offer or exchange offer for


 


16

















 


Common Stock, or (C) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up.  The failure to give the notice
required by this Section 14 or any defect therein shall not affect the legality
or validity of any distribution, or winding up, or the vote upon any action.


 


(b)          
If
the Company takes any action that would require an adjustment in the Exercise
Price pursuant to Subsection (a) of Section 11, the Company shall mail to the
Holder a notice at least 10 days before such date stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision or reclassification.  Failure to mail the notice or any defect
in the notice shall not affect the validity of the transaction.


 


Nothing contained in this
Warrant Agreement or any Warrant Certificate shall be construed as conferring
upon the Holder the right to vote or to consent or to receive notice as a
shareholder in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as a
shareholder of the Company.


 


SECTION
15.         Merger, Consolidation
or Change of Name of Warrant Agent.  Any corporation into which
the Warrant Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Warrant
Agent shall be a party, or any corporation succeeding to the business of the
Warrant Agent, shall be the successor to the Warrant Agent hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor warrant agent under the provisions of Section
17.  Any such successor Warrant Agent shall promptly cause notice of its
succession as Warrant Agent to be mailed (by first class mail, postage prepaid)
to each Holder at such Holder’s last address as shown on the register
maintained by the Warrant Agent pursuant this Warrant Agreement.  In case
at the time such successor to the Warrant Agent shall succeed to the agency
created by this Warrant Agreement, and in case at that time any of the Warrant
Certificates shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent; and in case at that time any of the Warrant Certificates shall
not have been countersigned, any successor to the Warrant Agent may countersign
such Warrant Certificates either in the name of the predecessor Warrant Agent
or in the name of the successor to the Warrant Agent; and in all such cases
such Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Warrant Agreement.


 


In case at any time the
name of the Warrant Agent shall be changed and at such time any of the Warrant
Certificates shall have been countersigned but not delivered, the Warrant Agent
whose name has been changed may adopt the countersignature under its prior
name, and in case at that time any of the Warrant Certificates shall not have
been countersigned, the Warrant Agent may countersign such Warrant Certificates
either in its prior name or in its changed name, and in all such cases such
Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Warrant Agreement.


 


SECTION
16.         Warrant Agent.  The Warrant
Agent undertakes the duties and


 


17

















 


obligations imposed by this Warrant Agreement upon the
following terms and conditions, by all of which the Company and the Holders of
Warrants, by their acceptance thereof, shall be bound:


 


(a)          
The
statements contained herein and in the Warrant Certificates shall be taken as
statements of the Company and the Warrant Agent assumes no responsibility for
the correctness of any of the same except such as describe the Warrant Agent or
action taken or to be taken by it.  The Warrant Agent assumes no
responsibility with respect to the distribution of the Warrant Certificates
except as herein otherwise provided.


 


(b)          
The
Warrant Agent shall not be responsible for any failure of the Company to comply
with any of the covenants contained in this Warrant Agreement or in the Warrant
Certificates to be complied with by the Company.


 


(c)          
The
Warrant Agent may consult at any time with counsel satisfactory to it (who may
be counsel for the Company) and the Warrant Agent shall incur no liability or
responsibility to the Company or to any Holder of any Warrant Certificate in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel.


 


(d)          
The
Warrant Agent shall incur no liability or responsibility to the Company or to
any Holder of any Warrant Certificate for any action taken in reliance on any
Warrant Certificate, certificate of shares, notice, resolution, waiver,
consent, order, certificate, or other paper, document or instrument believed by
it to be genuine and to have been signed, sent or presented by the proper party
or parties.


 


(e)          
The
Company agrees to pay to the Warrant Agent reasonable compensation for all
services rendered by the Warrant Agent in the execution of this Warrant
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature reasonably
incurred by the Warrant Agent in the execution of this Warrant Agreement and to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, reasonable costs and counsel fees, for
anything done or omitted by the Warrant Agent in the execution of this Warrant
Agreement except as a result of its negligence or bad faith.


 


(f)           
The
Warrant Agent shall be under no obligation to institute any action, suit or
legal proceeding or to take any other action likely to involve expense unless
the Company or one or more Holders of Warrant Certificates shall furnish the
Warrant Agent with reasonable security and indemnity for any costs and expenses
which may be incurred, but this provision shall not affect the power of the
Warrant Agent to take such action as it may consider proper, whether with or
without any such security or indemnity.  All rights of action under this
Warrant Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrant Certificates or the production
thereof at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent and any recovery of judgment shall be for the ratable benefit
of the Holders of the Warrants, as their respective rights or interests may
appear.


 


(g)          
The
Warrant Agent, and any stockholder, director, officer or employee of it, may
buy, sell or deal in any of the Warrants or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be
interested, or contract


 


18

















 


with or lend money to the Company or otherwise act as
fully and freely as though it were not Warrant Agent under this Warrant
Agreement.  Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.


 


(h)          
The
Warrant Agent shall act hereunder solely as agent for the Company, and its
duties shall be determined solely by the provisions hereof.  The Warrant
Agent shall not be liable for anything which it may do or refrain from doing in
connection with this Warrant Agreement except for its own negligence or bad
faith.


 


(i)           
The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder of any Warrant Certificate to make or cause to be made any adjustment of
the Exercise Price or number of the Warrant Shares or other securities or
property deliverable as provided in this Warrant Agreement, or to determine
whether any facts exist which may require any of such adjustments, or with
respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same.  The Warrant Agent
shall not be accountable with respect to the validity or value or the kind or
amount of any Warrant Shares or of any securities or property which may at any
time be issued or delivered upon the exercise of any Warrant or with respect to
whether any such Warrant Shares or other securities will when issued be validly
issued and fully paid and nonassessable, and makes no representation with
respect thereto.


 


(j)           
The
Warrant Agent shall be entitled to rely on the statements of the Company and
the Holders, and shall be under no duty or responsibility with respect to any
such statements.


 


(k)          
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 or other common stock or property upon the exercise of any
Warrant.


 


SECTION
17.         Resignation and
Removal of Warrant Agent; Appointment of Successor.  No resignation
or removal of the Warrant Agent and no appointment of a successor warrant agent
shall become effective until the acceptance of appointment by the successor
warrant agent as provided herein.  The Warrant Agent may resign its duties
and be discharged from all further duties and liability hereunder (except
liability arising as a result of the Warrant Agent’s own negligence of willful
misconduct) after giving written notice to the Company.  The Company may
remove the Warrant Agent upon written notice, and the Warrant Agent shall
thereupon in like manner be discharged from all further duties and liabilities
hereunder, except as aforesaid.  The Warrant Agent shall, at the Company’s
expense, mail (by first class mail, postage prepaid) to each Holder of a
Warrant at his last address as shown on the register of the Company maintained
by the Warrant Agent a copy of said notice of resignation or notice of removal,
as the case may be.  Upon such resignation or removal, the Company shall
appoint in writing a new warrant agent.  If the Company shall fail to make
such appointment within a period of 30 days after it has been notified in
writing of such resignation by the resigning Warrant Agent or after such
removal, then the resigning Warrant Agent or the Holder of any Warrant may
apply to any court of competent jurisdiction for the appointment of a new warrant
agent.  Any new warrant agent, whether appointed by the Company or by such
a court, shall be a corporation doing business under the laws of the United
States or any state thereof, in good standing and having a combined capital and
surplus of not less than $50,000,000.  The combined capital and surplus of


 


19

















 


any such new warrant agent shall be deemed to be the
combined capital and surplus as set forth in the most recent annual report of
its condition published by such warrant agent prior to its appointment,
provided that such reports are published at least annually pursuant to law or
to the requirements of a federal or state supervising or examining
authority.  After acceptance in writing of such appointment by the new
warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant
Agent, without any further assurance, conveyance, act or deed; but if for any
reason it shall be necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the expense of
the Company and shall be legally and validly executed and delivered by the
resigning or removed Warrant Agent.  Not later than the effective date of any
such appointment, the Company shall give notice thereof to the resigning or
removed Warrant Agent.  Failure to give any notice provided for in this
Section, however, or any defect therein, shall not affect the legality or
validity of the resignation of the Warrant Agent or the appointment of a new
warrant agent, as the case may be.


 


SECTION
18.         Notices to Company and
Warrant Agent.  Any notice or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by the Holder of any
Warrant Certificate to or on the Company shall be sufficiently given or made
when and if deposited in the mail, first class or registered, postage prepaid,
addressed (until another address is filed in writing by the Company with the
Warrant Agent), as follows:


 


AboveNet, Inc.

360 Hamilton Avenue

White Plains, New York 10601

Telecopy:  (914) 421-6793

Telephone:  (914) 421-6700

Attention:   General Counsel


 


With a copy to:


 


Kronish Lieb Weiner & Hellman LLP

1114 Avenue of the Americas

New York, New York 10036


Telecopy: (212) 479-6275


Telephone: (212) 479-6078


Attn:  Lawrence C. Gottlieb, Esq.


 


In case the Company shall
fail to maintain such office or agency or shall fail to give such notice of the
location or of any change in the location thereof, presentations may be made
and notices and demands may be served at the principal office of the Warrant
Agent.


 


Any notice pursuant to
this Warrant Agreement to be given by the Company or by the Holder(s) of any
Warrant Certificate to the Warrant Agent shall be sufficiently given when and
if deposited in the mail, first-class or registered, postage prepaid, addressed
(until another address is filed in writing by the Warrant Agent with the
Company) to the Warrant Agent as follows:


 


American Stock Transfer & Trust Company

55 Maiden Lane


 


20

















 


New York, New York 10004

Telephone:  (212) 936-5100


Attention:  Office of the General Counsel


 


SECTION
19.         Supplements and
Amendments.  The Company and the Warrant Agent may from time to
time supplement or amend this Warrant Agreement without the approval of any
Holders of Warrant Certificates in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the interests of the Holders of Warrant Certificates.  Any
amendment or supplement to this Warrant Agreement that has a material adverse
effect on the interests of Holders shall require the written consent of Holders
representing a two-thirds of the then outstanding Warrants.  The consent
of each Holder of a Warrant affected shall be required for any amendment
pursuant to which the Exercise Price would be increased or the number of
Warrant Shares purchasable upon exercise of Warrants would be decreased. 
The Warrant Agent shall be entitled to receive and, subject to Section 16,
shall be fully protected in relying upon, an officers’ certificate and opinion
of counsel as conclusive evidence that any such amendment or supplement is
authorized or permitted hereunder, that it is not inconsistent herewith, and
that it will be valid and binding upon the Company in accordance with its
terms.


 


SECTION
20.         Successors.  All the
covenants and provisions of this Warrant Agreement by or for the benefit of the
Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.


 


SECTION
21.         Termination.  This Warrant
Agreement (other than any party’s obligations with respect to Warrants
previously exercised and with respect to indemnification under Section 16)
shall terminate at 5:00 p.m., New York City time on the Expiration Date.


 


SECTION
22.         Governing Law.  This Warrant
Agreement and each Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the state of New York and for all purposes
shall be construed in accordance with the internal laws of said state.


 


SECTION
23.         Benefits of This
Warrant Agreement.


 


(i)           
Nothing
in this Warrant Agreement shall be construed to give to any person or
corporation other than the Company, the Warrant Agent and the Holders of the
Warrant Certificates any legal or equitable right, remedy or claim under this
Warrant Agreement; but this Warrant Agreement shall be for the sole and
exclusive benefit of the Company, the Warrant Agent and the Holders of the
Warrant Certificates.


 


(ii)          
Prior
to the exercise of the Warrants, no Holder of a Warrant Certificate, as such,
shall be entitled to any rights of a stockholder of the Company, including,
without limitation, the right to receive dividends or subscription rights, the
right to vote, to consent, to exercise any preemptive right, to receive any
notice of meetings of stockholders for the election of directors of the Company
or any other matter or to receive any notice of any proceedings of the Company,
except as may be specifically provided for herein.  The Holders of the
Warrants are not entitled to


 


21

















 


share in the assets of the Company in the event of the
liquidation, dissolution or winding up of the Company’s affairs.


 


(b)          
All
rights of action in respect of this Warrant Agreement are vested in the Holders
of the Warrants, and any Holder of any Warrant, without the consent of the
Warrant Agent or the Holder of any other Warrant, may, on such Holder’s own behalf
and for such Holder’s own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company suitable to enforce, or
otherwise in respect of, such Holder’s rights hereunder, including the right to
exercise, exchange or surrender for purchase such Holder’s Warrants in the
manner provided in this Warrant Agreement.


 


SECTION
24.         Counterparts.  This Warrant
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.


 


22

















 


IN
WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be
duly executed, as of the day and year first above written.


 


	
   

  	
   

  	
   

  	
  ABOVENET, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Michael A. Doris

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Michael
  A. Doris

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  SVP
  & CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Seal]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   /s/ Robert
  Sokota

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Secretary

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AMERICAN STOCK TRANSFER
  &

  TRUST COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Seal]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
											



 


23

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Warrant Agreement to be duly executed, as of
the day and year first above written.


 


	
   

  	
   

  	
   

  	
  ABOVENET, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Seal]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Secretary

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AMERICAN STOCK TRANSFER
  &

  TRUST COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Joseph Wolf

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Joseph
  Wolf

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Seal]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
  /s/
  Susan Silber

  	
   

  	
   

  	
   

  	
   

  
	
  Asst.
  Secretary

  	
   

  	
   

  	
   

  	
   

  
							



 


24

















 


EXHIBIT
A


 


[Form of Warrant
Certificate]


 


[Face]


 


	
  No.
         

  	
        Warrants

  



 


Warrant
Certificate


 


ABOVENET, INC.


 


This Warrant Certificate
certifies that
                    ,
or its registered assigns, is the registered holder of Warrants expiring
September 8, 2008 (the “Warrants”)
to purchase Common Stock, par value $.01 (the “Common Stock”), of AboveNet, Inc., a Delaware corporation (the
“Company”).  Each Warrant
entitles the registered holder upon exercise at any time until 5:00 p.m. New
York City Time on September 8, 2008, to receive from the Company one fully paid
and nonassessable share of Common Stock (the “Warrant
Shares”) at the initial exercise price (the “Exercise Price”) of $20.00 per share
payable in lawful money of the United States of America upon surrender of this
Warrant Certificate and payment of the Exercise Price at the office or agency
of the Warrant Agent, but only subject to the conditions set forth herein and
in the Warrant Agreement referred to on the reverse hereof.  The Exercise
Price and number of Warrant Shares issuable upon exercise of the Warrants are
subject to adjustment upon the occurrence of certain events set forth in the
Warrant Agreement.


 


This Warrant is
immediately exercisable.  No Warrant may be exercised after 5:00 p.m., New
York City Time on September 8, 2008, and to the extent not exercised by such
time such Warrants shall become void.


 


Reference is hereby made
to the further provisions of this Warrant Certificate set forth on the reverse
hereof and such further provisions shall for all purposes have the same effect
as though fully set forth at this place.


 


This Warrant Certificate
shall not be valid unless countersigned by the Warrant Agent, as such term is
used in the Warrant Agreement.


 


This Warrant Certificate
shall be governed by and construed in accordance with the internal laws of the
State of New York.


 


25

















 


IN WITNESS WHEREOF,
AboveNet, Inc. has caused this Warrant Certificate to be signed by its
President and by its Secretary, each by a signature or a facsimile thereof, and
has caused a facsimile of its corporate seal to be affixed hereunto or
imprinted hereon.


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ABOVENET, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AMERICAN STOCK TRANSFER

  & TRUST COMPANY,

  as Warrant Agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


26

















 


[Form of Warrant
Certificate]


 


[Reverse]


 


[Unless and until it is
exchanged in whole or in part for Warrants in definitive form, this Warrant may
not be transferred except as a whole by the depositary to a nominee of the
depositary or by a nominee of the depositary to the depositary or another
nominee of the depositary or by the depositary or any such nominee to a
successor depositary or a nominee of such successor depositary.  The
Depository Trust Company (“DTC”), (55
Water Street, New York, New York) shall act as the depositary until a successor
shall be appointed by the Company and the Warrant Agent.  Unless this
certificate is presented by an authorized representative of DTC to the issuer
or its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or 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.](1)


 


The Warrants evidenced by
this Warrant Certificate are part of a duly authorized issue of Warrants
expiring September 8, 2008 entitling the holder on exercise to receive shares
of Common Stock, par value $.01, of the Company (the “Common Stock”), and are issued or to be issued pursuant to a
Warrant Agreement dated as of November     , 2003 (the “Warrant Agreement”), duly executed and
delivered by the Company to American Stock Transfer & Trust Company, as
warrant agent (the “Warrant Agent”),
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Warrant Agent, the Company and the holders (the words “holders” or “holder”
meaning the registered holders or registered holder) of the Warrants.  A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.  Capitalized terms used herein without definition
shall have the meanings ascribed to them in the Warrant Agreement.


 


Warrants are immediately
exercisable and may be exercised at any time prior to 5:00 p.m., New York City
Time on September 8, 2008.  The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price in lawful money of the
United States of America at the office of the Warrant Agent.  In the event
that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised.  No adjustment
shall be made for any dividends on any Common Stock issuable upon exercise of
this Warrant.


 


The Warrant Agreement
provides that upon the occurrence of certain events the Exercise Price set
forth on the face hereof and/or the number of shares of Common Stock issuable
upon the exercise of each Warrant shall, subject to certain conditions, be
adjusted.  No fractions of a share of Common Stock will be issued upon the
exercise of any Warrant, but the


 












(1)   This
is to be included only if the Warrant is in global form.


 


27

















 


Company will pay the cash value thereof determined as
provided in the Warrant Agreement.


 


Warrant Certificates,
when surrendered at the office of the Warrant Agent by the registered holder
thereof in person or by legal representative or attorney duly authorized in
writing, may be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any service charge,
for another Warrant Certificate or Warrant Certificate’s of like tenor evidencing
in the aggregate a like number of Warrants.


 


Upon due presentation for
registration of transfer of this Warrant Certificate at the office of the
Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor
and evidencing in the aggregate a like number of Warrants shall be issued to
the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any
tax or other governmental charge imposed in connection therewith.


 


The Company and the
Warrant Agent may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and neither the Company nor the Warrant Agent shall be affected by
any notice to the contrary.  Neither the Warrants nor this Warrant
Certificate entitles any holder hereof to any rights of a stockholder of the
Company.


 


28

















 


[Form of Election
to Purchase]


 


(To Be Executed
Upon Exercise Of Warrant)


 


	
  Method of Election:

  
	
   

  	
   

  	
  (Choose 1)

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Payment of Cash

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Net Exercise of
  Warrants

  



 


The undersigned hereby
irrevocably elects to exercise the right, represented by this Warrant
Certificate, to receive
                  
shares of Common Stock and herewith tenders payment for such shares to the
order of ABOVENET, INC., either in the amount of $                  
in accordance with the terms hereof or pursuant to the net exercise provision
for this Section 4 of the Warrant Agreement.  The undersigned requests
that a certificate for such shares be registered in the name of
                              ,
whose address is
                           
and that such shares be delivered
to                                
, whose address is                               . 
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
                                              ,
whose address is                         
, and that such Warrant Certificate be delivered to
                             ,
whose address is                                  
..


 


	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature Guaranteed

  	
   

  



 


29

















 


[FORM OF
ASSIGNMENT]


 


FOR VALUE RECEIVED, the
undersigned registered holder of the within Warrant Certificate hereby sells,
assigns and transfers unto the assignee(s) named below (including the
undersigned with respect to any shares of common stock for which the Warrants
represented by the within Warrant Certificate are exercisable but the right to
exercise for which is not being assigned hereby) all of the right of the
undersigned under the within Warrant Certificate, with respect to the number of
Warrants as are set forth below:


 


	
  Name(s)
  of

  Assignees

  	
   

  	
  Address

  	
   

  	
  Social
  Security

  or other

  Identifying

  number of

  Assignee(s)

  	
   

  	
  Number
  of Warrants

  being assigned

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


and does hereby irrevocably constitute and appoint
                                   
the undersigned’s attorney to make such transfer on the books of AboveNet, Inc.
maintained for that purpose with full power of substitution in the premises.


 


	
  Dated: 

  	
   

  	
   

  	
   

  	
   (1) 

  
	
   

  	
  (Signature of Owner)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Street Address)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (City)

  	
  (State)

  	
  (ZIP Code)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature Guaranteed
  by: 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


This
assignment must comply with the provisions of Section 6 of the Warrant
Agreement governing this warrant.












(1)           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 whatever, and must
be guaranteed by an eligible guarantor Institution pursuant to S.E.C. Rule 17Ad-15.


 


30

















 


SCHEDULE OF
EXCHANGES OF DEFINITIVE WARRANTS(2)


 


The following exchanges of a part of this Global
Warrant for definitive Warrants have been made:


 


	
  Date of

  Exchange

  	
   

  	
  Amount
  of

  decrease in

  Number of

  Warrants in this

  Global Warrant

  	
   

  	
  Amount
  of

  increase in

  Number of

  Warrants in this

  Global Warrant

  	
   

  	
  Number
  of

  Warrants in this

  Global Warrant

  following such

  decrease or

  increase

  	
   

  	
  Signature
  of

  authorized

  officer of

  Warrant Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 












(2)   This
is to be included only if the Warrant is in global form


 


31