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WARRANT AGREEMENT
between
HEALTHSOUTH CORPORATION
and
XXXXX FARGO BANK NORTHWEST, N.A.,
as Warrant Agent
Dated as of January 16, 2004
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TABLE OF CONTENTS
Page
Article 1 CERTAIN DEFINITIONS............................................1
Article 2 ORIGINAL ISSUE OF WARRANTS.....................................5
Section 2.1 Form of Warrant Certificates.........................5
Section 2.2 Restrictive Legends..................................5
Section 2.3 Execution and Delivery of Warrant Certificates.......7
Article 3 EXERCISE PRICE, EXERCISE AND REPURCHASE OF WARRANTS............7
Section 3.1 Exercise Price.......................................7
Section 3.2 Exercise; Restrictions on Exercise...................8
Section 3.3 Method of Exercise; Payment of Exercise Price........8
Section 3.4 Repurchase Offers....................................9
Article 4 ADJUSTMENTS...................................................13
Section 4.1 Adjustments.........................................13
Section 4.2 Notice of Adjustment................................22
Section 4.3 Statement on Warrants...............................23
Section 4.4 Notice of Consolidation, Merger, Etc................23
Section 4.5 Fractional Interests................................23
Section 4.6 When Issuance or Payment May Be Deferred............23
Section 4.7 No Dilution or Impairment...........................24
Article 5 LOSS OR MUTILATION............................................24
Article 6 RESERVATION AND AUTHORIZATION OF COMMON SHARES................25
Article 7 WARRANT TRANSFER BOOKS; RESTRICTIONS ON TRANSFER..............25
Section 7.1 Transfer and Exchange...............................25
Section 7.2 Special Transfer Provisions.........................26
Section 7.3 Surrender of Warrant Certificates...................27
Article 8 WARRANT HOLDERS...............................................27
Section 8.1 Warrant Holder Deemed Not a Stockholder.............27
Section 8.2 Right of Action.....................................28
Article 9 REMEDIES......................................................28
Section 9.1 Defaults............................................28
Section 9.2 Payment Obligations.................................28
Section 9.3 Remedies; No Waiver.................................28
Article 10 THE WARRANT AGENT.............................................29
Section 10.1 Duties and Liabilities..............................29
Section 10.2 Right to Consult Counsel............................30
Section 10.3 Compensation; Indemnification.......................31
Section 10.4 No Restrictions on Actions..........................31
Section 10.5 Discharge or Removal; Replacement Warrant Agent.....31
Section 10.6 Successor Warrant Agent.............................32
Article 11 MISCELLANEOUS.................................................32
Section 11.1 Monies Deposited with the Warrant Agent.............32
Section 11.2 Payment of Taxes....................................33
Section 11.3 No Merger, Consolidation or Sale of Assets of
the Company.........................................33
Section 11.4 Reports to Holders...................................33
Section 11.5 Notices; Payment.....................................34
Section 11.6 Binding Effect.......................................34
Section 11.7 Counterparts.........................................35
Section 11.8 Amendments...........................................35
Section 11.9 Headings.............................................35
Section 11.10 Common Shares Legend.................................35
Section 11.11 Third Party Beneficiaries............................37
Section 11.12 Termination..........................................37
Section 11.13 Governing Law........................................37
FORM OF REVERSE OF WARRANT CERTIFICATE SUBSCRIPTION FORM....................A-6
FORM OF CERTIFICATE FOR REPURCHASE OFFER....................................A-8
FORM OF ASSIGNMENT..........................................................A-9
Form of Certificate to be Delivered in Connection with Transfers
Pursuant to Regulation S....................................................B-1
Form of Certificate to be Delivered by Transferor in Connection with
Transfers to Institutional Accredited Investors...........................C-1-1
Form of Certificate to be Delivered By Transferees in Connection with
Transfers to Institutional Accredited Investors---------------------------C-2-1
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of January 16, 2004 (this "Agreement"),
between HEALTHSOUTH CORPORATION, a Delaware corporation (together with its
successors, the "Company"), and Xxxxx Fargo Bank Northwest, N.A. (the "Warrant
Agent").
W I T N E S S E T H:
WHEREAS, the Company has agreed to issue to the lenders, or their
designees, under that certain Credit Agreement dated January 16, 2004 (the
"Credit Agreement"), among the Company, Credit Suisse First Boston, as
Administrative Agent, Syndication Agent and Arranger ("CSFB"), and the lenders
named therein, an aggregate of 10,000,000 warrants (each, a "Warrant" and
collectively, the "Warrants"), each Warrant initially entitling the holder
thereof to purchase one (1) share of Common Stock (as defined below) of the
Company at an exercise price of $6.50 per Common Share (as defined below),
concurrently with the funding of the Loans (as defined in the Credit
Agreement); and
WHEREAS, the Company desires to engage the Warrant Agent to act on
the Company's behalf, and the Warrant Agent desires to act on behalf of the
Company, in connection with the issuance of the Warrant Certificates (as
defined below) and the other matters as provided herein, including, without
limitation, for the purpose of defining the terms and provisions of the
Warrants and the respective rights and obligations thereunder of the Company
and the record holders thereof (together with the holders of shares of Common
Stock (or other securities) received upon exercise thereof, the "Holders");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements contained herein, the Company and the Warrant Agent hereby agree as
follows:
Article 1
CERTAIN DEFINITIONS
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Auditors" means, at any time, the independent auditors of the
Company at such time.
"Board" means the board of directors of the Company or any duly
authorized committee thereof.
"Business Day" means a day except a Saturday, Sunday or other day on
which commercial banks in The City of New York, or in the city of the
principal corporate trust office of the Warrant Agent, are authorized by law
to close.
"Cashless Exercise" has the meaning specified in Section 3.3 hereof.
"Certificate for Surrender" means the form on the reverse side of the
Warrant Certificates substantially in the form of Exhibit B hereto.
"Closing Date" means the date hereof.
"Commission" means the United States Securities and Exchange
Commission.
"Common Shares" means the shares of the Common Stock of the Company.
"Common Stock" means the Common Stock, par value $0.01 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" has the meaning specified in the preamble to this
Agreement.
"Credit Agreement" has the meaning specified in the preamble to this
Agreement.
"Current Market Value" has the meaning specified in Section 4.1(f)
hereof.
"Default" has the meaning specified in Section 9.1 hereof.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Exercise Price" has the meaning specified in Section 3.1 hereof.
"Expiration Date" means January 16, 2014.
"Fair Value Report" has the meaning specified in Section 3.4(d)
hereof.
"Final Surrender Time" has the meaning specified in Section 3.4(b)
hereof.
"Financial Expert" means any investment banking firm reasonably
agreed to by the Company and the Requisite Holders (as defined in the Warrant
Registration Rights Agreement).
"Holders" has the meaning specified in the recitals to this
Agreement.
"Independent Financial Expert" means a Financial Expert that does not
(and, to the knowledge of the Company after due inquiry, whose directors,
executive officers and 5% stockholders do not) have a direct or indirect
financial interest in the Company or any of its subsidiaries or Affiliates,
which has not been for at least five years and, at the time that it is called
upon to give independent financial advice to the Company, is not (and, to the
knowledge of the Company after due inquiry, none of its directors, executive
officers or 5% stockholders is) a promoter, director or officer of the Company
or any of its subsidiaries or Affiliates.
"Institutional Accredited Investor" shall mean an institution that is
an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) of Regulation D under the Securities Act.
"Notice Date" has the meaning specified in Section 3.4(b) hereof.
"Offer Notice" has the meaning specified in Section 3.4(f) hereof.
"Officer" means, with respect to the Company, the Chairman of the
Board, any Vice Chairman of the Board, the Chief Executive Officer, the
President, or any Vice President, the Treasurer or any Assistant Treasurer,
the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed by an Officer.
"Opinion of Counsel" means a written opinion signed by legal counsel
reasonably acceptable to the Warrant Agent who may be an employee of or
counsel to the Company.
"Person" means any individual, limited liability company,
corporation, partnership, joint venture, incorporated or unincorporated
association, joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof or other entity of
any kind.
"Private Placement Legend" means the legend set forth on the Warrant
Certificates in the form set forth in Section 2.2 hereof.
"Reference Security" has the meaning specified in Section 4.1(l)
hereof.
"Relevant Value" has the meaning specified in Section 3.4(d) hereof.
"Repurchase Event" means, and shall be deemed to occur on, any date
when (i) the Company consolidates with or merges into or with another person
(but only where the holders of Common Stock receive consideration in exchange
for all or part of such Common Stock), if the Common Stock (or other
securities) thereafter issuable upon exercise of the Warrants is not
registered under the Exchange Act or (ii) the Company sells all or
substantially all of its assets to another person, if the Common Stock (or
other securities) thereafter issuable upon exercise of the Warrants is not
registered under the Exchange Act, provided that, in the case of this clause
(ii), a "Repurchase Event" shall not be deemed to have occurred if the
consideration for such transaction consists solely of cash, or (iii) the
Company or any subsidiary of the Company purchases Common Shares pursuant to a
tender offer or an exchange offer under Section 13 or 14 of the Exchange Act
for a price per Common Share that is greater than the then Current Market
Value per Common Share in effect at the end of the trading day immediately
following the day on which such tender offer or exchange offer expires.
"Repurchase Notice" has the meaning specified in Section 3.4(a)
hereof.
"Repurchase Obligation" has the meaning specified in Section 9.2
hereof.
"Repurchase Offer" means the Company's offer to repurchase the
Warrants in accordance with Section 3.4 hereof.
"Repurchase Price" has the meaning specified in Section 3.4(d)
hereof.
"Right" has the meaning specified in Section 4.1(c) hereof.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Securities Offering" means a bona fide public offering or private
placement (to five or more investors) pursuant to Section 4(2) of the
Securities Act, Regulation D thereunder or Regulation S thereunder, made
through at least one investment bank of national standing.
"Spread" means, with respect to any Warrant, the Current Market Value
of the Common Shares subject to such Warrant, less the Exercise Price of such
Warrant, in each case as adjusted as provided herein.
"Subscription Form" means the form on the reverse side of the Warrant
Certificates substantially in the form of Exhibit A hereto.
"Underlying Securities" shall mean the Common Shares (or other
securities) issuable upon exercise of the Warrants.
"Valuation Date" means the date five Business Days prior to the
Notice Date.
"Value Certificate" has the meaning specified in Section 3.4(d)
hereof.
"Value Report" has the meaning specified in Section 4.1(k) hereof.
"Warrant" has the meaning specified in the recitals to this
Agreement.
"Warrant Agent" has the meaning specified in the preamble to this
Agreement until a successor Warrant Agent replaces it in accordance with the
provisions of Section 10.5 and thereafter means such successor.
"Warrant Certificates" has the meaning specified in Section 2.1
hereof.
"Warrant Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof, between the Company and the holders party
thereto.
Article 2
ORIGINAL ISSUE OF WARRANTS
Section 2.1. Form of Warrant Certificates. Certificates representing
the Warrants (the "Warrant Certificates") shall be substantially in the form
attached hereto as Exhibit A, shall be dated the date on which such Warrant
Certificates are countersigned by the Warrant Agent and shall have such
insertions as are appropriate or required or permitted by this Agreement and
may have such letters, numbers or other marks of identification and such
legends and endorsements stamped, printed, lithographed or engraved thereon as
the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation pursuant thereto or with any rule or regulation of
any securities exchange on which the Warrants may be listed, or to conform to
usage.
Warrants shall be issued initially in registered form substantially
in the form set forth in Exhibit A. The definitive Warrant Certificates shall
be typed, printed, lithographed or engraved or produced by any combination of
these methods or may be produced in any other manner permitted by the rules of
any securities exchange on which the Warrants may be listed, all as determined
by the Officers executing such Warrant Certificates, as evidenced by their
execution of such Warrant Certificates.
Section 2.2. Restrictive Legends. The Warrant Certificates shall,
subject to Section 7.2(c) hereof, bear substantially the following legend on
the face thereof:
THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (B)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THE WARRANTS
REPRESENTED BY THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR (C)
IT IS A PERSON OTHERWISE ELIGIBLE TO ACQUIRE THE WARRANTS IN
A TRANSACTION CONSUMMATED IN ACCORDANCE WITH RULE 144 UNDER
THE SECURITIES ACT, IF AVAILABLE, (2) AGREES THAT IT WILL
NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k)
UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH
TRANSFER, RESELL OR OTHERWISE TRANSFER THE WARRANTS
REPRESENTED BY THIS CERTIFICATE EXCEPT (A) TO HEALTHSOUTH
CORPORATION (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) TO
AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE WARRANT AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THE WARRANTS REPRESENTED BY
THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE WARRANT AGENT), (C) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT SUBJECT TO ANY CERTIFICATION AND DELIVERY
REQUIREMENTS CONTAINED IN THE WARRANT AGREEMENT GOVERNING THE
WARRANTS, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE WARRANTS REPRESENTED BY THIS
CERTIFICATE ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE
WARRANTS REPRESENTED BY THIS CERTIFICATE WITHIN THE TIME
PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE WARRANT AGENT. IF THE PROPOSED TRANSFER IS PURSUANT TO
CLAUSE (B) OF THE PRECEDING SENTENCE, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO EACH OF THE WARRANT AGENT AND
THE COMPANY SUCH CERTIFICATIONS OR OTHER INFORMATION AS
EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A
PROVISION REQUIRING THE WARRANT AGENT TO REFUSE TO REGISTER
ANY TRANSFER OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
Section 2.3. Execution and Delivery of Warrant Certificates. Warrant
Certificates evidencing 10,000,000 Warrants, each Warrant to purchase
initially one (1) Common Share, may be executed, on or after the date of this
Agreement, by the Company and delivered to the Warrant Agent for
countersignature, and the Warrant Agent shall thereupon countersign and
deliver such Warrant Certificates upon the order and at the written direction
of the Company signed by any duly authorized Officer to the purchasers thereof
on the date of issuance. The Warrant Agent is hereby authorized to countersign
and deliver Warrant Certificates as required by this Section 2.3 or by Section
3.3, Article 5 or Article 7 hereof.
The Warrant Certificates shall be executed on behalf of the Company
by any duly authorized Officer of the Company either manually or by facsimile
signature printed thereon. The Warrant Certificates shall be countersigned by
manual signature of the Warrant Agent and shall not be valid for any purpose
unless so countersigned.
In case any Officer of the Company whose signature shall have been
placed upon any of the Warrant Certificates shall cease to be such Officer of
the Company before countersignature by the Warrant Agent and the issuance and
delivery thereof, such Warrant Certificates may nevertheless be countersigned
by the Warrant Agent and issued and delivered with the same force and effect
as though such person had not ceased to be such Officer of the Company.
Article 3
EXERCISE PRICE, EXERCISE AND REPURCHASE OF WARRANTS
Section 3.1. Exercise Price. Each Warrant Certificate shall, when
countersigned by the Warrant Agent, initially entitle the Holder thereof,
subject to the provisions of this Agreement, to purchase the number of Common
Shares indicated thereon at a purchase price of $6.50 per Common Share,
subject to adjustment as provided in Section 4.1 hereof (the "Exercise
Price").
Section 3.2. Exercise; Restrictions on Exercise. At any time after
the Closing Date and on or before the Expiration Date, any outstanding
Warrants may be exercised on any Business Day; provided, however, that no such
exercise may be effected unless (a) for those Holders who may exercise
warrants pursuant to a registration statement, a registration statement with
the Commission relating to the Common Shares for which such Warrants are being
exercised is, at the time of exercise, in effect or (b) the exercise of such
Warrants is exempt from the registration requirements of the Securities Act.
In the case of clause (b) above, (i) Holders exercising such Warrants pursuant
to Regulation S under the Securities Act shall be required to (A) exercise
such Warrants outside the United States and (B) deliver either (1) written
certification that it is not a "U.S. Person" (as defined in Rule 902 under the
Securities Act) and the warrant is not being exercised on behalf of a U.S.
Person or (2) an Opinion of Counsel to the effect that the Warrant and the
Underlying Securities have been registered under the Securities Act or are
exempt from registration thereunder and (ii) all other exercising Holders
shall deliver such certifications, acknowledgements and undertakings as the
Company or the Warrant Agent may reasonably request and, if the Company or the
Warrant Agent reasonably require, an Opinion of Counsel with respect to such
exemption. Any Warrants not exercised by 5:00 p.m., New York City time, on the
Expiration Date shall expire and all rights of the Holders of such Warrants
shall terminate. Additionally, the Warrants shall expire and all rights of the
Holders of such Warrants shall terminate as, when and to the extent provided
in Section 4.1(j)(ii) hereof, if the Company merges or consolidates with, or
sells all or substantially all of its property and assets to, another Person
(other than an Affiliate of the Company) and the consideration is payable to
holders of Common Stock in exchange for their Common Stock in connection with
such merger, consolidation or sale consists solely of cash or in the event of
the dissolution, liquidation or winding up of the Company.
Section 3.3. Method of Exercise; Payment of Exercise Price. In order
to exercise all or any of the Warrants represented by a Warrant Certificate,
the Holder thereof must surrender for exercise the Warrant Certificate to the
Warrant Agent at its corporate trust office address set forth in Section 11.5
hereof, with the Subscription Form duly executed, together with payment in
full of the Exercise Price then in effect for each share of Underlying
Securities issuable upon exercise of the Warrants as to which a Warrant is
exercised; such payment may be made in cash or by certified or official bank
or bank cashier's check payable to the order of the Company and shall be made
to the Warrant Agent at its corporate trust office address set forth in
Section 11.5 hereof prior to the close of business on the date the Warrant
Certificate is surrendered to the Warrant Agent for exercise. Notwithstanding
the foregoing, the Exercise Price may be paid by surrendering additional
Warrants to the Warrant Agent having an aggregate Spread equal to the
aggregate Exercise Price of the Warrants being exercised (a "Cashless
Exercise"). All payments received upon exercise of Warrants shall be delivered
to the Company by the Warrant Agent as instructed in writing by the Company.
If less than all the Warrants represented by a Warrant Certificate are
exercised (or surrendered in connection with a Cashless Exercise), such
Warrant Certificate shall be surrendered and a new Warrant Certificate of the
same tenor and for the number of Warrants which were not exercised or
surrendered shall be executed by the Company and delivered to the Warrant
Agent and the Warrant Agent shall countersign the new Warrant Certificate,
registered in such name or names as may be directed in writing by the Holder,
and shall deliver the new Warrant Certificate to the Person or Persons
entitled to receive the same. Upon the exercise of any Warrants following the
surrender of a Warrant Certificate in conformity with the foregoing
provisions, the Warrant Agent shall instruct the Company to transfer promptly
to the Holder or, upon the written order of the Holder of such Warrant
Certificate, appropriate evidence of ownership of any Common Shares or other
security or property to which it is entitled, registered or otherwise placed
in such name or names as may be directed in writing by the Holder, and to
deliver such evidence of ownership to the Person or Persons entitled to
receive the same and fractional shares, if any, or an amount in cash, in lieu
of any fractional shares, as provided in Section 4.5 hereof; provided,
however, that the Holder of such Warrant shall be responsible for the payment
of any transfer taxes required as the result of any change in ownership of
such Warrants or the issuance of such shares of Underlying Securities other
than to the Holder of such Warrants and any such transfer shall comply with
applicable law. Upon the exercise of a Warrant or Warrants, the Company shall
promptly enter, or cause any transfer agent of the Common Shares to enter, the
name of the person entitled to receive the Common Shares upon the exercise of
such Warrants into the Company's register of shareholders, and issue
certificates (bearing the legend set forth in Section 11.10 hereof, if
applicable, unless a registration statement with the Commission relating to
such Common Shares shall then be in effect or the Company and the Holder
exercising such Warrant or Warrants otherwise agree) for the number of shares
of Underlying Securities to which said Holder may be entitled, and deliver
such certificate to the Warrant Agent who in turn shall deliver it to the
Person entitled to receive the shares of Underlying Securities. Upon such
exercise, the Warrant Agent is hereby authorized and instructed to request
from any such transfer agent (and all such transfer agents are hereby
irrevocably authorized to comply with all such requests) such certificates. A
Warrant shall be deemed to have been exercised immediately prior to the close
of business on the date of the surrender for exercise, as provided above, of
the Warrant Certificate representing such Warrant and, for all purposes under
this Agreement, the Person entitled to receive the shares of Underlying
Securities upon such exercise shall, as between such Person and the Company,
be deemed to be the Holder of such shares of Underlying Securities of record
as of the close of business on such date and shall be entitled to receive, and
the Warrant Agent shall make available for delivery to such Person, any shares
of Underlying Securities to which such Person would have been entitled had
such Person been the registered holder on such date.
Section 3.4. Repurchase Offers.
(a) Notice of Repurchase Event. Within two Business Days following
the occurrence of a Repurchase Event, the Company shall give notice (a
"Repurchase Notice") to the Holders of the Warrants and the Warrant Agent that
such event has occurred.
(b) Repurchase Offers Generally. Following the occurrence of any
Repurchase Event, the Company shall offer to repurchase for cash or, in the
case of a Repurchase Event that is an exchange offer, at the option of the
Holders for cash or for the relevant exchange securities, all outstanding
Warrants pursuant to the provisions of this Section 3.4 (a "Repurchase
Offer"). The Company shall give notice of a Repurchase Offer in accordance
with Section 3.4(f) hereof. Each date on which the Company gives any such
notice is referred to as the "Notice Date." Subject to Section 3.4(h) hereof,
the Repurchase Offer shall commence on the Notice Date for such Repurchase
Offer and shall expire at 5:00 p.m., New York City time, on a date determined
by the Company (the "Final Surrender Time") that is at least 30 but not more
than 45 days after the Notice Date.
(c) Repurchase Offers.
(i) In any Repurchase Offer, the Company shall offer to purchase
for cash or, in the case of a Repurchase Event that is an exchange
offer, at the option of the Holders for cash or for the relevant
exchange securities, at the Repurchase Price all Warrants outstanding
on the Notice Date for such Repurchase Offer that are properly
tendered to the Warrant Agent on or prior to the Final Surrender Time
for such Repurchase Offer.
(ii) Each Holder may, but shall not be obligated to, accept such
Repurchase Offer by tendering to the Warrant Agent, on or prior to
the Final Surrender Time for such Repurchase Offer, the Warrant
Certificates evidencing the Warrants such Holder desires to have
repurchased in such offer, together with a completed Certificate for
Surrender. A Holder may withdraw all or a portion of the Warrants
tendered to the Warrant Agent at any time prior to the Final
Surrender Time for such Repurchase Offer. If less than all the
Warrants represented by a Warrant Certificate shall be tendered, such
Warrant Certificate shall be surrendered and a new Warrant
Certificate of the same tenor and for the number of Warrants not
tendered shall be executed by the Company and delivered to the
Warrant Agent and the Warrant Agent shall countersign the new Warrant
Certificate, registered in such name or names as may be directed in
writing by the Holder, and shall make available for delivery the new
Warrant Certificate to the Person or Persons entitled to receive the
same; provided, however, that the Holder of such Warrants shall be
responsible for the payment of any transfer taxes required as the
result of any change in ownership of such Warrants and any such
transfer shall comply with applicable law.
(d) Repurchase Price.
(i) The purchase price (the "Repurchase Price") for each Warrant
properly tendered to the Warrant Agent pursuant to a Repurchase Offer
shall, except in the case of a Repurchase Event within the meaning of
clause (iii) of the definition thereof, be equal to the value (the
"Relevant Value") on the Valuation Date of the Common Shares
issuable, and other securities or property of the Company which would
have been delivered, upon exercise of Warrants had the Warrants been
exercised (regardless of whether the Warrants are then exercisable),
less the Exercise Price in effect on the Notice Date for such
Repurchase Offer.
(ii) The Relevant Value of the Common Shares and other
securities or property issuable upon exercise of all the Warrants, on
any Valuation Date shall be:
(1) (A) If the Common Shares (or other securities) are
registered under the Exchange Act, deemed to be the average of
the daily market prices (on the stock exchange that is the
primary trading market for the Common Shares (or other
securities)) of the Common Shares (or other securities) for the
20 consecutive trading days immediately preceding such Valuation
Date or, (B) if the Common Shares (or other securities) have
been registered under the Exchange Act for less than 20
consecutive trading days before such date, then the average of
the daily market prices for all of the trading days before such
date for which daily market prices are available, in the case of
each of (A) and (B), as certified to the Warrant Agent by the
President, any Vice President or the Chief Financial Officer of
the Company (the "Value Certificate"). The market price for each
such trading day shall be: (A) in the case of a security listed
or admitted to trading on any national securities exchange, the
closing sales price on such day, or if no sale takes place on
such day, the average of the closing bid and asked prices on
such day, (B) in the case of a security not then listed or
admitted to trading on any national securities exchange, the
last reported sale price on such day, or if no sale takes place
on such day, the average of the closing bid and asked prices on
such day, as reported by a reputable quotation source designated
by the Company, (C) in the case of a security not then listed or
admitted to trading on any national securities exchange and as
to which no such reported sale price or bid and asked prices are
available, the average of the reported high bid and low asked
prices on such day, as reported by a reputable quotation
service, or a newspaper of general circulation in the Borough of
Manhattan, City and State of New York customarily published on
each Business Day, designated by the Company, or, if there shall
be no bid and asked prices on such day, the average of the high
bid and low asked prices, as so reported, on the most recent day
(not more than 30 days prior to the date in question) for which
prices have been so reported and (D) if there are no bid and
asked prices reported during the 30 days prior to the date in
question, the Relevant Value shall be determined as if the
Common Shares (or other securities) were not registered under
the Exchange Act; or
(2) If the Common Shares (or other securities) are not
registered under the Exchange Act or if the value cannot be
computed under clause (1) above, deemed to be equal to the value
set forth in the Fair Value Report (as defined below) as
determined by an Independent Financial Expert, which shall be
selected by the Board in accordance with Section 3.4(e) hereof,
and retained on customary terms and conditions, using one or
more valuation methods that the Independent Financial Expert, in
its best professional judgment, determines to be most
appropriate but without giving effect to any discount for lack
of liquidity, the fact that the Company has no class of equity
securities registered under the Exchange Act or the fact that
the Common Shares and other securities or property issuable upon
exercise of the Warrants represent a minority interest in the
Company. The Company shall cause the Independent Financial
Expert to deliver to the Company, with a copy to the Warrant
Agent, within 45 days of the appointment of the Independent
Financial Expert in accordance with Section 3.4(e) hereof, a
value report (the "Fair Value Report") stating the Relevant
Value of the Common Shares and other securities or property of
the Company, if any, being valued as of the Valuation Date and
containing a brief statement as to the nature and scope of the
methodologies upon which the determination of Relevant Value was
made. The Warrant Agent shall have no duty with respect to the
Fair Value Report of any Independent Financial Expert, except to
keep it on file and available for inspection by the Holders. The
determination as to Relevant Value in accordance with the
provisions of this Section 3.4(d) shall be conclusive on all
Persons. The Independent Financial Expert shall consult with
management of the Company in order to allow management to
comment on the proposed Relevant Value prior to delivery to the
Company of any Fair Value Report of the Independent Financial
Expert.
(iii) The Repurchase Price for each Warrant properly tendered to
the Warrant Agent pursuant to a Repurchase Offer with respect to a
Repurchase Event within the meaning of clause (iii) of the definition
thereof shall be equal to the price that would have been paid for the
Common Shares represented by such Warrant had such Warrant been
exercised and such Common Shares tendered or exchanged in the
relevant tender offer or exchange offer.
(e) Selection of Independent Financial Expert. If clause (d)(ii)(2)
of this Section 3.4 is applicable, the Board shall select an Independent
Financial Expert not more than two Business Days following a Repurchase Event.
Within four Business Days following a Repurchase Event, the Company shall
deliver to the Warrant Agent a notice setting forth the name of the
Independent Financial Expert.
(f) Notice of Repurchase Offer. Each notice of a Repurchase Offer (an
"Offer Notice") given by the Company pursuant to Section 3.4(b) shall be given
by the Company directly to all Holders of the Warrants, with a copy to the
Warrant Agent, shall be given simultaneously with the Repurchase Notice (or,
in the event that Section 3.4(d)(ii) is applicable and the Relevant Value of
the Common Shares or other securities or property issuable upon exercise of
all the Warrants cannot be determined pursuant to Section 3.4(d)(ii)(1), then
such Offer Notice shall be given within two Business Days after the Company
receives the Value Report with respect to such offer) and shall specify (A)
the Final Surrender Time for such Repurchase Offer, (B) the manner in which
Warrants may be surrendered to the Warrant Agent for repurchase by the
Company, (C) the Repurchase Price at which the Warrants will be repurchased by
the Company, (D) if applicable, the name of the Independent Financial Expert
whose valuation of the Common Shares and other securities or property was
utilized in connection with determining such Repurchase Price and (E) that
payment of the Repurchase Price will be made by the Warrant Agent. Each such
notice shall be accompanied by a Certificate for Surrender for the Repurchase
Offer in substantially the form attached to the Warrant Certificate and a copy
of the Fair Value Report, if any.
(g) Payment for Warrants. Upon surrender for repurchase of any
Warrants in conformity with the provisions of this Section 3.4, the Warrant
Agent shall thereupon promptly notify the Company of such surrender. On or
before the Final Surrender Time for any Repurchase Offer, the Company shall
deposit with the Warrant Agent funds sufficient to make payment for the
Warrants tendered to the Warrant Agent and not withdrawn. After receipt of
such deposit from the Company, the Warrant Agent shall make payment, by
delivering a check, by providing for same-day funds settlement or any other
customary payment means, in such amount as is appropriate, to such Person or
Persons as it may be directed in writing by the Holder surrendering such
Warrants, net of any transfer taxes required to be paid in the event that the
payment is to be made to a Person other than the Holder.
(h) Compliance with Laws. Notwithstanding anything contained in this
Section 3.4, if the Company is required to comply with laws, rules,
regulations and securities exchange or clearing procedures, in connection with
making any Repurchase Offer, such laws, rules, regulations and procedures
shall govern the making of such Repurchase Offer.
Article 4
ADJUSTMENTS
Section 4.1 Adjustments. The Exercise Price and the number of Common
Shares issuable upon exercise of each Warrant shall be subject to adjustment
from time to time as follows:
(a) Divisions; Consolidations; Reclassifications. In case the Company
shall, on or before the Expiration Date, (i) issue any Common Shares in
payment of a dividend or other distribution with respect to its Common Stock
or other shares of capital stock, (ii) subdivide its issued and outstanding
Common Shares, (iii) consolidate its issued and outstanding Common Shares into
a smaller number of shares, or (iv) reclassify or convert the Common Shares
(other than a reclassification in connection with a merger, consolidation or
other business combination governed by Section 4.1(j)), then the number of
Common Shares purchasable upon exercise of each Warrant immediately prior to
the record date for such issue or distribution or the effective date of such
subdivision, consolidation, reclassification or conversion shall be adjusted
so that the Holder of each Warrant shall thereafter be entitled to receive the
kind and number of Common Shares which such Holder would have been entitled to
receive after the happening of any of the events described above had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this Section
4.1(a) shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
(b) Rights; Options; Warrants. In case the Company shall issue
rights, options, warrants or convertible or exchangeable securities (other
than an issuance of convertible or exchangeable securities subject to Section
4.1(a)) to all holders of its Common Shares, entitling them to subscribe for
or purchase Common Shares at a price per share which is lower (at the record
date for such issuance) than the then Current Market Value per Common Share,
then the Company shall ensure that at the time of such issuance, the same or a
like offer or invitation is made to the Holders of the Warrants as if their
Warrants had been exercised on the day immediately preceding the record date
of such offer or invitation on the terms (subject to any adjustment pursuant
to Section 4.1(a) for a prior event) on which such Warrants could have been
exercised on such date; provided , however, that if the Board so resolves, the
Company shall not be required to ensure that the same offer or invitation is
made to the Holders of the Warrants, but the number of Common Shares
thereafter purchasable upon the exercise of each Warrant shall instead be
adjusted and shall be determined by multiplying the number of Common Shares
theretofore purchasable upon exercise of each Warrant by a fraction, the
numerator of which shall be the sum of (i) the number of Common Shares
outstanding immediately prior to the issuance of such rights, options,
warrants or convertible or exchangeable securities plus (ii) the number of
additional Common Shares which may be purchased or subscribed for upon
exercise, exchange or conversion of such rights, options, warrants or
convertible or exchangeable securities and the denominator of which shall be
the sum of (x) the number of Common Shares outstanding immediately prior to
the issuance of such rights, options, warrants or convertible or exchangeable
securities plus (y) the number of shares which the total consideration
received by the Company for such rights, options, warrants or convertible or
exchangeable securities so offered would purchase at the then Current Market
Value per Common Share.
In the event that the Company decreases the purchase price per share
of any outstanding rights, options, warrants or convertible or exchangeable
securities (other than under or as a result of provisions designed to protect
against dilution of the type set forth in this Article 4), then the number of
Common Shares thereafter issuable upon exercise of each Warrant shall be
determined by multiplying the number of Common Shares theretofore issuable
upon exercise of each Warrant by a fraction, the numerator of which shall be
the number of outstanding Common Shares plus the number of Common Shares which
may thereafter be purchased or subscribed for upon exercise, exchange or
conversion of such rights, options, warrants or convertible or exchangeable
securities and the denominator of which shall be (x) the number of outstanding
Common Shares plus (y) the number of Common Shares which the aggregate
decreased purchase price would have purchased at the then Current Market Value
per Common Share.
In the event that the Company increases the number of Common Shares
which may be purchased or subscribed for upon exercise, exchange or conversion
of any outstanding rights, options, warrants or convertible or exchangeable
securities (other than under or as a result of provisions designed to protect
against dilution of the type set forth in this Article 4), then the number of
Common Shares thereafter issuable upon exercise of each Warrant shall be
determined by multiplying the number of Common Shares theretofore issuable
upon exercise of each Warrant by a fraction, the numerator of which shall be
the number of outstanding Common Shares plus the number of Common Shares which
may thereafter be purchase or subscribed for upon exercise, exchange or
conversion of such rights, option, warrants or convertible or exchangeable
securities and the denominator of which shall be (x) the number of outstanding
Common Shares plus (y) the number of Common Shares which theretofore could
have been purchase or subscribed fro upon exercise, exchange or conversion of
such rights, options, warrants or convertible or exchangeable securities.
Except as otherwise provided above or in Section 4.1(m), such
adjustment shall be made whenever such rights, options, warrants or
convertible or exchangeable securities are issued, or the date of any such
decrease in purchase price or such increase in underlying Common Shares, and
shall become effective retroactively immediately after the record date for the
determination of stockholders entitled to receive such rights, options,
warrants or convertible or exchangeable securities or to such decrease or
increase.
(c) Issuance of Common Shares at Lower Values. In case the Company
shall sell and issue any Common Share or Right (as defined below) (excluding
(i) any Right issued in any of the transactions described in Section 4.1(a) or
(b) above and (ii) Common Shares issued pursuant to the Warrants or any Right
issued in any transaction described in Section 4.1(a) or (b) above and (iii)
Common Shares or Rights issued as consideration when any corporation or
business is acquired, merged into or becomes part of the Company or a
subsidiary of the Company in an arm's-length transaction between the Company
and a Person other than an Affiliate of the Company) at a price per Common
Share (determined in the case of any such Right, by dividing (x) the total
consideration receivable by the Company in consideration of the sale and
issuance of such Right, plus the total consideration payable to the Company
upon exercise, conversion or exchange thereof, by (y) the total number of
Common Shares covered by such Right) that is lower than the Current Market
Value per Common Share in effect immediately prior to the date of such sale or
issuance (or, in the case of a Securities Offering of Common Shares or Rights,
the date not more than five business days prior to the date of such sale or
issuance on which the Company fixes the price therefor) then the number of
Common Shares thereafter purchasable upon the exercise of each Warrant shall
be determined by multiplying the number of Common Shares theretofore
purchasable upon exercise of such Warrant by a fraction, the numerator of
which shall be the number of Common Shares outstanding immediately after such
sale or issuance and the denominator of which shall be the number of Common
Shares outstanding immediately prior to such sale or issuance plus the number
of Common Shares which the aggregate consideration received (determined as
provided below) for such sale or issuance would purchase at such Current
Market Value per Common Share. For purposes of this Section 4.1(c), the Common
Shares which the holder of any such Right shall be entitled to subscribe for
or purchase shall be deemed to be issued and outstanding as of the date of
sale and issuance of such Right and the consideration received by the Company
therefor shall be deemed to be the consideration received by the Company for
such Right, plus the consideration or premiums stated in such Right to be paid
for the Common Shares covered thereby. In case the Company shall sell and
issue any Right together with one or more other securities as part of a unit
at a price per unit, then in determining the "price per Common Share" and the
"consideration received by the Company" for purposes of the first sentence of
this Section 4.1(c), the Board shall determine, in good faith, the fair value
of the Right then being sold as part of such unit. For purposes of this
paragraph, a "Right" shall mean any right, option, warrant or convertible or
exchangeable security containing the Right to subscribe for or acquire one or
more Common Shares, excluding the Warrants.
(d) Distributions of Debt, Assets, Subscription Rights or Convertible
Securities. In case the Company shall make a distribution to holders of its
Common Shares of (i) evidences of its indebtedness, or assets, or other
dividends or distributions, or (ii) any options, warrants or other rights to
subscribe for or purchase any of the foregoing (excluding (1) any issuance of
Common Shares referred to in Section 4.1(a) above, (2) distributions in
connection with the dissolution, liquidation or winding- up of the Company
governed by Section 4.1(j) and (3) distributions of securities referred to in
Section 4.1(a), Section 4.1(b) or Section 4.1(c)), then, in each case, the
number of Common Shares purchasable after the record date for the
determination of stockholders entitled to receive such distribution (or the
date provided for in Section 4.1(m), if applicable) upon the exercise of each
Warrant, shall be determined by multiplying the number of Common Shares
purchasable upon the exercise of such Warrant immediately prior to such date
by a fraction, the numerator of which shall be the Current Market Value per
Common Share immediately prior to such date and the denominator of which shall
be the Current Market Value per Common Share immediately prior to such date
less (a) any cash so distributed per Common Share plus (b) the then fair value
(as determined in good faith by the Board and set forth in a Board resolution
delivered to the Warrant Agent and, upon request, to any Holder) of the
evidences of its indebtedness, or non-cash assets or other non-cash dividends
or distributions, options or subscription or purchase rights so distributed
attributable to one Common Share (notwithstanding the foregoing, if the fair
value in the above formula equals or exceeds the Current Market Value per
Common Share, then the Current Market Value per Common Share shall be equal to
such fair value). Such adjustment shall be made whenever any such distribution
is made, and shall become effective on the date of distribution retroactive to
the record date for the determination of stockholders entitled to receive such
distribution (or the date provided for in Section 4.1(m), if applicable).
(e) Expiration of Rights, Options and Conversion Privileges. Upon the
expiration of any rights, options, warrants or conversion or exchange
privileges (including, without limitation, any Rights) that have previously
resulted in an adjustment hereunder, if any thereof shall not have been
exercised, exchanged or converted, the Exercise Price and the number of Common
Shares issuable upon the exercise of each Warrant shall, upon such expiration,
be readjusted and shall thereafter, upon any future exercise, be such as they
would have been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (i) the only Common
Shares so issued were the Common Shares, if any, actually issued or sold upon
the exercise, exchange or conversion of such rights, options, warrants or
conversion or exchange rights (including, without limitation, any Rights) and
(ii) such Common Shares, if any, were issued or sold for the consideration
actually received by the Company upon such exercise, exchange or conversion
plus the consideration, if any, actually received by the Company for issuance,
sale or grant of all such rights, options, warrants or conversion or exchange
rights (including, without limitation, any Rights) whether or not exercised;
provided, however, that no such readjustment shall (except by reason of an
intervening adjustment under Section 4.1(a)) have the effect of decreasing the
number of Common Shares issuable upon the exercise of each Warrant by an
amount in excess of the amount of the adjustment initially made in respect of
the issuance, sale or grant of such rights, options, warrants or conversion
exchange privileges.
(f) Current Market Value. For the purposes of any computation under
this Article 4, the "Current Market Value" per Common Share or of any other
security (herein collectively referred to as a "security") at any date herein
specified shall be:
(i) if the security is not registered under the Exchange Act,
the value of the security (1) most recently determined as of a date
within the six months preceding such date by an Independent Financial
Expert selected by the Company in accordance with the criteria for
such valuation set out in Section 4.1(k), or (2) if no such
determination shall have been made within such six-month period or if
the Company so chooses, determined as of such a date by an
Independent Financial Expert selected by the Company in accordance
with the criteria for such valuation set out in Section 4.1(k), or
(ii) if the security is registered under the Exchange Act, the
average of the daily market prices of the security for the 20
consecutive trading days immediately preceding such date or, if the
security has been registered under the Exchange Act for less than 20
consecutive trading days before such date, then the average of the
daily market prices for all of the trading days before such date for
which daily market prices are available. The market price for each
such trading day shall be: (A) in the case of a security listed or
admitted to trading on any national securities exchange, the closing
sales price, regular way, on such day, or if no sale takes place on
such day, the average of the closing bid and asked prices on such day
on the principal national securities exchange on which such security
is listed or admitted, as determined by the Board in good faith, (B)
in the case of a security not then listed or admitted to trading on
any national securities exchange, the last reported sale price on
such day, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reputable
quotation source designated by the Company, (C) in the case of a
security not then listed or admitted to trading on any national
securities exchange and as to which no such reported sale price or
bid and asked prices are available, the average of the reported high
bid and low asked prices on such day, as reported by a reputable
quotation service, or a newspaper of general circulation in the
Borough of Manhattan, City and State of New York customarily
published on each Business Day, designated by the Company, or, if
there shall be no bid and asked prices on such day, the average of
the high bid and low asked prices, as so reported, on the most recent
day (not more than 30 days prior to the date in question) for which
prices have been so reported and (D) if there are no bid and asked
prices reported during the 30 days prior to the date in question, the
Current Market Value of the security shall be determined as if the
security were not registered under the Exchange Act.
(g) Consideration Received. For purposes of any computation
respecting consideration received pursuant to this Section 4.1, the following
shall apply:
(i) in the case of the issuance of Common Shares for cash, the
consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Company for any underwriting of the
issue or otherwise in connection therewith;
(ii) in the case of the issuance of Common Shares for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof
as determined in good faith by the Board (irrespective of the
accounting treatment thereof), whose determination shall be
conclusive and described in reasonable detail in a Board resolution
which shall be provided promptly thereafter to the Warrant Agent and
(upon request) to any Holder; and
(iii) in the case of the issuance of rights, options, warrants
or securities convertible into or exchangeable for Common Shares
(including, without limitation, any Rights), the aggregate
consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such
rights, options, warrants or securities convertible into or
exchangeable for Common Shares, plus the additional minimum
consideration, if any, to be received by the Company upon the
exercise, conversion or exchange thereof (the consideration in each
case to be determined in the same manner as provided in clauses (i)
and (ii) of this Section 4.1(g)).
(h) De Minimis Adjustments. No adjustment in the number of Common
Shares purchasable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the number of
Common Shares purchasable upon the exercise of each Warrant; provided,
however, that any adjustments which by reason of this Section 4.1(h) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations shall be made to the nearest
one-ten-billionth of a share.
(i) Adjustment of Exercise Price. Whenever the number of Common
Shares purchasable upon the exercise of each Warrant is adjusted, as
herein provided, the Exercise Price per Common Share payable upon
exercise of such Warrant shall be adjusted (calculated to the nearest
$0.01) so that it shall equal the price determined by multiplying
such Exercise Price immediately prior to such adjustment by a
fraction the numerator of which shall be the number of Common Shares
purchasable upon the exercise of each Warrant immediately prior to
such adjustment and the denominator of which shall be the number of
Common Shares so purchasable immediately thereafter.
If after an adjustment, a Holder of a Warrant upon exercise of it may
receive shares of two or more classes in the capital of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
such classes of shares in a manner that the Board deems fair and equitable to
the Holders. After such allocation, the exercise privilege and the Exercise
Price of each class of shares shall thereafter be subject to adjustment on
terms comparable to those applicable to Common Shares in this Article 4.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(j) Consolidation, Merger, Etc.
(i) Subject to the provisions of Subsection (ii) below of this
Section 4.1(j), in case of the consolidation of the Company with, or
merger of the Company with or into, or of the sale of all or
substantially all of the properties and assets of the Company to, any
Person, and in connection therewith consideration is payable to
holders of Common Shares (or other securities or property purchasable
upon exercise of Warrants) in exchange therefor, the Warrants shall
remain subject to the terms and conditions set forth in this
Agreement and each Warrant shall, after such consolidation, merger or
sale, entitle the Holder to receive upon exercise the number of
shares in the capital or other securities or property (including
cash) of or from the Person resulting from such consolidation or
surviving such merger or to which such sale shall be made or of the
parent of such Person, as the case may be, that would have been
distributable or payable on account of the Common Shares if such
Holder's Warrants had been exercised immediately prior to such
merger, consolidation or sale (or, if applicable, the record date
therefor); and in any such case the provisions of this Agreement with
respect to the rights and interests thereafter of the Holders of
Warrants shall be appropriately adjusted by the Board in good faith
so as to be applicable, as nearly as may reasonably be, to any
shares, other securities or any property thereafter deliverable on
the exercise of the Warrants.
(ii) Notwithstanding the foregoing, (x) if the Company merges or
consolidates with, or sells all or substantially all of its property
and assets to, another Person (other than an Affiliate of the
Company) and consideration is payable to holders of Common Shares in
exchange for their Common Shares in connection with such merger,
consolidation or sale consists solely of cash, or (y) in the event of
the dissolution, liquidation or winding up of the Company, then the
Holders of Warrants shall be entitled to receive distributions on the
date of such event on an equal basis with holders of Common Shares
(or other securities issuable upon exercise of the Warrants) as if
the Warrants had been exercised immediately prior to such event, less
the Exercise Price. Upon receipt of such payment, if any, the rights
of a Holder shall terminate and cease and such Holder's Warrants
shall expire. If the Company has made a Repurchase Offer that has not
expired at the time of such transaction, the holders of the Warrants
will be entitled to receive the higher of (i) the amount payable to
the holders of the Warrants described above and (ii) the Repurchase
Price payable to the holders of the Warrants pursuant to such
Repurchase Offer. In case of any such merger, consolidation or sale
of assets, the surviving or acquiring Person and, in the event of any
dissolution, liquidation or winding up of the Company, the Company
shall deposit promptly with the Warrant Agent the funds, if any,
necessary to pay the Holders of the Warrants. After receipt of such
deposit from such Person or the Company and after receipt of
surrendered Warrant Certificates, the Warrant Agent shall make
payment by delivering a check, by providing for same-day funds
settlement or any other customary payment means, in such amount as is
appropriate (or, in the case of consideration other than cash, such
other consideration as is appropriate) to such Person or Persons as
it may be directed in writing by the Holder surrendering such
Warrants.
(k) If required pursuant to Section 4.1(f)(i), the Current Market
Value shall be deemed to be equal to the value set forth in the Value Report
(as defined below) as determined by an Independent Financial Expert, which
shall be selected by the Board, and retained on customary terms and
conditions, using one or more valuation methods that the Independent Financial
Expert, in its best professional judgment, determines to be most appropriate.
The Company shall cause the Independent Financial Expert to deliver to the
Company, with a copy to the Warrant Agent, within 45 days of the appointment
of the Independent Financial Expert, a value report (the "Value Report")
stating the value of the Common Shares and other securities or property of the
Company, if any, being valued as of the Valuation Date and containing a brief
statement as to the nature and scope of the examination or investigation upon
which the determination of value was made. The Warrant Agent shall have no
duty with respect to the Value Report of any Independent Financial Expert,
except to keep it on file and available for inspection by the Holders. The
determination as to Current Market Value in accordance with the provisions of
this Section 4.1(k) shall be conclusive on all Persons. The Independent
Financial Expert shall consult with management of the Company in order to
allow management to comment on the proposed value prior to delivery to the
Company of any Value Report.
(l) When No Adjustment Required. No adjustment need be made for:
(i) exercises of Rights granted to and held by directors of the
Company or employees of the Company or any of its subsidiaries, and
existing on the Closing Date;
(ii) Rights granted to and held by directors of the Company or
employees of the Company or its subsidiaries after the Closing Date
or Common Shares issued or granted to such employees or directors
after the Closing Date, whether or not upon the exercise, exchange or
conversion of any such Rights, to the extent that all such Common
Shares do not have (and such Rights are not exercisable, exchangeable
or convertible for Common Shares having) an aggregate equity value in
excess of 5.0% of the equity value of the Company (such percentage to
be calculated on a fully-diluted basis after giving effect to all
Common Stock and Rights outstanding on the Closing Date), as
determined in good faith by the Board and set forth in a Board
resolution delivered to the Warrant Agent and (upon request) to any
Holder;
(iii) rights to purchase Common Shares pursuant to a Company
plan for reinvestment of dividends or interest; or
(iv) a Securities Offering of any security trading on any
national securities exchange or in the over the counter market, or of
a security directly or indirectly convertible or exchangeable for any
such security (the latter security being a "Reference Security"),
where such security (or the Reference Security as applicable) is sold
to investors at a price at least equal to the closing sale, bid or
ask price (whichever is customary) of such security (or the Reference
Security as applicable) on the date (not more than five business days
prior to the consummation of such Securities Offering) on which the
Company fixes such price for such sale.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not
accrue on the cash.
(m) Detachable Rights, Options or Warrants. Rights, options or
warrants distributed by the Company to all holders of Common Shares entitling
the holders thereof to subscribe for or purchase shares of the Company's
capital stock (either initially or under certain circumstances), which rights,
options or warrants, until the occurrence of a specified event or events (a
"Trigger Event"), (i) are deemed to be transferred with such shares of Common
Shares, (ii) are not exercisable and (iii) are also issued in respect of
future issuances of Common Shares, shall be deemed not to have been
distributed for purposes of Section 4.1(b) or Section 4.1(d) (and no
adjustment under such Section will be required) until the date of occurrence
of the earliest Trigger Event. If such right, option or warrant is subject to
subsequent events, upon the occurrence of which such right, option or warrant
shall become exercisable to purchase different securities, evidences of
indebtedness or other assets or entitle the holder to purchase a different
number or amount of the foregoing or to purchase any of the foregoing at a
different purchase price, then the occurrence of each such event shall be
deemed to be the date of issuance and record date with respect to a new right,
option or warrant (and a termination or expiration of the existing right,
option or warrant without exercise by the holder thereof). In addition, in the
event of any distribution (or deemed distribution) of rights or warrants, or
any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto, that resulted in an adjustment under Section
4.1(b) or Section 4.1(d), (1) in the case of any such rights, options or
warrants which shall all have been redeemed or repurchased without exercise by
any holders thereof, the Exercise Price and the number of Common Shares
issuable upon the exercise of each Warrant shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger Event,
as the case may be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of Common Shares
with respect to such rights, options or warrants (assuming such holder had
retained such rights, options or warrants), made to all holders of Common
Shares as of the date of such redemption or repurchase, and (2) in the case of
such rights, options or warrants all of which shall have expired or been
terminated without exercise, the Exercise Price and the number of Common
Shares issuable upon the exercise of each Warrant shall be readjusted as if
such rights, options or warrants had never been issued.
(n) Other Adjustments. In the event that at any time, as a result of
an adjustment made pursuant to this Section 4.1, Holders shall be entitled to
receive any securities of the Company other than Common Shares, thereafter the
number of such other securities so receivable upon exercise of the Warrants
and the Exercise Price applicable to such exercise shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares contained in
this Section 4.1.
(o) Other Events. If any event occurs as to which the foregoing
provisions of this Section 4.1 are not strictly applicable or, if strictly
applicable, would not fairly and adequately protect the purchase rights of the
Warrants in accordance with the essential intent and principles of such
provisions, then there shall be made such adjustments in the application of
such provisions, in accordance with such essential intent and principles, as
shall be reasonably necessary to protect such purchase rights as aforesaid,
but in no event shall any such adjustment have the effect of increasing the
Exercise Price or decreasing the number of Common Shares issuable upon
exercise of each Warrant.
Section 4.2 Notice of Adjustment. Whenever the number of Common
Shares purchasable upon the exercise of each Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall cause the Warrant Agent
promptly to mail, at the expense of the Company, to each Holder notice of such
adjustment or adjustments and shall deliver to the Warrant Agent a certificate
of the Auditors setting forth the number of Common Shares purchasable upon the
exercise of each Warrant and the Exercise Price after such adjustment, setting
forth a brief statement of the facts requiring such adjustment and setting
forth the computation by which such adjustment was made. The Warrant Agent
shall be entitled conclusively to rely on such certificate and shall be under
no duty or responsibility with respect to any such certificate, except to
exhibit the same, from time to time, to any Holder desiring an inspection
thereof during reasonable business hours upon reasonable notice. The Warrant
Agent shall not at any time be under any duty or responsibility to any Holders
to determine whether any facts exist which may require any adjustment of the
Exercise Price or the number of Common Shares purchasable on exercise of the
Warrants or any of the other adjustments set forth in Section 4.1, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment, or the validity or
value (or the kind or amount) of any Common Shares which may be purchasable on
exercise of the Warrants. 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 Common Shares or share certificates upon the exercise of any
Warrant.
Section 4.3 Statement on Warrants. Irrespective of any adjustment in
the Exercise Price or the number or kind of shares purchasable upon the
exercise of the Warrants, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in the Warrants initially issuable pursuant to this Agreement.
Section 4.4 Notice of Consolidation, Merger, Etc. In case at any time
after the date hereof and prior to 5:00 p.m., New York City time, on the
Expiration Date, there shall be any (i) consolidation or merger involving the
Company or sale, transfer or other disposition of all or substantially all of
the Company's property, assets or business or (ii) any other transaction
contemplated by Section 4.1(a), (b), (c), (d) or (j) above then, in any one or
more of such cases, the Company shall cause to be mailed to the Warrant Agent
and shall cause the Warrant Agent to mail by overnight mail, return receipt
requested, at Company's expense, to each Holder of a Warrant, at the earliest
practicable time (and, in any event, not less than 10 Business Days before any
date set for definitive action), notice of the date on which such transaction
shall take place. Such notice shall also set forth such facts as shall
indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Exercise Price and the kind and amount of the
Common Shares and other securities, money and other property deliverable upon
exercise of the Warrants. Such notice shall also specify the date as of which
the holders of record of the Common Shares or other securities or property
issuable upon exercise of the Warrants shall be entitled to exchange their
shares for securities, money or other property deliverable upon such
reorganization, sale, consolidation, merger, dissolution, liquidation or
winding up, as the case may be.
Section 4.5 Fractional Interests. If more than one Warrant shall be
presented for exercise in full at the same time by the same Holder, the number
of full Common Shares which shall be issuable upon such exercise thereof shall
be computed on the basis of the aggregate number of Common Shares purchasable
on exercise of the Warrants so presented. The Company shall not be required to
issue fractional Common Shares upon the exercise of Warrants. If any fraction
of a Common Share would, except for the provisions of this Section 4.5, be
issuable on the exercise of any Warrant (or specified portion thereof), the
Company may pay an amount in cash calculated by it to be equal to the then
Current Market Value per Common Share multiplied by such fraction computed to
the nearest whole cent.
Section 4.6 When Issuance or Payment May Be Deferred. In any case in
which this Article 4 shall require that an adjustment in the Exercise Price be
made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event (i) issuing to the holder of
any Warrant exercised after such record date the Common Shares and other
shares in the capital of the Company, if any, issuable upon such exercise over
and above the Common Shares and other shares in the capital of the Company, if
any, issuable upon such exercise and (ii) paying such holder any amount in
cash in lieu of a fractional share; provided, however, that the Company shall
deliver to such Holder a due xxxx or other appropriate instrument evidencing
such Holder's right to receive such additional Common Shares, other shares and
cash upon the occurrence of the event requiring such adjustment.
Section 4.7 No Dilution or Impairment. The Company will not by
amendment of its charter or through reorganization, consolidation, merger,
dissolution, sale of assets or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Agreement, but
will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in
order to protect the rights of the Holders against dilution or other
impairment. Without limiting the generality of the foregoing, the Company will
not (a) increase the par value of the Common Shares above the Exercise Price
or (b) take any action that would, after giving effect to the provisions of
Article 4, result in a reduction of the Exercise Price to an amount below the
par value per Common Share unless the Company takes all action necessary in
order to protect the Holders against dilution or other impairment as
contemplated by this Article 4. At all times, the Company will take all such
action (including, without limitation, reducing the par value of the Common
Shares) as may be necessary or appropriate in order that the Company may
validly and legally issue Common Shares upon the exercise of the Warrants.
Article 5
LOSS OR MUTILATION
Upon receipt by the Company and the Warrant Agent of evidence
reasonably satisfactory to them of the ownership and the loss, theft,
destruction or mutilation of any Warrant Certificate and of indemnity or bond
reasonably satisfactory to them and (in the case of mutilation) upon surrender
and cancellation thereof, then, in the absence of notice to the Company or the
Warrant Agent that the Warrants represented thereby have been acquired by a
bona fide purchaser, the Company shall execute and the Warrant Agent shall
countersign and deliver to the registered Holder of the lost, stolen,
destroyed or mutilated Warrant Certificate, in exchange for or in lieu
thereof, a new Warrant Certificate of the same tenor and for a like aggregate
number of Warrants. Upon the issuance of any new Warrant Certificate under
this Article 5, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and other reasonable expenses (including the fees and expenses of the
Warrant Agent) in connection therewith. Every new Warrant Certificate executed
and delivered pursuant to this Article 5 in lieu of any lost, stolen or
destroyed Warrant Certificate shall constitute a contractual obligation of the
Company whether or not the allegedly lost, stolen or destroyed Warrant
Certificates shall be at any time enforceable by anyone and shall be entitled
to the benefits of this Agreement equally and proportionately with any and all
other Warrant Certificates duly executed and delivered hereunder.
Article 6
RESERVATION AND AUTHORIZATION OF COMMON SHARES
The Company shall at all times reserve and keep available such number
of its authorized but unissued Common Shares deliverable upon exercise of the
Warrants as will be sufficient to permit the exercise in full of all
outstanding Warrants and will cause appropriate evidence of ownership of such
Common Shares to be delivered to the Warrant Agent upon its request for
delivery thereof upon the exercise of the Warrants. The Company represents,
warrants, covenants and agrees that all Common Shares of the Company that may
be issued upon the exercise of the Warrants will, upon issuance, be duly
authorized, validly issued, fully paid, non-assessable and not subject to any
calls for funds and free from pre-emptive rights and all taxes, liens, charges
and security interests with respect to the issue thereof. The Warrant Agent
shall have no duty to verify availability of such Common Shares set aside by
the Company.
Article 7
WARRANT TRANSFER BOOKS; RESTRICTIONS ON TRANSFER
Section 7.1 Transfer and Exchange. The Warrant Certificates shall be
issued in registered form only. The Warrant Agent shall keep at its office a
register for the registration of Warrant Certificates and transfers or
exchanges of Warrant Certificates as herein provided and other appropriate
data as determined by the Warrant Agent. The Company shall, upon reasonable
notice to the Warrant Agent, have access to such register during the Warrant
Agent's regular business hours. All Warrant Certificates issued upon any
registration of transfer or exchange of Warrant Certificates shall be the
valid obligations of the Company, evidencing the same obligations, and
entitled to the same benefits under this Agreement, as the Warrant
Certificates surrendered for such registration of transfer or exchange.
A Holder may transfer its Warrants only by written application to the
Warrant Agent stating the name of the proposed transferee and otherwise
complying with the terms of this Agreement. No such transfer shall be effected
until, and such transferee shall succeed to the rights of a Holder only upon,
final acceptance and registration of the transfer by the Warrant Agent in the
register. Prior to the registration of any transfer of Warrants by a Holder as
provided herein, the Company, the Warrant Agent, and any agent of the Company
may treat the person in whose name the Warrants are registered as the owner
thereof for all purposes and as the person entitled to exercise the rights
represented thereby, any notice to the contrary notwithstanding. When Warrant
Certificates are presented to the Warrant Agent with a request to register the
transfer or to exchange them for an equal amount of Warrants, the Warrant
Agent shall register such transfer or make such exchange as requested if its
requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall execute Warrant Certificates at the
Warrant Agent's request. No service charge shall be made for any registration
of transfer or exchange of Warrants, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer of Warrants.
Section 7.2 Special Transfer Provisions. The following provisions
shall apply with respect to the registration of any proposed transfer of
Warrants:
(a) Transfers to Non-U.S. Persons at Any Time. The Warrant Agent
shall register any proposed transfer of Warrants in accordance with Rule 904
under the Securities Act only upon receipt of a certificate substantially in
the form of Exhibit B from the proposed transferor.
(b) Transfers to Any Other Person. The following provisions shall
apply with respect to the registration of any proposed transfer of Warrants
not specified in paragraph (a) above (including any Institutional Accredited
Investor). The Warrant Agent shall register any proposed transfer of Warrants
to any such Person if (x) the transferor has delivered to the Warrant Agent
and the Company a certificate substantially in the form of Exhibit C-1 hereto
and, if the Company or the Warrant Agent reasonably require as specified by
paragraph (d) thereof, an Opinion of Counsel to the effect set forth therein
and (y) the proposed transferee has delivered to the Warrant Agent and the
Company a certificate substantially in the form of Exhibit C-2 hereto if such
transferee is an Institutional Accredited Investor.
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Warrant Certificates not bearing the Private Placement Legend,
the Warrant Agent shall deliver Warrant Certificates that do not bear the
Private Placement Legend. Upon the transfer, exchange or replacement of
Warrant Certificates bearing the Private Placement Legend, the Warrant Agent
shall deliver only Warrant Certificates that bear the Private Placement Legend
unless there is delivered to the Warrant Agent an opinion of counsel
reasonably satisfactory to the Company and its counsel and the Warrant Agent
to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(d) Transfers of Interests in Warrants Not Bearing the Private
Placement Legend. Notwithstanding paragraphs (a) and (b) of this Section 7.2,
the Warrant Agent shall register the transfer of any interest in any Warrant
represented by a Warrant Certificate not bearing the Private Placement Legend
without requiring any additional certification.
(e) General.
(i) By its acceptance of any Warrants represented by a Warrant
Certificate bearing the Private Placement Legend, each Holder of such
Warrants acknowledges the restrictions on transfer of such Warrants
set forth in this Agreement and in the Private Placement Legend and
agrees that it will transfer such Warrants only as provided in this
Agreement. The Warrant Agent shall not register a transfer of any
Warrants unless such transfer complies with the restrictions on
transfer of such Warrants set forth in this Agreement and is in
compliance with applicable laws and applicable rules, regulations and
procedures of any securities exchange or clearing agency in effect
from time to time. In connection with any transfer of Warrants, each
Holder agrees by its acceptance of Warrants to furnish the Warrant
Agent or the Company such certifications, legal opinions or other
information as either of them may reasonably require to confirm that
such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the
Securities Act; provided that the Warrant Agent shall not be required
to determine (but may rely on a determination made by the Company
with respect to) the sufficiency of any such certifications, legal
opinions or other information.
(ii) The Warrant Agent shall retain copies of all letters,
notices and other written communications received pursuant to this
Section 7.2. The Company shall have the right to inspect and make
copies of all such letters, notices or other written communications
at any reasonable time upon the giving of reasonable written notice
to the Warrant Agent.
Section 7.3 Surrender of Warrant Certificates. Any Warrant
Certificate surrendered for registration of transfer, exchange or exercise of
the Warrants represented thereby shall, if surrendered to the Company, be
delivered to the Warrant Agent, and all Warrant Certificates surrendered or so
delivered to the Warrant Agent shall be promptly cancelled by the Warrant
Agent and shall not be reissued by the Company and, except as provided in this
Article 7 in case of an exchange, Article 3 hereof in case of the exercise of
less than all the Warrants represented thereby or Article 5 in case of a
mutilated Warrant Certificate, no Warrant Certificate shall be issued
hereunder in lieu thereof. The Warrant Agent shall in accordance with its
customary procedures dispose of such cancelled Warrant Certificates.
Article 8
WARRANT HOLDERS
Section 8.1 Warrant Holder Deemed Not a Stockholder. 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 the purpose of any
exercise thereof and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Accordingly,
the Company and/or the Warrant Agent shall not, except as ordered by a court
of competent jurisdiction as required by law, be bound to recognize any
equitable or other claim to or interest in the Warrants on the part of any
person other than such registered Holder, whether or not it shall have express
or other notice thereof. Prior to the valid 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 vote
or to consent to any action of the stockholders, to receive dividends or other
distributions, to exercise any preemptive right or to receive any notice of
meetings of stockholders and, except as otherwise provided in this Agreement,
shall not be entitled to receive any notice of any proceedings of the Company.
Section 8.2 Right of Action. All rights of action with respect to
this Agreement are vested in the Holders of the Warrants, and any Holder of
any Warrant, without the consent of the Warrant Agent or the Holders 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 right to exercise such Warrants in the manner provided in
the Warrant Certificate representing such Warrants and in this Agreement.
Article 9
REMEDIES
Section 9.1 Defaults. It shall be deemed to be a "Default" with
respect to the Company's (or its successor's) obligations under this Agreement
if:
(a) a Repurchase Event occurs and the Company (or its successor)
shall fail to make a Repurchase Offer pursuant to Section 3.4 hereof; or
(b) the Company (or its successor) shall fail to purchase the
Warrants pursuant to the Repurchase Offer in accordance with the provisions of
Section 3.4 hereof.
Section 9.2 Payment Obligations. Upon the happening of a Default
under this Agreement, the Company shall be obligated to increase the amount
otherwise payable pursuant to Section 3.4(d) hereof in respect of the
Repurchase Offer to which such Default relates by an amount equal to interest
thereon at a rate per annum equal to 12.375% from the date of the Default to
the date of payment, which interest shall compound quarterly (all such payment
obligations in respect of such Repurchase Offer, together with all such
increased amounts, being the "Repurchase Obligation").
Section 9.3 Remedies; No Waiver. Notwithstanding any other provision
of this Agreement, if a Default occurs and is continuing, the Holders of the
Warrants may pursue any available remedy to collect the Repurchase Obligation
or to enforce the performance of any provision of this Agreement.
A delay or omission by any Holder of a Warrant in exercising, or a
failure to exercise, any right or remedy arising out of a Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Default. All remedies are cumulative to the extent permitted by law.
Article 10
THE WARRANT AGENT
Section 10.1 Duties and Liabilities. The Warrant Agent hereby accepts
the agency established by this Agreement and agrees to perform the same upon
the terms and conditions herein set forth, by all of which the Company and the
Holders of Warrants, by their acceptance thereof, shall be bound. The Warrant
Agent shall not, by countersigning Warrant Certificates or by any other act
hereunder, be deemed to make any representations as to the validity or
authorization of the Warrants or the Warrant Certificates (except as to its
countersignature thereon) or of any Common Shares issued upon exercise of any
Warrant, or as to the accuracy of the computation of the Exercise Price or the
number or kind or amount of Common Shares deliverable upon exercise of any
Warrant or the correctness of the representations of the Company made in the
certificates that the Warrant Agent receives. The Warrant Agent shall not be
accountable for the use or application by the Company of the proceeds of the
exercise of any Warrant. The Warrant Agent shall not have any duty to
calculate or determine any adjustments with respect to either the Exercise
Price or the kind and amount of Common Shares receivable by Holders upon the
exercise of Warrants required from time to time and the Warrant Agent shall
have no duty or responsibility in determining the accuracy or correctness of
such calculation. The Warrant Agent shall not be (a) liable for any recital or
statement of fact contained herein or in the Warrant Certificates or for any
action taken, suffered or omitted by it in good faith without gross negligence
in the belief that any Warrant Certificate or any other documents or any
signatures are genuine or properly authorized, (b) responsible for any failure
on the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in the Warrant Certificates to be complied with
by the Company or (c) liable for any act or omission in connection with this
Agreement except for its own gross negligence, bad faith or willful
misconduct. The Warrant Agent is hereby authorized to accept written
instructions with respect to the performance of its duties hereunder from any
Officer and to apply to any such Officer for such written instructions and the
Warrant Agent shall not be liable for any action taken or suffered to be taken
by it in good faith without gross negligence in accordance with the
instructions of any Officer; provided, however, that, in its discretion, the
Warrant Agent may, in lieu thereof, accept other evidence of such or may
require such further or additional evidence as it may deem reasonable. The
Warrant Agent shall not be liable for any action taken with respect to any
matter in the event it requests instructions from the Company as to that
matter and does not receive such instructions within a reasonable period of
time after the request therefor.
The Warrant Agent may execute and exercise any of the rights and
powers hereby vested in it or perform any duty hereunder either itself or by
or through attorneys, agents or employees of its selection, and the Warrant
Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys, agents or employees; provided that
reasonable care has been exercised with respect to the selection of any such
attorney, agent or employee. The Warrant Agent shall not be under any
obligation or duty to institute, appear in or defend any action, suit or legal
proceeding in respect hereof, 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. The Warrant Agent shall promptly notify the
Company in writing of any claim made or action, suit or proceeding instituted
against it arising out of or in connection with this Agreement.
The Company will perform, execute, acknowledge and deliver or cause
to be delivered all such further acts, instruments and assurances as are
consistent with this Agreement and as may reasonably be required by the
Warrant Agent in order to enable it to carry out or perform its duties under
this Agreement.
The Warrant Agent shall act solely as agent of the Company hereunder.
The Warrant Agent shall not be liable except for the failure to perform such
duties as are specifically set forth herein, and no implied covenants or
obligations shall be read into this Agreement against the Warrant Agent, whose
duties and obligations shall be determined solely by the express provisions
hereof.
Notwithstanding anything in this Agreement to the contrary, the
Warrant Agent shall not 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.
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 if
there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
Section 10.2 Right to Consult Counsel. The Warrant Agent may at any
time consult with legal counsel of its selection (who may be legal counsel for
the Company), and the opinion or advice of such counsel shall be full and
complete authorization and protection to the Warrant Agent and the Warrant
Agent shall incur no liability or responsibility to the Company or to any
Holder for any action taken, suffered or omitted by it in good faith without
gross negligence in accordance with the opinion or advice of such counsel.
Section 10.3 Compensation; Indemnification. The Company agrees
promptly to pay the Warrant Agent from time to time and in any case within 30
days of receipt of an invoice, compensation for its services hereunder as the
Company and the Warrant Agent may agree from time to time, and to reimburse it
upon its request upon furnishing reasonable supporting documentation for fees
or expenses and reasonable counsel fees and expenses incurred in connection
with the execution and administration of this Agreement, and further agrees to
indemnify each of the Warrant Agent and any predecessor Warrant Agent and save
it harmless against any and all losses, claims, damages, liabilities or
reasonable expenses arising out of or in connection with the acceptance and
administration of this Agreement, including, without limitation, the
reasonable costs and expenses of investigating or defending any claim (whether
asserted by the Company or any Holder or any other Person) of such liability,
except that the Company shall have no liability hereunder to the extent that
any such loss, liability or expense results from the Warrant Agent's own gross
negligence, bad faith or willful misconduct. The obligations of the Company
under this Section 10.3 shall survive the exercise and the expiration of the
Warrants, the termination of this Agreement and the resignation or removal of
the Warrant Agent in respect of services or expenses incurred in connection
with the Warrants or this Agreement.
Section 10.4 No Restrictions on Actions. Nothing in this Agreement
shall be deemed to prevent the Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent from buying, selling or dealing in
any of the Warrants or other securities of the Company or becoming pecuniarily
interested in transactions in which the Company may be interested, or
contracting with or lending money to the Company or otherwise acting as fully
and freely as though it were not the Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
Section 10.5 Discharge or Removal; Replacement Warrant Agent. The
Warrant Agent may resign from its position as such and be discharged from all
further duties and liabilities hereunder (except liability arising as a result
of the Warrant Agent's own gross negligence, bad faith or willful misconduct),
after giving one month's prior written notice to the Company. The Company may
at any time remove the Warrant Agent upon one month's written notice
specifying the date when such discharge shall take effect, 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 mail to
each Holder of a Warrant, at the Company's expense, 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 or removed Warrant Agent or
the Holder of any Warrant may, at the expense of the Company, apply to any
court of competent jurisdiction for the appointment of a new warrant agent.
After 30 days from receipt of, or giving, notice, as the case may be, and
pending appointment of a successor to the original Warrant Agent, either by
the Company or by such a court, the duties of the Warrant Agent shall be
carried out by the Company. Any new warrant agent, whether appointed by the
Company or by such a court, shall be a bank or trust company 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 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; however, the
original Warrant Agent shall in all events deliver and transfer to the
successor Warrant Agent all property (including, without limitation, documents
and recorded information), if any, at the time held hereunder by the original
Warrant Agent and 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 file notice
thereof with the resigning or removed Warrant Agent and shall forthwith cause
a copy of such notice to be mailed by the successor Warrant Agent to each
Holder of a Warrant. Failure to give any notice provided for in this Section
10.5, 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. No Warrant Agent hereunder shall be liable
for any acts or omissions of any successor Warrant Agent.
Section 10.6 Successor Warrant Agent. Any corporation into which the
Warrant Agent or any new warrant agent may be merged or converted, or any
corporation resulting from any consolidation to which the Warrant Agent or any
new 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 a successor Warrant Agent under this Agreement without any further
act, provided that such corporation would be eligible for appointment as
successor to the Warrant Agent under the provisions of Section 10.5 hereof.
Any such successor Warrant Agent shall promptly cause notice of its succession
as Warrant Agent to be mailed to each Holder of a Warrant.
Article 11
MISCELLANEOUS
Section 11.1 Monies Deposited with the Warrant Agent. The Warrant
Agent shall not be required to pay interest on any monies deposited pursuant
to the provisions of this Agreement except such as it shall agree in writing
with the Company to pay thereon. Any monies, securities or other property
which at any time shall be deposited by the Company or on its behalf with the
Warrant Agent pursuant to this Agreement shall be and are hereby assigned,
transferred and set over to the Warrant Agent in trust for the purpose for
which such monies, securities or other property shall have been deposited; but
such monies, securities or other property need not be segregated from other
funds, securities or other property except to the extent required by law. Any
monies, securities or other property deposited with the Warrant Agent for
payment or distribution to the Holders that remains unclaimed for one year
after the date the monies, securities or other property was deposited with the
Warrant Agent shall be delivered to the Company upon its written request
therefor.
Section 11.2 Payment of Taxes. Subject to Article 5 hereof, all
Common Shares issuable upon the exercise of Warrants shall be duly authorized,
validly issued, fully paid, non-assessable and not subject to any calls for
funds, and the Company shall pay any taxes and other governmental charges that
may be imposed under the laws of the United States of America or any other
jurisdiction, or any political subdivision or taxing authority thereof or
therein, in respect of the issue or delivery thereof upon exercise of Warrants
(other than income taxes imposed on the Holders). The Company shall not be
required, however, to pay any tax or other charge imposed in connection with
any transfer involved in the issue of any certificate for Common Shares
(including other securities or property issuable upon the exercise of the
Warrants) or payment of cash to any Person other than the Holder of a Warrant
Certificate surrendered upon the exercise of a Warrant and in case of such
transfer or payment, the Warrant Agent and the Company shall not be required
to issue any share certificate or pay any cash until such tax or charge has
been paid or it has been established to the Warrant Agent's and the Company's
satisfaction that no such tax or charge is due.
Section 11.3 No Merger, Consolidation or Sale of Assets of the
Company. Except as otherwise provided herein, the Company will not merge into
or consolidate with, or sell or otherwise transfer all or substantially all of
its property and assets to, any other Person, unless the Person resulting from
such merger or consolidation, or that is the transferee of such property and
assets, shall expressly assume, by supplemental agreement satisfactory in form
to the Warrant Agent and executed and delivered to the Warrant Agent, the due
and punctual performance and observance of each and every covenant and
condition of this Agreement or contained in the Warrants to be performed and
observed by the Company.
Section 11.4 Reports to Holders. At all times after audited financial
statements with the Commission for the periods that would be required to be
included in a registration statement on Form S-1 are available, whether or not
the Company is then required to file reports with the Commission, the Company
shall file with the Commission all such reports and other information it would
be required to file with the Commission by Section 13(a) or 15(d) under the
Exchange Act if it were subject thereto, including information required by
annual, quarterly or current reports whether or not required to be so filed.
The Company shall supply the Warrant Agent and each Holder or shall supply to
the Warrant Agent for forwarding to each such Holder, without cost to such
Holder, copies of such reports and other information. The Warrant Agent's
receipt of such reports and other information shall not constitute
constructive notice of any information contained therein or determinable from
information (including mathematical calculations) contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Warrant Agent is entitled to rely exclusively on Officers' Certificates).
Section 11.5 Notices; Payment.
(a) Except as otherwise provided in Section 11.5(c) hereof, any
notice, demand or delivery authorized by this Agreement shall be sufficiently
given or made when mailed, if sent by first class mail, postage prepaid,
addressed to any Holder of a Warrant at such Holder's last known address
appearing on the register of the Company maintained by the Warrant Agent and
to the Company or the Warrant Agent as follows:
To the Company:
HEALTHSOUTH Corporation
Xxx XXXXXXXXXXX Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
To the Warrant Agent:
Xxxxx Fargo Bank Northwest, N.A.
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Attention: Corporate Trust Trustee Administration
or such other address as shall have been furnished to the party giving or making
such notice, demand or delivery. Any notice that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given when mailed,
whether or not the Holder receives the notice.
(b) Payment of the Exercise Price shall be made in accordance with
the provisions of this Agreement at the office of the Warrant Agent set forth
above, unless otherwise directed by the Warrant Agent and the Company.
(c) Any notice required to be given by the Company to the Holders
shall be made by mailing by registered mail, return receipt requested, to the
Holders at their last known addresses appearing on the register maintained by
the Warrant Agent. The Company hereby irrevocably authorizes the Warrant
Agent, in the name and at the expense of the Company, to mail any such notice
upon receipt thereof from the Company. Any notice that is mailed in the manner
herein provided shall be conclusively presumed to have been duly given when
mailed, whether or not the Holder receives the notice.
Section 11.6 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and the Warrant Agent and their respective
successors and assigns, and the Holders from time to time. Nothing in this
Agreement is intended or shall be construed to confer upon any Person, other
than the Company, the Warrant Agent and the Holders, any right, remedy or
claim under or by reason of this Agreement or any part hereof.
Section 11.7 Counterparts. This Agreement may be executed manually or
by facsimile in any number of counterparts, each of which shall be deemed an
original, but all of which together constitute one and the same instrument.
Section 11.8 Amendments. The Warrant Agent may, without the consent
or concurrence of the Holders of the Warrants, by supplemental agreement or
otherwise, join with the Company in making any changes or corrections in this
Agreement that (a) are required to cure any ambiguity or to correct any
defective or inconsistent provision or clerical omission or mistake or
manifest error herein contained, (b) add to the covenants and agreements of
the Company in this Agreement further covenants and agreements of the Company
thereafter to be observed, or surrender any rights or power reserved to or
conferred upon the Company in this Agreement or (c) provide for successors and
changes in addresses in Section 11.5 hereof; provided that in either case such
changes or corrections do not and will not adversely affect, alter or change
the rights, privileges or immunities of the Holders. 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 that
alters the rights or duties of the Warrant Agent. The Company shall, prior to
the execution of such amendment, promptly provide the Warrant Agent with an
Officers' Certificate and Opinion of Counsel that provide that all conditions
precedent to adoption of an amendment have been satisfied.
Section 11.9 Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section 11.10 Common Shares Legend. Unless and until the Common
Shares issuable upon the exercise of the Warrants are registered under the
Securities Act, or unless otherwise agreed by the Company and the Holder
thereof, such Common Shares will bear a legend substantially to the following
effect:
THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR
(B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE COMMON
SHARES REPRESENTED BY THIS CERTIFICATE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, OR (C) IT IS A PERSON OTHERWISE ELIGIBLE TO
ACQUIRE THE COMMON SHARES IN A TRANSACTION CONSUMMATED IN
COMPLIANCE WITH RULE 144 UNDER THE SECURITIES ACT, IF
AVAILABLE, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k), UNDER THE SECURITIES
ACT AS IN EFFECT WITH RESPECT TO SUCH TRANSFER, RESELL OR
OTHERWISE TRANSFER THE COMMON SHARES REPRESENTED BY THIS
CERTIFICATE EXCEPT (A) TO HEALTHSOUTH CORPORATION (THE
"COMPANY") OR ANY SUBSIDIARY THEREOF, (B) TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRANSFER AGENT AND REGISTRAR A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THE COMMON SHARES REPRESENTED
BY THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE TRANSFER AGENT AND REGISTRAR), (C) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON
SHARES REPRESENTED BY THIS CERTIFICATE ARE TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE COMMON SHARES REPRESENTED
BY THIS CERTIFICATE WITHIN THE TIME PERIOD REFERRED TO ABOVE,
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRANSFER AGENT AND REGISTRAR.
IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (B) OF THE
PRECEDING SENTENCE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO EACH OF THE TRANSFER AGENT AND REGISTRAR AND THE
COMPANY SUCH CERTIFICATIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THE COMPANY HAS INSTRUCTED THE TRANSFER AGENT
AND REGISTRAR TO REFUSE TO REGISTER ANY TRANSFER OF THE
SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
Section 11.11 Third Party Beneficiaries. The Holders shall be third
party beneficiaries to the agreements made hereunder between the Company, on
the one hand, and the Warrant Agent, on the other hand, and each Holder shall
have the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder. By acquiring Warrants, each Holder agrees to be bound by
the obligations of Holders generally as set forth herein and as such
obligations may be applicable to such Holder.
Section 11.12 Termination. Except as otherwise specified herein, this
Agreement shall terminate at 5:00 p.m. (New York City time) on the tenth
anniversary of the Closing Date. Notwithstanding the foregoing, this Agreement
shall terminate on any earlier date as of which all Warrants have been
exercised.
Section 11.13 Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be governed by the laws of the State of New
York. The Warrant Agent, the Company and the Holders agree to submit to the
jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Agreement or the Warrants.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
HEALTHSOUTH CORPORATION
By: /s/ Xxx Xxxxxxx
------------------------------------
Name: Xxx Xxxxxxx
Title: Interim Chief Financial Officer
Xxxxx Fargo Bank Northwest, N.A., as
Warrant Agent
By: /s/ Valt Ortow
------------------------------------
Name: Valt Ortow
Title: Vice President
Exhibit A
FORM OF WARRANT CERTIFICATE
HEALTHSOUTH CORPORATION
CUSIP No. [ ]
No. _____
WARRANTS TO PURCHASE COMMON SHARES
This certifies that ______________, or its registered assigns, is the
owner of ___________ Warrants, each of which represents the right to purchase
from HEALTHSOUTH CORPORATION, a Delaware corporation (the "Company"), at any
time, one (1) share of the common stock, par value $0.01 per share, of the
Company (the "Common Shares") at an exercise price (the "Exercise Price") of
$6.50 per Common Share (subject to adjustment as provided in the Warrant
Agreement hereinafter referred to below), upon surrender hereof at the
principal corporate trust office of Xxxxx Fargo Bank Northwest, N.A., or to
its successor, as the warrant agent under the Warrant Agreement (any such
warrant agent being herein called the "Warrant Agent"), or such other location
contemplated by Section 11.5(b) of the Warrant Agreement, with the
Subscription Form on the reverse hereof duly executed, with signature
guaranteed as therein specified and simultaneous payment in full in cash or by
certified or official bank or bank cashier's check payable to the order of the
Company. Notwithstanding the foregoing, the Exercise Price may be paid by
surrendering additional Warrants to the Warrant Agent having an aggregate
Spread equal to the aggregate Exercise Price of the Warrants being exercised.
At any time after the Closing Date and on or before the Expiration Date, any
outstanding Warrants may be exercised on any Business Day; provided, however,
that (a) a registration statement with the Commission relating to the Common
Shares for which such Warrants are being exercised is, at the time of
exercise, in effect or (b) the exercise of such Warrants is exempt from the
registration requirements of the Securities Act.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of January 16, 2004 (the "Warrant Agreement"),
between the Company and Xxxxx Fargo Bank Northwest, N.A., as Warrant Agent,
and a Registration Rights Agreement dated as of January 16, 2004 (the "Warrant
Registration Rights Agreement"), between the Company and the holders party
thereto, and is subject to the Certificate of Incorporation of the Company and
to the terms and provisions contained therein, to all of which terms and
provisions the Holder of this Warrant Certificate consents by acceptance
hereof. The terms of the Warrant Agreement and the Warrant Registration Rights
Agreement are hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement and the Warrant Registration
Rights Agreement for a full description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Company and the Holders
of the Warrants. The summary of the terms of the Warrant Agreement and the
Warrant Registration Rights Agreement contained in this Warrant Certificate is
qualified in its entirety by express reference to the Warrant Agreement and
the Warrant Registration Rights Agreement. All terms used in this Warrant
Certificate that are defined in the Warrant Agreement and the Warrant
Registration Rights Agreement shall have the meanings assigned to them in such
agreements.
Copies of the Warrant Agreement and the Warrant Registration Rights
Agreement are on file at the office of the Warrant Agent and may be obtained
by writing to the Warrant Agent at the following address:
Xxxxx Fargo Bank Northwest, N.A.
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Attention: Corporate Trust Trustee Administration
A "Repurchase Event", as defined in the Warrant Agreement, shall be
deemed to occur on any date when (i) the Company consolidates with or merges
into or with another person (but only where the holders of Common Stock
receive consideration in exchange for all or part of such Common Stock), if
the Common Stock (or other securities) thereafter issuable upon exercise of
the Warrants is not registered under the Exchange Act or (ii) the Company
sells all or substantially all of its assets to another person, if the Common
Stock (or other securities) thereafter issuable upon exercise of the Warrants
is not registered under the Exchange Act provided that, in the case of this
clause (ii), a "Repurchase Event" shall not be deemed to have occurred if the
consideration for such transaction consists solely of cash, or (iii) the
Company or any subsidiaries of the Company purchases Common Shares pursuant to
a tender offer or an exchange offer for a price per Common Share that is
greater than the then Current Market Value per Common Share in effect at the
end of the trading day immediately following the day on which such tender
offer or exchange offer expires.
Following a Repurchase Event, the Company must make an offer to
repurchase for cash or, in the case of a Repurchase Event that is an exchange
offer, at the option of the Holders for cash or for the relevant exchange
securities, all outstanding Warrants (a "Repurchase Offer"). If the Company
makes a Repurchase Offer, Holders may, until the expiration date of such
offer, surrender all or part of their Warrants for repurchase by the Company.
Warrants received by the Warrant Agent in proper form during a
Repurchase Offer will, except as otherwise provided in the Warrant Agreement,
be repurchased by the Company at a price in cash (the "Repurchase Price")
equal (except in the case of a Repurchase Event within the meaning of clause
(iii) of the definition thereof) to the value on the Valuation Date of the
Common Shares issuable, and other securities or property of the Company which
would have been delivered, upon exercise of Warrants had the Warrants been
exercised (whether or not the Warrants are then exercisable), less the
Exercise Price in effect on the Notice Date for such Repurchase Offer. The
value of such Common Shares and other securities or property will be (i)(A) if
the Common Shares (or other securities) are registered under the Exchange Act,
determined based upon the average of the daily market prices (as determined
pursuant to Section 3.4(d)(ii)(1) of the Warrant Agreement) of the Common
Shares (or other securities) for the 20 consecutive trading days immediately
preceding such Valuation Date or (B) if the Common Shares (or other
securities) have been registered under the Exchange Act for less than 20
consecutive trading days before such date, then the average of the daily
market prices (as determined pursuant to Section 3.4(d)(ii)(1) of the Warrant
Agreement) for all of the trading days before such date for which daily market
prices are available, or (ii) if the Common Shares (or other securities) are
not registered under the Exchange Act or if the value cannot be computed under
clause (i) above, determined by the Independent Financial Expert (as defined
in the Warrant Agreement), in each case as set forth in the Warrant Agreement.
The "Valuation Date" as defined in the Warrant Agreement shall be
deemed to occur on the date five Business Days prior to the date notice of the
Repurchase Offer is given.
The Repurchase Price for each Warrant properly tendered to the
Warrant Agent pursuant to a Repurchase Offer with respect to a Repurchase
Event within the meaning of clause (iii) of the definition thereof shall be
equal to the price that would have been paid for the Common Shares represented
by such Warrant had such Warrant been exercised and such Common Shares
tendered or exchanged in the relevant tender offer or exchange offer.
If the Company fails to make or complete a Repurchase Offer (a
"Default") as required by the Warrant Agreement, it shall be obligated to
increase the amount otherwise payable pursuant to the Warrant Agreement in
respect of the Repurchase Offer by an amount equal to interest thereon at a
rate per annum that is 12.375% from the date of the Default to the date of
payment, which interest shall compound quarterly.
If the Company merges or consolidates with or into, or sells all or
substantially all of its property and assets to, another Person and the
consideration received by holders of Common Shares consists solely of cash,
the Holders of Warrants shall be entitled to receive distributions on the date
of such event on an equal basis with, and on the same day as, holders of
Common Shares (or other securities issuable upon exercise of the Warrants) as
if the Warrants had been exercised immediately prior to such event (less the
Exercise Price). Upon receipt of such payment, if any, the rights of a Holder
shall terminate and cease and such Holder's Warrants shall expire.
The number of Common Shares purchasable upon the exercise of each
Warrant and the price per share are subject to adjustment as provided in the
Warrant Agreement. Except as stated in the immediately preceding paragraph and
in the Warrant Agreement, in the event the Company merges or consolidates
with, or sells all or substantially all of its assets to, another Person, each
Warrant will, upon exercise, entitle the Holder thereof to receive the number
of shares of capital stock or other securities or the amount of money and
other property which the holder of a Common Share (or other securities or
property issuable upon exercise of a Warrant) is entitled to receive upon
completion of such merger, consolidation or sale.
As to any final fraction of a share which the same Holder of one or
more Warrant Certificates would otherwise be entitled to purchase upon
exercise thereof in the same transaction, the Company may pay the cash value
thereof determined as provided in the Warrant Agreement.
All Common Shares issuable by the Company upon the exercise of
Warrants shall be duly authorized, validly issued, fully paid, non-assessable
and not subject to any calls for funds, and the Company shall pay any taxes
and other governmental charges that may be imposed under the laws of the
United States of America or any other jurisdiction, or any political
subdivision or taxing authority thereof or therein in respect of the issue or
delivery thereof upon exercise of Warrants (other than income taxes imposed on
the Holders). The Company shall not be required, however, to pay any tax or
other charge imposed in connection with any transfer involved in the issue of
any certificate for Common Shares (including other securities or property
issuable upon the exercise of the Warrants) or payment of cash to any Person
other than the Holder of a Warrant Certificate surrendered upon the exercise
of a Warrant and in case of such transfer or payment, the Warrant Agent and
the Company shall not be required to issue any share certificate or pay any
cash until such tax or charge has been paid or it has been established to the
Warrant Agent's and the Company's satisfaction that no such tax or charge is
due.
Subject to the restrictions on and conditions to transfer set forth
in Articles 2 and 7 of the Warrant Agreement, this Warrant Certificate and all
rights hereunder are transferable by the registered Holder hereof, in whole or
in part, on the register of the Company maintained by the Warrant Agent for
such purpose at the Warrant Agent's office in New York, New York upon
surrender of this Warrant Certificate duly endorsed, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Warrant Agent duly executed, with signatures guaranteed as specified in the
attached Form of Assignment, by the registered Holder hereof or his attorney
duly authorized in writing and by such other documentation required pursuant
to the Warrant Agreement and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. Upon any partial
transfer, the Company will sign and issue and the Warrant Agent will
countersign and deliver to such Holder a new Warrant Certificate or
Certificates with respect to any portion not so transferred. Each taker and
Holder of this Warrant Certificate, by taking and holding the same, consents
and agrees that prior to the registration of transfer as provided in the
Warrant Agreement, the Company and the Warrant Agent may treat the person in
whose name the Warrants are registered as the absolute owner hereof for any
purpose and as the Person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding. Accordingly, the Company and/or
the Warrant Agent shall not, except as ordered by a court of competent
jurisdiction as required by law, be bound to recognize any equitable or other
claim to or interest in the Warrants on the part of any person other than such
registered Holder, whether or not it shall have express or other notice
thereof.
This Warrant Certificate may be exchanged at the office of the
Warrant Agent maintained for such purpose in New York, New York, for Warrant
Certificates representing the same aggregate number of Warrants, each new
Warrant Certificate to represent such number of Warrants as the Holder hereof
shall designate at the time of such exchange.
Prior to the exercise of the Warrants represented hereby, the Holder
of this Warrant Certificate, as such, shall not be entitled to any rights of a
stockholder of the Company, including, without limitation, the right to vote
or to consent to any action of the stockholders, to receive any distributions,
to exercise any pre-emptive right or to receive any notice of meetings of
stockholders, and shall not be entitled to receive any notice of any
proceedings of the Company except as provided in the Warrant Agreement.
This Warrant Certificate shall be void and all rights evidenced
hereby shall cease on January 16, 2014, unless sooner terminated by the
liquidation, dissolution or winding-up of the Company or as otherwise provided
in the Warrant Agreement upon the consolidation or merger of the Company with,
or sale of the Company to, another Person or unless such date is extended as
provided in the Warrant Agreement.
The Warrant Agreement and the Warrants shall be governed by the laws
of the State of New York.
This Warrant Certificate shall not be valid for any purpose until it
shall have been countersigned by the Warrant Agent.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
HEALTHSOUTH CORPORATION
By:________________________________
Name:
Title:
Dated:
Countersigned:
Xxxxx Fargo Bank NORTHWEST,
N.A., as Warrant Agent
By:________________________________
Authorized Signatory
FORM OF REVERSE OF WARRANT CERTIFICATE
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: Xxxxx Fargo Bank Northwest, N.A.,
as Warrant Agent
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx,
Xxxx Xxxx Xxxx, XX 00000
Attention: Corporate Trust Trustee Administration
The undersigned irrevocably exercises ________ of the Warrants
represented by this Warrant Certificate and herewith makes payment of $
_______ (such payment being in cash or by certified or official bank or bank
cashier's check payable to the order or at the direction of HEALTHSOUTH
Corporation or the exercise price may be paid by surrendering additional
Warrants to the Warrant Agent having an aggregate Spread equal to the
aggregate exercise price of the Warrants being exercised) all at the exercise
price and on the terms and conditions specified in this Warrant Certificate
and in the Warrant Agreement and the Warrant Registration Rights Agreement
referred to herein and surrenders this Warrant Certificate and all right,
title and interest therein to and directs that the common stock, par value
$0.01 per share, of HEALTHSOUTH Corporation (the "Common Shares") deliverable
upon the exercise of such Warrants be registered or placed in the name and at
the address specified below and delivered thereto.
Dated:
____________________________________
(Signature of Owner)
____________________________________
(Xxxxxx Xxxxxxx)
____________________________________
(City) (State) (Zip Code)
Signature Guaranteed By:
____________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Warrant Agent,
which requirements include membership or
participation in the Security Transfer
Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as
may be determined by the Warrant Agent in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
Securities and/or check or other property to be issued or delivered to: Please
insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
FORM OF CERTIFICATE FOR REPURCHASE OFFER
(To be executed only upon repurchase of Warrant by HEALTHSOUTH Corporation)
To:_____________________
The undersigned, having received prior notice of the consideration
for which HEALTHSOUTH CORPORATION will repurchase the Warrants represented by
the within Warrant Certificate, hereby surrenders this Warrant Certificate for
repurchase by HEALTHSOUTH CORPORATION of the number of Warrants specified
below for the consideration set forth in such notice.
Dated:
____________________________________
(Number of Warrants)
____________________________________
(Signature of Owner)
____________________________________
(Xxxxxx Xxxxxxx)
____________________________________
(City) (State) (Zip Code)
Signature Guaranteed By:
____________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the
requirements of the Warrant Agent, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Warrant Agent in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
Securities and/or check to be
issued or delivered to: Please
insert social security or
identifying number:
Name:
Street Address:
City, State and Zip Code:
FORM OF ASSIGNMENT
In consideration of monies or other valuable consideration received
from the Assignee(s) named below, the undersigned registered Holder of this
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants
constituting a part of the Warrants evidenced by this Warrant Certificate not
being assigned hereby) all of the right of the undersigned under this Warrant
Certificate, with respect to the number of Warrants set forth below:
Name(s) of Assignee(s): ___________________________________
Address: __________________________________________________
No. of Warrants: __________________________________________
Please insert social security or other identifying number of assignee(s):
and does hereby irrevocably constitute and appoint ________________________ the
undersigned's attorney to make such transfer on the books of __________________
maintained for the purposes, with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES EXCEPT UN LEGENDED
CERTIFICATES]
In connection with any transfer of Warrants, the undersigned confirms
that without utilizing any general solicitation or general advertising that:
Check One:
[ ](a) documents are being furnished which comply with the conditions of
transfer set forth in this Warrant Certificate and the Warrant
Agreement, or
[ ](b) these Warrants are being transferred pursuant to an effective
registration statement under the U.S. Securities Act of 1933, as
amended.
If none of the foregoing boxes is checked, the Warrant Agent shall not
be obligated to register the Warrants in the name of any Person other
than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Article 7 of the
Warrant Agreement shall have been satisfied.
Dated:
____________________________________
(Signature of Owner)
____________________________________
(Xxxxxx Xxxxxxx)
____________________________________
(City) (State) (Zip Code)
Signature Guaranteed By:
____________________________________
Signatures must be guaranteed by an
"eligible guarantor institution"
meeting the requirements of the
Warrant Agent, which requirements
include membership or participation
in the Security Transfer Agent
Medallion Program ("STAMP") or such
other "signature guarantee program"
as may be determined by the Warrant
Agent in addition to, or in
substitution for, STAMP, all in
accordance with the Securities
Exchange Act of 1934, as amended.
Dated:
[NOTE: To be executed by an executive officer]
Exhibit B
Form of Certificate to be Delivered
in Connection with
Transfers Pursuant to Regulation S
[Date]
HEALTHSOUTH Corporation
Xxx XXXXXXXXXXX Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Xxxxx Fargo Bank Northwest, N.A.,
as Warrant Agent
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx,
Xxxx Xxxx Xxxx, XX 00000
Attention: Corporate Trust Administration
Re: Warrants (the "Warrants") to Purchase Common Shares
of HEALTHSOUTH Corporation (the "Company")
Ladies and Gentlemen:
In connection with our proposed sale of _______________
Warrants, we hereby certify that such sale has been effected pursuant to and in
accordance with Regulation S under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), and, accordingly, we represent that:
(1) the offer or sale of the Warrants was made in an "Offshore
Transaction" (as defined in Regulation S under the Securities Act);
(2) no "Directed Selling Efforts" (as such term is defined in Regulation S
under the Securities Act) have been made by us, any of our affiliates
or any persons acting on our behalf in the United States in
contravention of the requirements of Rule 903(b) or Rule 904 of
Regulation S under the Securities Act, as applicable;
(3) if we are (A) a "dealer" (as defined in Section 2(a) of the Exchange
Act) or are receiving a selling concession, fee or other remuneration
in respect of the securities offered or sold, we have complied with the
requirements of Rule 904(b)(1) under the Securities Act or (B) an
officer or director of the Company or a distributor, or an affiliate of
the Company or a distributor solely by virtue of holding that position,
we have complied with the requirements of Rule 904(b)(2) under the
Securities Act; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
The Warrant Agent and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:________________________________
Authorized Signature
Exhibit C-1
Form of
Certificate to be
Delivered by Transferor in Connection with
Transfers to Institutional Accredited Investors
[Date]
HEALTHSOUTH Corporation
Xxx XXXXXXXXXXX Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Xxxxx Fargo Bank Northwest, N.A.,
as Warrant Agent
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx,
Xxxx Xxxx Xxxx, XX 00000
Attention: Corporate Trust Administration
Re: Warrants (the "Warrants") to Purchase Common Shares of HEALTHSOUTH
Corporation (the "Company")
Ladies and Gentlemen:
We hereby certify that such transfer is being effected in
compliance with the transfer restrictions applicable to the Warrants or
interests therein transferred pursuant to and in accordance with the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and accordingly we
hereby further certify that (check one):
(a) [ ] such transfer is being effected to the Company or a
subsidiary thereof; or
(b) [ ] such transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
(c) [ ] such transfer is being effected pursuant to an
effective registration statement under the Securities Act; or
(d) [ ] such transfer is being effected pursuant to an
exemption from the registration requirements of the Securities Act other than
Rule 144 or Rule 904 thereunder, and we hereby further certify that (i) such
transfer complies with the transfer restrictions applicable to the Warrants or
interests therein transferred to Institutional Accredited Investors (or in
another transaction exempt from or not subject to the registration
requirements of the Securities Act) and in accordance with the requirements of
the exemption claimed, which certification is supported by (if the Company or
the Warrant Agent reasonably request) an Opinion of Counsel provided by us or
the transferee (a copy of which we have attached to this certification), to
the effect that such transfer is in compliance with the Securities Act and
(ii) we are not a "dealer" as defined in the Securities Act.
Upon consummation of the proposed transfer in accordance with
the terms of the Warrant Agreement, the transferred Warrants or interests
therein will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Warrant Certificated and in the Warrant
Agreement and the Securities Act.
Very truly yours,
[Name of Transferor]
By:_________________________________
Authorized Signatory
Exhibit C-2
Form of Certificate to be Delivered
By Transferees in Connection with
Transfers to Institutional Accredited Investors
[Date]
HEALTHSOUTH Corporation
Xxx XXXXXXXXXXX Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Xxxxx Fargo Bank Northwest, N.A.,
as Warrant Agent
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx,
Xxxx Xxxx Xxxx, XX 00000
Attention: Corporate Trust Administration
Re: Warrants (the "Warrants") to Purchase Common Shares of
HEALTHSOUTH Corporation (the "Company")
Dear Sirs:
In connection with our proposed purchase of ___________ aggregate
number of Warrants, we confirm that:
1. We understand that any subsequent transfer of the Warrants, any
interest therein or the Common Shares issuable upon exercise of any Warrant
(the "Warrant Shares") is subject to certain restrictions and conditions set
forth in the Warrant Agreement dated as of January 16, 2004, relating to the
Warrants (the "Warrant Agreement") and the Registration Rights Agreement dated
as of January 16, 2004, relating to the Warrants (the "Warrant Registration
Rights Agreement") and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Warrants or Warrant Shares except in
compliance with, such restrictions and conditions and the U.S. Securities Act
of 1933, as amended (the "Securities Act").
2. We understand that the Warrants represented by this Warrant
Certificate and, as of the date this Warrant Certificate was originally
issued, the Warrant Shares have not been registered under the Securities Act,
and accordingly may not be offered, sold, pledged or otherwise transferred
within the United States or to, or for the account or benefit of, U.S. Persons
except as set forth in the following sentence. We agree that we will not,
within the time period referred to under Rule 144(k) of the Securities Act
(taking into account the provisions of Rule 144(d) under the Securities Act,
if applicable) under the Securities Act as in effect on the date of the
transfer of this Warrant, resell or otherwise transfer the Warrants
represented by this Warrant Certificate except (a) to HealthSouth Corporation,
or any successor thereto or subsidiary thereof, (b) outside the United States
in an offshore transaction in compliance with Rule 904 under the Securities
Act, (c) pursuant to the exemption from registration provided by Rule 144
under the Securities Act (if available), (d) to an institutional accredited
investor that, prior to such transfer, furnishes to you, to the Company and,
in the case of the Warrant Shares, to the transfer agent and registrar
therefor, a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Warrants represented by this
Warrant Certificate (the form of which letter can be obtained from the Warrant
Agent), (e) pursuant to an effective registration statement under the
Securities Act and, in each case, in accordance with applicable state
securities laws or (f) in another transaction exempt from or not subject to
the registration requirements of the Securities Act.
3. We understand that, on any proposed resale of any Warrants, any
interest therein or Warrant Shares, we will be required to furnish to you and
the Company such certifications, legal opinions and other information as you
and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Warrants purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Warrants,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment for an indefinite period of time.
5. We are acquiring the Warrants purchased by us (i) for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion, (ii) for investment purposes and (iii) without a view to
distribution.
6. We are not a "dealer" as defined in the Securities Act.
The Warrant Agent, the Company and, if applicable, the transfer agent
and registrar for the Warrant Shares are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:________________________________
Authorized Signature
