EXHIBIT 99.4
LORAL SPACE & COMMUNICATIONS LTD.
AND
THE BANK OF NEW YORK, AS WARRANT AGENT
---------------------
WARRANT AGREEMENT
DATED AS OF , 20
WARRANT AGREEMENT
TABLE OF CONTENTS
PAGE
----
SECTION 1. Appointment of Warrant Agent................................
SECTION 2. Warrant Certificates........................................
SECTION 3. Execution of Warrant Certificates...........................
SECTION 4. Registration and Countersignature...........................
SECTION 5. Registration of Transfers and Exchanges.....................
SECTION 6. Terms and Release of Warrants...............................
SECTION 7. Registration Statement......................................
SECTION 8. Payment of Taxes............................................
SECTION 9. Mutilated or Missing Warrant Certificates...................
SECTION 10. Reservation of Warrant Shares...............................
SECTION 11. Obtaining Stock Exchange Listings...........................
SECTION 12. Adjustment of Exercise Price................................
SECTION 13. Fractional Interests........................................
SECTION 14. Notices to Warrant holders..................................
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent....
SECTION 16. Warrant Agent...............................................
SECTION 17. Change of Warrant Agent.....................................
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 Agreement..................................
SECTION 24. Counterparts................................................
Exhibit A Form of Warrant Certificate
i
WARRANT AGREEMENT dated as of , 20 between Loral Space &
Communications Ltd., a Bermuda company (the "COMPANY"), and The Bank of
New
York, a
New York banking corporation, as Warrant Agent (the "WARRANT AGENT").
WHEREAS, the Company proposes to issue Common Stock Purchase Warrants, as
hereinafter described (the "WARRANTS"), which in the aggregate initially entitle
the holders thereof to purchase up to shares of Common Stock of
the Company (the "COMMON STOCK") (the Common Stock issuable on exercise of the
Warrants being referred to herein as the "WARRANT SHARES") pursuant to an
exchange offer (the "Exchange Offer") made pursuant to a Lock-Up Agreement dated
as of October 15, 2001 between the Company, Loral CyberStar, Inc., and certain
holders of Loral CyberStar's Senior Notes and Senior Discount Notes.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and exercise of Warrants and other matters as
provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. 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 Agreement, and the Warrant Agent
hereby accepts such appointment. The Company may from time to time appoint such
Co-Warrant Agents as is may deem necessary or desirable upon ten (10) days'
prior written notice to the Warrant Agent. The Warrant Agent shall have no duty
to supervise, and shall in no event be liable for, the acts or omissions of any
such Co-Warrant Agent.
SECTION 2. WARRANT CERTIFICATES. The certificates evidencing the Warrants
(the "WARRANT CERTIFICATES") to be delivered pursuant to this Agreement shall be
in registered form only and shall be substantially in the form set forth in
Exhibit A attached hereto.
SECTION 3. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates shall
be signed on behalf of the Company by its Chairman of the Board or its President
or a Vice President and by its Secretary or an Assistant Secretary. 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, 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, Vice President, Secretary or Assistant Secretary,
notwithstanding the fact that at the time the Warrant Certificates shall be
countersigned and delivered or disposed of he or she shall have ceased to hold
such office.
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 date of countersignature by the
Warrant Agent.
SECTION 4. REGISTRATION AND COUNTERSIGNATURE. The Warrant Agent, on
behalf of the Company, shall hold the Warrants unnumbered and unregistered.
Warrant Certificates shall be manually countersigned 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, a Vice President, the Treasurer, the Secretary or the Chief Financial
Officer of the Company, initially countersign, issue and deliver Warrants
collectively for all Warrants outstanding 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 Agreement.
The Company and the Warrant Agent may deem and treat the registered
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 5. REGISTRATION OF TRANSFERS AND EXCHANGES. The Warrant Agent
shall from time to time, subject to the limitations of Section 6 hereof,
register the transfer of any outstanding Warrant Certificates upon the records
to be maintained by it for that purpose, upon surrender thereof duly endorsed or
accompanied (if so required by the Warrant Agent) by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, duly executed
by the registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled by the
Warrant Agent. Cancelled Warrant Certificates shall thereafter be disposed of by
the Warrant Agent in its customary manner.
Subject to the terms of this Agreement, Warrant Certificates may be
exchanged at the option of the holder(s) thereof, when surrendered to the
Warrant Agent at its principal corporate trust office, which is currently
located at the address listed in SECTION 18 hereof, for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Any holder desiring to exchange a Warrant
Certificate shall deliver a written request to the Warrant Agent, and shall
surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by
a written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, the Warrant Certificate or Certificates to be so exchanged.
Warrant Certificates surrendered for exchange shall be cancelled by the Warrant
Agent. Such cancelled Warrant Certificates shall then be disposed of by such
Warrant Agent in its customary manner.
The Warrant Agent is hereby authorized to countersign, in accordance with
the provisions of this Section 5 and of Section 4 hereof, the new Warrant
Certificates required pursuant to the provisions of this Section 5.
SECTION 6. TERMS AND RELEASE OF WARRANTS.
(a) TERMS OF WARRANTS.
The initial exercise price per share at which Warrant Shares shall be
purchasable upon the exercise of Warrants (the "EXERCISE PRICE") shall be $
per share.
Subject to the terms of this Agreement, each Warrant holder shall have the
right, which may be exercised commencing at the opening of business on the date
that such Warrant may be issued pursuant to the Exchange Offer and until 5:00
p.m.,
New York City time on , , to receive from the Company the
number of fully paid and nonassessable Warrant Shares which the holder may at
the time be entitled to receive on exercise of such Warrants and payment of the
Exercise Price then in effect for such Warrant Shares. In the alternative, each
Warrant holder may exercise its right, during the exercise period, 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 (or payable)
upon exercise of its Warrants less that number of Warrant Shares having an
aggregate Market Price (as defined below) at the time of exercise equal to the
aggregate Exercise Price that would otherwise have been paid by the holder of
the Warrant Shares upon such exercise. Each Warrant not exercised prior to 5:00
p.m.,
New York City time, on , shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
A Warrant may be exercised upon surrender to the Company at the principal
corporate trust office of the Warrant Agent, which is currently located at the
address listed in SECTION 18 hereof, of the certificate or certificates
evidencing the Warrants to be exercised with the form of election to purchase on
the reverse thereof duly filled in and signed and such other documentation as
the Warrant Agent may reasonably request,
2
and upon payment to the Warrant Agent for the account of the Company of the
Exercise Price which is set forth in the form of Warrant Certificate attached
hereto as EXHIBIT A as adjusted as herein provided, for the number of Warrant
Shares in respect of which such Warrants are then exercised. Payment of the
aggregate Exercise Price shall be made (i) in cash or by certified or official
bank check payable to the order of the Company in
New York Clearing House Funds,
or the equivalent thereof or (ii) in the manner provided in this SECTION 6.
Subject to the provisions of SECTION 8 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to and in such name or names as the
Warrant holder may designate, a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of such Warrants, subject to
SECTION 13 hereof; provided, however, that if any Business Combination proposed
to be effected by the Company as defined in SECTION 12 hereof, or a tender offer
or an exchange offer for shares of Common Stock of the Company shall be made,
upon such surrender of Warrants and payment of the Exercise Price as aforesaid,
the Company shall, as soon as reasonably practicable, but in any event not later
than three business days thereafter, issue and cause to be delivered the full
number of Warrant Shares issuable upon the exercise of such Warrants in the
manner described in this sentence subject to SECTION 13 hereof. 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 Warrants and payment of
the Exercise Price.
The Warrants shall be 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 6 and of SECTION 4 hereof, and the
Company, whenever required by the Warrant Agent, shall supply the Warrant Agent
with Warrant Certificates duly executed on behalf of the Company for such
purpose. The Warrant Agent may assume that any Warrant presented for exercise is
permitted to be so exercised under applicable law and shall have no liability
for acting in reliance on such assumption.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled by the Warrant Agent. Such canceled Warrant Certificates shall then be
disposed of by the Warrant Agent in its customary manner. 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 Agreement and any notices given
or received hereunder available for inspection by the holders with reasonable
prior written notice 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 Agreement as the Warrant Agent may request.
SECTION 7. REGISTRATION STATEMENT. The Company shall use its commercially
reasonable efforts to file with the Securities and Exchange Commission (the
"SEC"), and cause to be declared effective, a registration statement (the
"Registration Statement") pursuant to Rule 415, or any successor rule, under the
Securities Act of 1933, as amended (the "Securities Act") on Form S-1 or Form
S-3, if the use of such form is then available and as determined by the Company,
or any successor forms, to cover the issuance of the Warrant Shares. The Company
shall use its commercially reasonable efforts to maintain the effectiveness of
the Registration Statement until the earlier of (a) such time as all Warrants
have been exercised and (b) the fifth anniversary of the date of this Agreement.
During any 365-day period in which the Warrants are exercisable, the Company may
suspend the availability of the Registration Statement for up to two 30-
consecutive-day periods (except during the 30 days immediately prior to the
expiration of the Warrants) if (a) the Board of Directors of the Company
determines in good faith that a valid business purpose exists for the suspension
of the use of the Registration Statement and (b) notice of such determination is
provided to
3
the holders of Warrants at their addresses appearing in the register of the
Warrants maintained by the Warrant Agent.
SECTION 8. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; provided, however, 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 Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates 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. In case any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
shall issue and the Warrant Agent shall countersign, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity, also satisfactory to the Company and the
Warrant Agent. Applicants for such new Warrant Certificates must pay such
reasonable charges as the Company may prescribe.
SECTION 10. RESERVATION OF WARRANT SHARES. The Company will at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants. The Warrant Agent shall have no duty to verify
availability of such shares set aside by the Company.
The Company or, if appointed, the transfer agent for the Common Stock (the
"TRANSFER AGENT") and every subsequent transfer agent for any shares of the
Company's Common Stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at 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 Common
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 and will provide or otherwise make available any
cash which may be payable as provided in SECTION 13 hereof. The Company will
furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto, transmitted to each holder pursuant to SECTION 14
hereof.
Before taking any action which would cause an adjustment pursuant to
SECTION 12 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any commercially reasonable
corporate action which may, in the opinion of its counsel (which may be counsel
employed by the Company), be necessary 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, upon payment of the Exercise Price therefor and
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.
SECTION 11. OBTAINING STOCK EXCHANGE LISTINGS. The Company will from time
to time take all commercially reasonable actions which may be necessary so that
the Warrant Shares, immediately upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchanges and markets
within the United States of America, if any, on which other shares of Common
Stock are then listed.
4
SECTION 12. ADJUSTMENT OF EXERCISE PRICE. The Exercise Price and the
number of Warrant Shares issuable on exercise of each Warrant are subject to
adjustment from time to time as described in this SECTION 12 and subject to
SECTION 13.
(a) COMMON STOCK ISSUED AT LESS THAN MARKET VALUE. If the Company
issues or sells any Common Stock other than Excluded Stock without
consideration or for consideration per share less than the Market Price of
the Common Stock (provided, however, that no sale of securities pursuant to
a bona fideunderwritten public offering or equity line or private placement
to non-affiliates of the Company (including without limitation the issuance
of equity as consideration of partial consideration for acquisitions from
persons that are not affiliates of the Company) will be deemed to be for
less than Market Price), as of the day of such issuance or sale, the
Exercise Price in effect immediately prior to each such issuance or sale
will immediately (except as provided below) be reduced to the price
determined by multiplying the Exercise Price, in effect immediately prior
to such issuance or sale, by a fraction, (x) the numerator of which shall
be (A) the number of shares of Common Stock outstanding immediately prior
to such issuance or sale plus (B) the number of shares of Common Stock
which the aggregate consideration received by the Company for the total
number of such additional shares of Common Stock so issued or sold would
purchase at the Market Price on the last trading day immediately preceding
such issuance or sale and (y) the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such issue or sale.
In such event, the number of Warrant Shares issuable upon the exercise of
each Warrant shall be increased to the number obtained by dividing (x) the
product of (A) the number of Warrant Shares issuable upon the exercise of
each Warrant before such adjustment, and (B) the Exercise Price in effect
immediately prior to the issuance giving rise to this adjustment by (y) the
new Exercise Price determined in accordance with the immediately preceding
sentence. For the purposes of any adjustment of the Exercise Price and the
number of Warrant Shares issuable upon exercise of each Warrant pursuant to
this SECTION 12(a), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the
amount of the consideration received by the Company shall be deemed to
be the amount of the cash proceeds received by the Company for such
Common Stock before deducting therefrom any discounts or commissions
allowed, paid or incurred by the Company for any underwriting or
otherwise in connection with the issuance and sale thereof.
(2) In the case of the issuance of Common Stock (otherwise than
upon the conversion of any shares of capital stock or other securities
of the Company) for a consideration in whole or in part other than cash,
including securities acquired in exchange therefor (other than
securities by their terms so exchangeable), the consideration other than
cash shall be deemed to be the fair value thereof as determined by the
Board of Directors, provided, however, that such fair value as
determined by the Board of Directors shall not exceed the aggregate
Market Price of the shares of Common Stock being issued as of the date
the Board of Directors authorizes the issuance of such shares.
(3) In the case of the issuance of (A) options, warrants or other
rights to purchase or acquire Common Stock (whether or not at the time
exercisable) or (B) securities by their terms convertible into or
exchangeable for Common Stock (whether or not at the time so convertible
or exchangeable) or options, warrants or rights to purchase such
convertible or exchangeable securities (whether or not at the time
exercisable):
(A) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options, warrants or other rights
to purchase or acquire Common Stock shall be deemed to have been
issued at the time such options, warrants or rights are issued and
for a consideration equal to the consideration (determined in the
manner provided in SECTIONS 12(a)(1) AND (2)), if any, received by
the Company upon the issuance of such options, warrants or rights
plus the minimum purchase price provided in such options, warrants or
rights for the Common Stock covered thereby;
5
(B) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities, or upon the exercise of
options, warrants or other rights to purchase or acquire such
convertible or exchangeable securities and the subsequent conversion
or exchange thereof, shall be deemed to have been issued at the time
such securities were issued or such options, warrants or rights were
issued and for a consideration equal to the consideration, if any,
received by the Company for any such securities and related options,
warrants or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the additional consideration
(determined in the manner provided in SECTION 12(a)(1) AND (2)), if
any, to be received by the Company upon the conversion or exchange of
such securities, or upon the exercise of any related options,
warrants or rights to purchase or acquire such convertible or
exchangeable securities and the subsequent conversion or exchange
thereof;
(C) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options, warrants or rights or
conversion or exchange of such convertible or exchangeable securities
or any change in the consideration to be received by the Company upon
such exercise, conversion or exchange, but excluding changes
resulting from the antidilution provisions thereof (to the extent
comparable to the antidilution provisions contained herein), the
Exercise Price and the number of Warrant Shares issuable upon
exercise of this Warrant as then in effect shall forthwith be
readjusted to such Exercise Price and number of Warrant Shares as
would have been obtained had an adjustment been made upon the
issuance of such options, warrants or rights not exercised prior to
such change, or of such convertible or exchangeable securities not
converted or exchanged prior to such change, upon the basis of such
change;
(D) on the expiration or cancellation of any such options,
warrants or rights (without exercise), or the termination of the
right to convert or exchange such convertible or exchangeable
securities (without exercise), if the Exercise Price and the number
of Warrant Shares issuable upon exercise of this Warrant shall have
been adjusted upon the issuance thereof, the Exercise Price and the
number of Warrant Shares issuable upon exercise of this Warrant shall
forthwith be readjusted to such Exercise Price and number of Warrant
Shares as would have been obtained had an adjustment been made upon
the issuance of such options, warrants, rights or such convertible or
exchangeable securities on the basis of the issuance of only the
number of shares of Common Stock actually issued upon the exercise of
such options, warrants or rights, or upon the conversion or exchange
of such convertible or exchangeable securities; and
(E) if the Exercise Price and the number of Warrant Shares
issuable upon exercise of this Warrant shall have been adjusted upon
the issuance of any such options, warrants, rights or convertible or
exchangeable securities, no further adjustment of the Exercise Price
and the number of Warrant Shares issuable upon exercise of this
Warrant shall be made for the actual issuance of Common Stock upon
the exercise, conversion or exchange thereof; provided, however, that
no increase in the Exercise Price shall be made pursuant to
subclauses (A) and (B) of this SECTION 12(a)(3).
(b) EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK GRANTS.
Notwithstanding anything to the contrary set forth in this Section 12,
no adjustment will be required in respect of issuances of Common Stock (or
options to purchase Common Stock) pursuant to stock options granted prior
to the date hereof or for stock options and restricted stock granted to
employees after the date hereof issued to the Company's employees,
officers, directors, consultants or advisors (whether or not still in such
capacity on the date of exercise) under bona fide employee benefit plans or
stock option plans adopted by the Board of Directors of the Company and
approved by the holders of Common Stock when required by law.
(c) CERTAIN REPURCHASES OF COMMON STOCK. In case the Company effects
a Pro Rata Repurchase of Common Stock, then the Exercise Price shall be
reduced to the price determined by multiplying the
6
Exercise Price in effect immediately prior to the effective date of such
Pro Rata Repurchase by a fraction of which the numerator shall be (x) the
product of (A) the number of shares of Common Stock outstanding immediately
before such Pro Rata Repurchase and (B) the Market Price of a share of
Common Stock on the trading day immediately preceding the first public
announcement by the Company or any of its Affiliates of the intent to
effect such Pro Rata Repurchase, minus (y) the aggregate purchase price of
the Pro Rata Repurchase, and of which the denominator shall be the product
of (x) the number of shares of Common Stock outstanding immediately prior
to such Pro Rata Repurchase minus the number of shares of Common Stock so
repurchased and (y) the Market Price per share of Common Stock on the
trading day immediately preceding the first public announcement of such Pro
Rata Repurchase. In such event, the number of Warrant Shares issuable upon
the exercise of each Warrant shall be increased to the number obtained by
dividing (x) the product of (A) the number of Warrant Shares issuable upon
the exercise of each Warrant before such adjustment, and (B) the Exercise
Price in effect immediately prior to the Pro Rata Repurchase giving rise to
this adjustment by (y) the new Exercise Price determined in accordance with
the immediately preceding sentence.
(d) Business Combinations. In case of any Business Combination or
reclassification of Common Stock (other than a reclassification of Common
Stock referred to in SECTION 12(e)), any Warrant Shares issued or issuable
upon exercise of this Warrant after the date of such Business Combination
or reclassification will be exchangeable for the number of shares of stock
or other securities or property (including cash) to which the Warrant
Shares issuable (at the time of such consolidation, merger, sale, lease or
conveyance) upon exercise of this Warrant immediately prior to such
Business Combination or reclassification would have been entitled upon such
Business Combination or reclassification; and in any such case, if
necessary, the provisions set forth herein with respect to the rights and
interests thereafter of the Holder shall be appropriately adjusted so as to
be applicable, as nearly as may reasonably be, to any shares of stock or
other securities or property thereafter deliverable on the exercise of this
Warrant. In determining the kind and amount of stock, securities or the
property receivable upon consummation of such Business Combination, if the
holders of Common Stock have the right to elect the kind or amount of
consideration receivable upon consummation of such Business Combination,
then the Holder shall have the right to make a similar election upon
exercise of this Warrant with respect to the number of shares of stock or
other securities or property which the Holder will receive upon exercise of
this Warrant.
(e) STOCK SPLITS, SUBDIVISIONS, RECLASSIFICATIONS OR COMBINATIONS. If
the Company shall (1) declare a dividend or make a distribution on its
Common Stock in shares of Common Stock, (2) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares, or (3)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, the number of Warrant Shares issuable upon exercise of this Warrant
at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification shall
be proportionately adjusted so that the Holder after such date shall be
entitled to purchase the number of Warrant Shares which such holder would
have owned or been entitled to receive after such date had this Warrant
been exercised immediately prior to such date. Successive adjustments in
the Exercise Price shall be made whenever any event specified above shall
occur. In such event the Exercise Price in effect at the time of the record
date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to the
number obtained by dividing (x) the product of (A) the number of Warrant
Shares issuable upon the exercise of this Warrant before such adjustment
and (B) the Exercise Price in effect immediately prior to the issuance
giving rise to this adjustment by (y) the new number of shares issuable
upon exercise of the Warrant determined pursuant to the immediately
preceding sentence.
(f) OTHER DISTRIBUTIONS. In case the Company shall fix a record date
for the making of a distribution to all holders of shares of its Common
Stock (1) of shares of any class other than its Common Stock or (2) of
evidence of indebtedness of the Company or any Subsidiary or (3) of assets,
or (4) of rights or warrants (in each case excluding (A) Ordinary Cash
Dividends and (B) any dividends or distribution referred to in SECTION
12(e)) in each such case the Exercise Price in effect on the record date
will be reduced by an amount equal, in the case of a distribution in cash,
to the amount thereof payable per share of the Common Stock, or in the case
of any other distribution, to the fair value thereof per share
7
of the Common Stock as determined by the Board of Directors. Such
reductions shall take effect on the record date for such distribution. In
such event, the number of Warrant Shares issuable upon the exercise of each
Warrant shall be increased to the number obtained by dividing (x) the
product of (A) the number of Warrant Shares issuable upon the exercise of
this Warrant before such adjustment, and (B) the Exercise Price in effect
immediately prior to the issuance giving rise to this adjustment by (y) the
new Exercise Price determined in accordance with the immediately preceding
sentence. In the event that such distribution is not so made, the Exercise
Price and the number of Warrant Shares issuable upon exercise of this
Warrant then in effect shall be readjusted, effective as of the date when
the Board determines not to distribute such shares, evidences of
indebtedness, assets, rights or warrants, as the case may be, to the
Exercise Price that would then be in effect and the number of Warrant
Shares that would then be issuable upon exercise of this Warrant if such
record date and distribution had not been fixed.
(g) RULES FOR ADJUSTMENT. No adjustment in the Exercise Price or the
number of Warrant Shares issuable upon the exercise of each Warrant is
required if the amount of the adjustment is less than $0.01 or
one-hundredth (1/100th) of a share, as the case may be; provided, however,
that any adjustments which by reason of this SECTION 12(g) are not required
to be made will be carried forward and given effect in any subsequent
adjustment.
(i) For the purposes of this Section 12, the term "shares of Common
Stock" means (1) the class of stock designated as the Common Stock of
the Company at the date hereof or (2) any other class of stock resulting
from successive changes or reclassifications of such shares consisting
solely of changes in par value, or from no par value to par value.
(ii) Notwithstanding the foregoing, in any case which this Section
12 provides that an adjustment becomes effective immediately after a
record date for an event, the Company may defer until the occurrence of
such event (1) issuing to the Holder of any Warrant exercised after such
record date and before the occurrence of such event the additional
securities issuable upon such conversion before giving effect to such
adjustment and (2) paying to the Holder any amount in cash in lieu of
any fraction pursuant to SECTION 13.
(iii) If the Company takes any action affecting the Common Stock,
other than action described in this SECTION 12, which in the opinion of
the Board of Directors of the Company would materially adversely affect
the conversion rights of the Holder of the Warrants, the Exercise Price
for the Warrants and/or the number of Warrant Shares received upon
exercise of the Warrant may be adjusted, to the extent permitted by law,
in such manner, if any, and at such time, as such Board may determine in
good faith to be equitable in the circumstances. Failure of the Board of
Directors of the Company to provide for any such adjustment prior to the
effective date of any such action by the Company affecting the Common
Stock will be evidence that the Board of Directors of the Company has
determined that it is equitable to make no adjustments in the
circumstances.
(h) VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at its
option, at any time during the term of the Warrants, reduce the then
current Exercise Price or increase the number of Warrant Shares for which
the Warrant may be exercised to any amount deemed appropriate by the Board
of Directors of the Company; provided, however, that if the Company elects
to make such adjustment, such adjustment will remain in effect for at least
a 15-day period, after which time the Company may, at its option, reinstate
the Exercise Price or number of Warrant Shares in effect prior to such
reduction, subject to any interim adjustments pursuant to this SECTION 12.
(i) NOTICE OF ADJUSTMENT. Whenever the Exercise Price or number of
Warrant Shares is adjusted, the Chief Financial Officer of the Company will
compute the adjustments in accordance with the foregoing provisions and
will prepare a certificate setting forth the adjustments and showing in
reasonable detail the facts upon which such adjustments are based.
A copy of such certificate will be filed promptly with the Transfer
Agent. Promptly after delivery of such certificate, the Company will
prepare a notice setting forth the adjustments and the date on which
8
such adjustments become effective and will mail such notice of such
adjustments to the Holder at the last address of the Holder as shown on the
Warrants Register.
(j) MISCELLANEOUS. Except as provided in this SECTION 12, no
adjustment in respect of any dividends or other payments or distributions
made to Holders of securities issuable upon exercise of Warrants will be
made during the term of a Warrant or upon the exercise of a Warrant. To the
extent (but only to the extent) that the Holder's rights hereunder have
been protected by the Holder's exercise (at Holder's election and
reasonable allocation) of its preemptive rights under the Investment
Agreement, no adjustments will be made to the Exercise Price or the number
of Warrant Shares. In addition, notwithstanding any of the foregoing, no
such adjustment will be made for the issuance or conversion of (a) any
Securities (as defined in the Investment Agreement) or (b) any rights under
the Rights Agreement (as defined in the Investment Agreement) or any
successor agreement unless such rights become exercisable (in which case
they will be deemed for purposes of this Agreement to have been issued at
the time they become exercisable).
(k) No adjustment need be made for a transaction referred to in
subsections (a) or (f) of this SECTION 12 if Warrant holders are to
participate, without requiring the Warrants to be exercised, in the
transaction on a basis and with notice that the Board of Directors of the
Company reasonably determines to be fair and appropriate in light of the
basis and notice on which holders of Common Stock participate in the
transaction. No adjustment need be made for a change in the par value of
the Common Stock. To the extent the Warrants become convertible into cash,
no adjustment need be made thereafter as to the amount of such cash, and no
interest will accrue thereon.
(l) STATEMENT ON CERTIFICATE. Irrespective of any adjustments in the
number or kind of securities purchasable upon the exercise of the Warrants
or the Exercise Price, the Certificates may continue to express the same
price and number and kind of shares as are stated in this Certificate.
(m) DEFINITIONS. For purposes of this SECTION 12, the following terms
shall have the following meanings:
"BUSINESS COMBINATION" means (1) any consolidation, merger, share
exchange or similar business combination transaction involving the
Company with any person or (2) the sale, assignment, conveyance,
transfer, lease or other disposition by the Company of all or
substantially all of its assets.
"EXCLUDED STOCK" means shares of Common Stock issued by the Company
upon exercise of Warrants, as a stock dividend payable in shares of
Common Stock, or upon any subdivision or split-up of the outstanding
shares of capital stock in each case which is subject to SECTION 12(e),
or upon conversion or exchange of shares or other securities convertible
or exchangeable for capital stock or the exercise of rights or warrants
to issued to holders of common stock (but not the issuance of such
securities subject to the provisions of SECTION 12(a)(3)).
"MARKET PRICE" means, with respect to a particular security, on any
given day, the average of the daily closing prices for 10 consecutive
trading days commencing on the 5th trading day prior to the day in
question or, in case no such reported sale takes place on such day, the
average of the last closing bid and asked prices regular way, in either
case on the
New York Stock Exchange or other principal national
securities exchange on which the applicable security is listed or
admitted to trading, or if not listed or admitted to trading on any
national securities exchange, (1) the average of the daily closing
prices for 10 consecutive trading days commencing on the 5th trading day
prior to the day in question reported by the NASDAQ Stock Market if such
security is traded over-the-counter and quoted in the NASDAQ Stock
Market, or (2) if such security is so traded, but not so quoted, the
average of the closing reported bid and asked prices of such security as
reported by the NASDAQ Stock Market or any comparable system, or (3) if
such security is not listed on the NASDAQ Stock Market or any comparable
system, the average of the closing bid and asked prices as furnished by
two members of the National Association of Securities Dealers, Inc.
selected from time to time by the Company for that purpose. If such
security is not listed and traded in a manner
9
that the quotations referred to above are available for the period
required hereunder, the Market Price per share of Common Stock shall be
deemed to be the fair value per share of such security as determined in
good faith by the Board of Directors of the Company.
"ORDINARY CASH DIVIDENDS" means regular quarterly cash dividends
not exceeding the average amount of net income reported for such
quarter.
"PRO RATA REPURCHASES" means any purchase of shares of Common Stock
by the Company or any Affiliate (as defined in the Investment Agreement)
thereof pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Exchange Act, or pursuant to any other offer
available to substantially all holders of Common Stock, whether for
cash, shares of capital stock of the Company, other securities of the
Company, evidences of indebtedness of the Company or any other person or
any other property (including, without limitation, shares of capital
stock, other securities or evidences of indebtedness of a subsidiary of
the Company), or any combination thereof, effected while this Warrant is
outstanding; provided, however, that "Pro Rata Repurchase" shall not
include any purchase of shares by the Company or any Affiliate thereof
made directly or indirectly in accordance with the requirements of Rule
10b-18 as in effect under the Exchange Act or any tender offer or
exchange offer commenced in connection with the transactions in which
this Warrant is issued. The "effective date" of a Pro Rata Repurchase
shall mean the date of acceptance of shares for purchase or exchange
under any tender or exchange offer which is a Pro Rata Repurchase or the
date of purchase with respect to any Pro Rata Repurchase that is not a
tender or exchange offer.
(n) WARRANT AGENT'S DISCLAIMER.
The Warrant Agent has no duty to determine when an adjustment under
this SECTION 12 should be made, how it should be made or what it should be.
The Warrant Agent has no duty to determine whether any provisions of a
supplemental
Warrant Agreement under subsection (m) of this SECTION 12 are
correct. The Warrant Agent makes no representation as to the validity or
value of any securities or assets issued upon exercise of Warrants. The
Warrant Agent shall not be responsible for the Company's failure to comply
with this Section.
(o) FORM OF WARRANTS.
Irrespective of any adjustments 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 and
Exercise Price as are stated in the Warrants initially issuable pursuant to this
Agreement.
SECTION 13. FRACTIONAL INTERESTS. Warrants may be issued in fractional
interests. Holders of fractional interests in Warrants will be entitled to
purchase a number of Warrant Shares equal to the product obtained by multiplying
the number of Warrant Shares issuable with respect to a full Warrant multiplied
by the fractional interest owned by such holder in the Warrant. The Company may,
but will not be required to, issue fractional Warrant Shares on the exercise of
Warrants. If more than one Warrant is presented for exercise in full at the same
time by a Holder, the exercise thereof will be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of a Warrant Share would be issuable on the exercise
of any Warrant (or specified portion thereof), the Company may, in its sole
discretion, issue such fraction of a Warrant Share or pay to the Holder of the
Warrant an amount in cash equal to the current Market Price per share of Common
Stock computed as of the trading day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction of a Warrant Share (but
in no event less than an amount equal to such fraction multiplied by the
Exercise Price in effect at such time).
SECTION 14. NOTICES TO WARRANT HOLDERS. Upon any adjustment of the
Exercise Price pursuant to SECTION 12, the Company shall promptly thereafter,
and in any event within five days, (i) cause to be filed with the Warrant Agent
a certificate executed by the Chief Financial Officer of the Company setting
forth the number of shares of common stock issuable upon exercise of each
Warrant after such adjustment and setting forth in reasonable detail the method
of calculation and the facts upon which such calculations are based, and
10
(ii) cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register written notice of
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. The Warrant Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of such adjustment
unless and until it shall have received such certificate.
In case:
(1) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(2) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other
than regular cash dividends or dividends payable in shares of Common Stock
or distributions referred to in subsection (b) of SECTION 12 hereof); or
(3) 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 or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of
Common Stock 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 shares of Common Stock; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(5) the Company proposes to take any action (other than actions of the
character described in SECTION 12(a) hereof) which would require an
adjustment of the Exercise Price pursuant to SECTION 12 hereof;
(6) then the Company shall cause to be filed with the Warrant Agent
and shall cause to be given to each of the registered holders of the
Warrant Certificates at his address appearing on the Warrant register, at
least 10 calendar days prior to the applicable record date hereinafter
specified, or as promptly as practicable under the circumstances in the
case of events for which there is no record date, by first-class mail,
postage prepaid, a written notice stating (i) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any
such rights, options, warrants or distribution are to be determined, or
(ii) the initial expiration date set forth in any tender offer or exchange
offer for shares of Common Stock, or (iii) 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 shares 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, right, option,
warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant Certificates
shall be construed as conferring upon the holders thereof the right to vote or
to consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of Directors of the Company or any other matter, or
any rights whatsoever as shareholders 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 all
or substantially all the corporate trust or agency 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
11
agent under the provisions of SECTION 17. In case at the time such successor to
the Warrant Agent shall succeed to the agency created by this 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 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 Agreement.
SECTION 16. WARRANT AGENT. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement (and no implied duties or obligations
shall be read into this Agreement against the Warrant Agent) upon the following
terms and conditions, by all of which the Company and the holders of Warrants,
by their acceptance thereof, shall be bound:
(1) 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.
(2) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates to be complied with by the Company.
(3) The Warrant Agent may consult at any time with counsel of its own
selection (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. The Warrant Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Warrant Agent shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(4) In the absence of bad faith on its part, the Warrant Agent may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Warrant Agent and conforming to the requirements of this Agreement. 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
(whether in its original or facsimile form) believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(5) The Company agrees to pay to the Warrant Agent such compensation
for all services rendered by the Warrant Agent in the administration and
execution of this Agreement as the Company and the Warrant Agent shall
agree in writing to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by
the Warrant Agent in the execution of this Agreement (including fees and
expenses of its counsel) and to indemnify the Warrant Agent (and any
predecessor Warrant Agent) and save it harmless against any and all claims
(whether asserted by the Company, a holder or any other person), damages,
losses, expenses (including taxes other than taxes based on the income of
the Warrant Agent), liabilities, including judgments, costs and counsel
12
fees and expenses, for anything done or omitted by the Warrant Agent in the
execution of this Agreement except as a result of its gross negligence or
willful misconduct. The provisions of this SECTION 16(5) shall survive the
expiration of the Warrants and the termination of this Agreement.
(6) 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 registered holders of
Warrant Certificates shall furnish the Warrant Agent with security and
indemnity satisfactory to it 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
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 registered holders of the Warrants, as their
respective rights or interests may appear.
(7) 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 with or
lend money to the Company or otherwise act as fully and freely as though it
were not 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.
(8) 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 Agreement except for its own
gross negligence or willful misconduct. The Warrant Agent shall not be
liable for any error of judgment made in good faith by it, unless it shall
be proved that the Warrant Agent was grossly negligent in ascertaining the
pertinent facts. Notwithstanding anything in this Agreement to the
contrary, in no event shall the Warrant Agent be liable for special,
indirect, punitive or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Warrant Agent has
been advised of the likelihood of the loss or damage and regardless of the
form of the action.
(9) 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
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.
(10) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Warrant Agent shall have any liability to any
holder of a Warrant Certificate or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason
of any preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such
obligation; provided that the Company must use its reasonable best efforts
to have any such order, decree or ruling lifted or otherwise overturned as
soon as possible.
(11) Any application by the Warrant Agent for written instructions
from the Company may, at the option of the Warrant Agent, set forth in
writing any action proposed to be taken or omitted by the Warrant Agent
under this Agreement and the date on and/or after which such action shall
be taken or
13
such omission shall be effective. The Warrant Agent shall not be liable for
any action taken by, or omission of, the Warrant Agent in accordance with a
proposal included in such application on or after the date specified in
such application (which date shall not be less than three Business Days
after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date
in the case of an omission), the Warrant Agent shall have received written
instructions in response to such application specifying the action to be
taken or omitted.
(12) No provision of this Agreement shall require the Warrant Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights.
(13) In addition to the foregoing, the Warrant Agent shall be
protected and shall incur no liability for, or in respect of, any action
taken or omitted by it in connection with its administration of this
Agreement if such acts or omissions are in reliance upon (i) the proper
execution of the certification concerning beneficial ownership appended to
the form of assignment and the form of the election attached hereto unless
the Warrant Agent shall have actual knowledge that, as executed, such
certification is untrue, or (ii) the non-execution of such certification
including, without limitation, any refusal to honor any otherwise
permissible assignment or election by reason of such non-execution.
SECTION 17. CHANGE OF WARRANT AGENT. The Warrant Agent may at any time
resign as Warrant Agent upon written notice to the Company. If the Warrant Agent
shall become incapable of acting as Warrant Agent, the Company shall appoint a
successor to such 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 or of such incapacity by the Warrant Agent or by the registered
holder of a Warrant Certificate, then the registered holder of any Warrant
Certificate or the Warrant Agent may apply, at the expense of the Company, to
any court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Pending appointment of a successor to such Warrant Agent, either
by the Company or by such a court, the duties of the Warrant Agent shall be
carried out by the Company. The holders of a majority of the unexercised
Warrants shall be entitled at any time to remove the Warrant Agent and appoint a
successor to such Warrant Agent. If a Successor Warrant Agent shall not have
been appointed within 30 days of such removal, the Warrant Agent may apply, at
the expense of the Company, to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Such successor to the Warrant
Agent need not be approved by the Company or the former Warrant Agent. After
appointment the successor to the Warrant Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Warrant Agent without further act or deed; but the former Warrant Agent upon
payment of all fees and expenses due it and its agents and counsel shall deliver
and transfer to the successor to the Warrant Agent any property at the time held
by it hereunder and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Failure to give any notice provided for in
this SECTION 17, however, or any defect therein, shall not affect the legality
or validity of the appointment of a successor to the Warrant Agent.
SECTION 18. NOTICES TO COMPANY AND WARRANT AGENT. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the
registered 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:
Loral Space & Communications Ltd.
c/o Loral SpaceCom, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 1016
Attention: General Counsel
14
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 corporate trust office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or by the
registered 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:
The Bank of
New York
000 Xxxxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
SECTION 19. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant Agent
may from time to time supplement or amend this 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. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 18, the Warrant Agent shall execute such supplement or
amendment. Notwithstanding anything in this Agreement to the contrary, the prior
written consent of the Warrant Agent must be obtained in connection with any
supplement or amendment which alters the rights or duties of the Warrant Agent.
The Company and the Warrant Agent may amend any provision herein with the
consent of the holders of Warrants exercisable for a majority of the Warrant
Shares issuable on exercise of all outstanding Warrants.
SECTION 20. SUCCESSORS. All the covenants and provisions of this
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 Agreement will terminate on any earlier
date if all Warrants have been exercised or expired without exercise. The
provisions of Section 15 hereof shall survive such termination.
SECTION 22. GOVERNING LAW. THIS 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 AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrant Certificates any legal
or equitable right, remedy or claim under this Agreement, and this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the registered holders of the Warrant Certificates.
SECTION 24. COUNTERPARTS. This 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.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS LTD.
By:
--------------------------------------
Title
THE BANK OF
NEW YORK, as
Warrant Agent
By:
--------------------------------------
Title:
16
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
EXERCISABLE ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME ,ON , 20 .
No. Warrants
WARRANT CERTIFICATE
LORAL SPACE & COMMUNICATIONS LTD.
This Warrant Certificate certifies that , or registered assigns,
is the registered holder of Warrants expiring , (the
"WARRANTS") to purchase shares of Common Stock, $.01 par value (the "COMMON
STOCK"), of LORAL SPACE & COMMUNICATIONS LTD. (the "COMPANY"). Each Warrant
entitles the holder upon exercise to receive from the Company on or before 5:00
p.m. New York City time, on , 20 , that number of fully paid and
nonassessable shares of Common Stock (each, a "WARRANT SHARE") as set forth
below at the exercise price (the "EXERCISE PRICE") as determined pursuant to the
Warrant Agreement referenced below 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. Notwithstanding the foregoing, Warrants may be exercised without
the exchange of funds pursuant to the net exercise provisions of Section 6 of
the
Warrant Agreement.
Each Warrant is initially exercisable for one share of Common Stock. The
number of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence after the closing of the Exchange Offer of
certain events set forth in the
Warrant Agreement.
The initial Exercise Price per share of Common Stock for any Warrant shall
be equal to $ per share. The Exercise Price is subject to adjustment upon
the occurrence of certain events set forth in the
Warrant Agreement.
No warrant may be exercised after 5:00 p.m., New York City time, on
, 20 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 AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
LORAL SPACE & COMMUNICATIONS, LTD.
By:
--------------------------------------
[Name]
President
Countersigned:
Dated: , 20
THE BANK OF NEW YORK,
as Warrant Agent
By:
----------------------------------
Authorized Signatory
A-2
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring , entitling the holder on
exercise to receive shares of Common Stock, par value $0.01 per share, of the
Company (the "COMMON STOCK"), and are issued or to be issued pursuant to a
Warrant Agreement dated as of (the "WARRANT AGREEMENT"), duly executed
and delivered by the Company to The Bank of New York, a New York banking
corporation, 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.
Warrants may be exercised at any time on or before 5:00 p.m., New York City
time, on , . 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 as specified in the Warrant
Agreement at the principal corporate trust 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 number of Warrant Shares set forth on the face hereof may, 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 Company will pay the cash value
thereof determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the principal corporate trust
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 Certificates 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.
A-3
