Exhibit 10.32
[L&W DRAFT OF 1/14/97]
===============================================================================
WARRANT AGREEMENT
Dated as of January __, 1997
by and between
PEGASUS COMMUNICATIONS CORPORATION
and
FIRST UNION NATIONAL BANK,
as Warrant Agent
==============================================================================
WARRANT AGREEMENT
TABLE OF CONTENTS***
Page
SECTION 1. Appointment of Warrant Agent.............................................................. 1
SECTION 2. Issuance of Warrants...................................................................... 1
SECTION 3. Warrant Certificates...................................................................... 1
SECTION 4. Execution of Warrant Certificates......................................................... 2
SECTION 5. Transfers of Warrants Prior to the Separation of Warrants and Notes;
Separation of Warrants and Notes.......................................................... 2
SECTION 6. Registration and Countersignature......................................................... 3
SECTION 7. Registration of Transfers and Exchanges................................................... 4
(a) Transfer and Exchange of Definitive Warrants.......................................... 4
(b) Exchange or Transfer of a Definitive Warrant for a Beneficial Interest in
a Global Warrant...................................................................... 4
(c) Transfer and Exchange of Global Warrants.............................................. 4
(d) Exchange of a Beneficial Interest in a Global Warrant for a Definitive Warrant........ 4
(e) Restrictions on Transfer and Exchange of Global Warrants.............................. 5
(f) Countersigning of Definitive Warrants in Absence of Depositary........................ 5
(g) Cancellation of Global Warrant........................................................ 5
(h) Obligations with Respect to Transfers and Exchanges of Warrants....................... 5
SECTION 8. Terms of Warrants; Exercise of Warrants................................................... 5
SECTION 9. Reports................................................................................... 7
SECTION 10. Payment of Taxes.......................................................................... 7
SECTION 11. Mutilated or Missing Warrant Certificates................................................. 8
SECTION 12. Reservation of Warrant Shares............................................................. 8
SECTION 13. Obtaining Stock Exchange Listings......................................................... 9
--------
*** This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
(i)
SECTION 14. Adjustment of Exercise Price and Number of Warrant Shares Issuable........................ 9
(a) Adjustment for Change in Capital Stock.................................................... 9
(b) Adjustment for Rights Issue............................................................... 10
(c) Adjustment for Other Distributions........................................................ 10
(d) Adjustment for Common Stock Issue......................................................... 11
(e) Adjustment for Convertible Securities Issue............................................... 12
(f) Adjustment for Certain Cash Dividends..................................................... 14
(g) Adjustment for Tender Offer............................................................... 15
(h) Current Market Price...................................................................... 16
(i) Consideration Received.................................................................... 16
(j) When De Minimis Adjustment May Be Deferred................................................ 16
(k) When No Adjustment Required............................................................... 17
(l) Notice of Adjustment...................................................................... 17
(m) Voluntary Reduction....................................................................... 17
(n) Notice of Certain Transactions............................................................ 17
(o) Reorganization of the Company............................................................. 18
(p) The Company Determination Final........................................................... 18
(q) Warrant Agent's Disclaimer................................................................ 19
(r) When Issuance or Payment May Be Deferred.................................................. 19
(s) Adjustment in Number of Shares............................................................ 19
(t) Form of Warrants.......................................................................... 19
SECTION 15. No Dilution or Impairment................................................................. 20
SECTION 16. Fractional Interests...................................................................... 20
SECTION 17. Notices to Warrant Holders................................................................ 20
SECTION 18. Merger, Consolidation or Change of Name of Warrant Agent.................................. 22
SECTION 19. Warrant Agent............................................................................. 22
SECTION 20. Registration Rights....................................................................... 24
SECTION 21. Change of Warrant Agent................................................................... 26
SECTION 22. Notices to the Company and Warrant Agent.................................................. 26
SECTION 23. Supplements and Amendments................................................................ 27
SECTION 24. Successors................................................................................ 27
SECTION 25. Termination............................................................................... 27
SECTION 26. Governing Law; Jurisdiction............................................................... 27
(ii)
SECTION 27. Benefits of this Agreement................................................................ 27
SECTION 28. Counterparts.............................................................................. 27
SECTION 29. Further Assurances........................................................................ 28
EXHIBIT A.............................................................................................. 1
(iii)
WARRANT AGREEMENT, dated as of January __, 1997, between
Pegasus Communications Corporation, a Delaware corporation (the "Company"), and
First Union National Bank, as warrant agent (the "Warrant Agent").
WHEREAS, the Company has entered into an underwriting
agreement (the "Underwriting Agreement"), dated January __, 1997 with CIBC Wood
Gundy Securities Corp., Xxxxxx Brothers Inc. and BT Securities Corporation (the
"Underwriters") in which the Company has agreed to sell to the Underwriters
100,000 units (the "Units") consisting of $100,000,000 principal amount of the
Company's __% Series A Cumulative Exchangeable Preferred Stock (the "Preferred
Stock") and 100,000 warrants, as hereinafter described (the "Warrants"), to
purchase up to an aggregate of 193,600 shares of Class A Common Stock, par value
$0.01 per share (the "Common Stock"), of the Company (the Common Stock issuable
upon exercise of the Warrants being referred to herein as the "Warrant Shares").
The Preferred Stock will be governed by the Company's Certificate of
Designation, Preferences and Relative, Participating, Optional and Other Special
Rights of Preferred Stock and Qualifications, Limitations and Restrictions
Thereof relating to the Preferred Stock (the "Certificate of Designation") and
shall be exchangeable, in full but not in part, for the Company's ___% Series A
Senior Subordinated Exchange Notes due 2007 (the "Exchange Notes"). The transfer
agent for the Preferred Stock will be First Union National Bank (the "Transfer
Agent") unless and until a successor is selected by the Company pursuant to the
Certificate of Designation. The Exchange Notes, if and when issued, will be
issued pursuant to an indenture (the "Exchange Note Indenture") between the
Company and First Union National Bank, as trustee (the "Exchange Note Trustee").
Each Warrant entitles the holder of the Warrant upon exercise to receive from
the Company, as adjusted as provided herein, 1.936 fully paid and nonassessable
shares of Common Stock of the Company in exchange for the Exercise Price (as
hereinafter defined), as provided herein;
WHEREAS, the Warrants and the Preferred Stock will be sold in
units and shall not be separately transferable until the earlier to occur of (i)
April 3, 1997 and (ii) in the event a Change of Control (as defined in the
Certificate of Designation) occurs, the date the Company mails notice thereof to
holders of the Preferred Stock or the Exchange Notes, as applicable (such
earlier date referred to herein as the "Separation Date"); and
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in connection
with the issuance of Warrant Certificates (as hereinafter defined) and other
matters as provided herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Issuance of Warrants. Warrants shall be originally
issued in connection with the issuance of the Units and shall not be separately
transferable from the Preferred Stock until on or after the Separation Date as
provided in Section 5 hereof.
SECTION 3. Warrant Certificates. The Warrants will be issued
in global form (the "Global Warrants"), substantially in the form of Exhibit A
(including the text accompanying footnotes 1 and 2 thereto but excluding such
footnotes), and in definitive form (the "Definitive Warrants"), substantially in
the form of Exhibit A (not including footnotes 1 and 2 thereto or the text
accompanying such footnotes). Each Definitive Warrant shall represent such of
the outstanding Warrants as shall be
specified therein and each Global Warrant shall provide that it shall represent
the aggregate amount of outstanding Warrants from time to time endorsed thereon
and that the aggregate amount of outstanding Warrants represented thereby may
from time to time be reduced or increased, as appropriate. Any endorsement of a
Global Warrant to reflect the amount of any increase or decrease in the amount
of outstanding Warrants represented thereby shall be made by the Warrant Agent
and the depositary with respect to the Global Warrants (the "Depositary") in
accordance with instructions given by the holder thereof. The Depository Trust
Company shall act as the Depositary until a successor shall be appointed by the
Company and the Warrant Agent. Upon request, a holder may receive from the
Depositary and the Warrant Agent separate Definitive Warrants as set forth in
Section 7 below. Any certificates (the "Warrant Certificates") evidencing the
Global Warrants or the Definitive Warrants to be delivered pursuant to this
Agreement shall be substantially in the form set forth in Exhibit A attached
hereto.
SECTION 4. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board, Chief Executive Officer, Chief Financial Officer, President or Vice
President and Secretary or an Assistant Secretary. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, Chief Executive Officer, Chief Financial
Officer, President or Vice President and Secretary or Assistant Secretary and
may be imprinted or otherwise reproduced on the Warrant Certificates and for
that purpose the Company may adopt and use the facsimile signature of any person
who shall have been Chairman of the Board, Chief Executive Officer, Chief
Financial Officer, President or Vice President and Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of he or she shall have ceased
to hold such office. The seal of the Company shall be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any
of the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.
SECTION 5. Transfers of Warrants Prior to the Separation of
Warrants and Notes; Separation of Warrants and Notes. Notwithstanding the
provisions of Section 7 hereof, on or after the Separation Date, the registered
holder of a Warrant Certificate containing a Warrant Legend (as hereinafter
defined) may surrender such Warrant Certificate accompanied by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent,
duly executed by the registered holder or holders thereof or by the duly
appointed legal representative thereof or by a duly authorized attorney to the
Warrant Agent, at its corporate trust office in ________________________ (the
"Warrant Agent Office") for the exchange of such Warrant containing a Warrant
Legend, in whole or in part, for a new Warrant Certificate or Warrant
Certificates not containing the first paragraph of the Warrant Legend (such
surrender and exchange being referred to herein as a "Separation" and the
related Warrants being referred to as "Separated").
Until the Separation Date, no Warrant may be sold, assigned or
otherwise transferred to any person unless simultaneously with such transfer,
the Warrant Agent receives confirmation from the
2
Transfer Agent for the Preferred Stock or the Exchange Note Trustee, as
applicable, that the holder thereof has requested a transfer to the same
transferee of one Warrant (subject to adjustment under Section 14 hereof) for
each $1,000 in aggregate liquidation preference of Preferred Stock or $1,000
aggregate principal amount of Exchange Notes, as applicable, so transferred. In
connection with the foregoing, upon original issuance (if prior to the
Separation Date) and, thereafter, until Separation, the Warrant Certificates
will bear the following legend (the "Warrant Legend"):
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE NOT
TRANSFERABLE SEPARATELY FROM THE COMPANY'S __% SERIES A CUMULATIVE
EXCHANGEABLE PREFERRED STOCK (THE "PREFERRED STOCK") ORIGINALLY SOLD AS
A UNIT WITH SUCH WARRANTS UNTIL THE EARLIER TO OCCUR OF (I) APRIL 3,
1997 AND (II) IN THE EVENT A CHANGE OF CONTROL (AS DEFINED IN THE
CERTIFICATE OF DESIGNATION RELATING TO THE PREFERRED STOCK) OCCURS, THE
DATE THE COMPANY MAILS NOTICE THEREOF (THE EARLIER OF SUCH DATES BEING
HEREIN REFERRED TO AS THE "SEPARATION DATE").
THE CLASS A COMMON STOCK, PAR VALUE $0.01, OF THE COMPANY (THE
"COMMON STOCK") FOR WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE
OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM
REGISTRATION REQUIREMENTS. ACCORDINGLY, NO WARRANT HOLDER SHALL BE
ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE
TIME OF EXERCISE, (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
RELATING TO THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF
THIS WARRANT (THE "WARRANT SHARES") HAS BEEN FILED WITH, AND DECLARED
EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), AND
NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF SUCH REGISTRATION
STATEMENT HAS BEEN ISSUED BY THE SEC OR (ii) THE ISSUANCE OF THE
WARRANT SHARES IS PERMITTED PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
SECTION 6. Registration and Countersignature. The Warrant
Agent, on behalf of the Company, shall number and register the Warrant
Certificates in a register as they are issued by the Company.
Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
The Warrant Agent shall, upon written instructions of the Chairman of the Board,
Chief Executive Officer, President, Vice President or the Chief Financial
Officer of the Company, initially countersign and deliver Warrants entitling the
holders thereof to purchase not more than the number of Warrant Shares referred
to above in the first recital hereof and shall countersign and deliver Warrants
as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the
registered holder(s) of the Warrant Certificates as the absolute owner(s)
thereof (notwithstanding any notation of ownership or other writing thereon made
by anyone), for all purposes, and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary.
3
SECTION 7. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Definitive Warrants. When
Definitive Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if its requirements for such transactions are met; provided, however, that the
Definitive Warrants presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Warrant Agent, duly executed by the holder
thereof or by his attorney, duly authorized in writing. Upon any such
registration of transfer, a new Definitive Warrant shall be issued to the
transferee(s) and the surrendered Definitive Warrant shall be cancelled by the
Warrant Agent. Cancelled Definitive Warrants shall thereafter be disposed of in
a manner satisfactory to the Company.
(b) Exchange or Transfer of a Definitive Warrant for a
Beneficial Interest in a Global Warrant. A Definitive Warrant may be exchanged
for a beneficial interest in a Global Warrant upon satisfaction of the
requirements set forth below. Upon receipt by the Warrant Agent of a Definitive
Warrant, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Warrant Agent, together with written instructions
directing the Warrant Agent to make, or to direct the Depositary to make, an
endorsement on the Global Warrant to reflect an increase in the number of
Warrants represented by the Global Warrant, then the Warrant Agent shall cancel
such Definitive Warrant and cause, or direct the Depositary to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Warrant Agent, the number of Warrants represented by the
Global Warrant to be increased accordingly. If no Global Warrants are then
outstanding, the Company shall issue and the Warrant Agent shall countersign a
new Global Warrant representing the appropriate number of Warrants and Warrant
Shares.
(c) Transfer and Exchange of Global Warrants. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Warrant Agreement and the
procedures of the Depositary therefor.
(d) Exchange of a Beneficial Interest in a Global
Warrant for a Definitive Warrant.
(i) Any person having a beneficial interest in a Global Warrant
may upon request exchange such beneficial interest for a
Definitive Warrant. Upon receipt by the Warrant Agent of
written instructions or such other form of instructions as is
customary for the Depositary from the Depositary or its
nominee on behalf of any person having a beneficial interest
in a Global Warrant then the Warrant Agent shall cause, in
accordance with the standing instructions and procedures
existing between the Depositary and Warrant Agent, the number
of Warrants represented by the Global Warrant to be reduced
and, following such reduction, the Company shall execute and
the Warrant Agent shall countersign and deliver to the
transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 7(d)
shall be registered in such names as the Depositary, pursuant
4
to instructions from its direct or indirect participants or
otherwise, shall instruct the Warrant Agent. The Warrant Agent
shall deliver such Definitive Warrants to the persons in whose
names such Warrants are so registered.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 7), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Countersigning of Definitive Warrants in Absence of
Depositary. If at any time:
(i) the Depositary for the Global Warrants notifies the Company
that the Depositary is unwilling or unable to continue as
Depositary for the Global Warrants and a successor Depositary
for the Global Warrants is not appointed by the Company within
90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of
Definitive Warrants under this Warrant Agreement,
then the Company shall execute, and the Warrant Agent, upon written instructions
signed by two officers of the Company, shall countersign and deliver Definitive
Warrants, in an aggregate number equal to the number of Warrants represented by
Global Warrants, in exchange for such Global Warrants.
(g) Cancellation of Global Warrant. At such time as all
beneficial interests in Global Warrants have either been exchanged for
Definitive Warrants, redeemed, repurchased or cancelled, all Global Warrants
shall be returned to or retained and cancelled by the Warrant Agent.
(h) Obligations with Respect to Transfers and Exchanges of
Warrants.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Warrant Agent is hereby
authorized to countersign, in accordance with the provisions
of Section 6 and this Section 7, Definitive Warrants and
Global Warrants as required pursuant to the provisions of this
Section 7.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration of transfer or exchange of Definitive Warrants or
Global Warrants shall be the valid obligations of the Company,
entitled to the same benefits under this Warrant Agreement, as
the Definitive Warrants or Global Warrants surrendered upon
such registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat
the person in whose name any Warrant is registered as the
absolute owner of such Warrant and neither the Warrant Agent,
nor the Company shall be affected by notice to the contrary.
(iv) No service charge shall be made to a holder for any
registration, transfer or exchange.
SECTION 8. Terms of Warrants; Exercise of Warrants. Subject to
the terms of this Agreement, each Warrant holder shall have the right, which may
be exercised on or after the Separation
5
Date until 5:00 p.m., New York, New York time on ________, 2007 (the "Expiration
Date"), to exercise each Warrant and receive from the Company the number of
fully paid and nonassessable Warrant Shares which the holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price then in effect for such Warrant Shares; provided, however, that no Warrant
holder shall be entitled to exercise such holder's Warrants at any time unless,
at the time of exercise, (i) a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), relating to the Warrant Shares has
been filed with, and declared effective by, the Securities and Exchange
Commission (the "SEC"), and no stop order suspending the effectiveness of such
registration statement has been issued by the SEC or (ii) the issuance of the
Warrant Shares is permitted pursuant to an exemption from the registration
requirements of the Securities Act. Each Warrant, when exercised, will entitle
the holder thereof to purchase 1.936 fully paid and nonassessable shares of
Common Stock at the Exercise Price. Any Warrant not exercised prior to the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time. No adjustments
as to dividends will be made upon exercise of the Warrants.
The Warrants may be exercised by surrendering to the Company
the Warrant Certificates evidencing the Warrants to be exercised with the
accompanying form of election to purchase properly completed and executed,
together with payment of the Exercise Price. Payment of the Exercise Price may
be made (A) by tendering shares of Preferred Stock having an aggregate
Liquidation Preference (as defined in the Certificate of Designation), plus,
without duplication, accumulated and unpaid dividends, if any, at the time of
tender equal to the Exercise Price, (B) by tendering Exchange Notes having an
aggregate principal amount, plus accrued and unpaid interest, if any, at the
time of tender equal to the Exercise Price, (C) by tendering Warrants having a
fair market value equal to the Exercise Price, (D) in the form of cash or by
certified or official bank check payable to the order of the Company or (E) by
any combination of shares of Preferred Stock, Warrants and cash or Exchange
Notes, Warrants and cash. For purposes of clause (C) above, the fair market
value of the Warrants shall be determined as follows: (A) if the Common Stock is
publicly traded and listed on the Nasdaq National Market or a national
securities exchange, the fair market value shall be equal to the greater of (1)
the difference between (a) the average closing price as quoted on the Nasdaq
National Market of the Common Stock for each of the ten trading days immediately
prior to the exercise date (or, if the Common Stock is listed on a national
securities exchange, the average closing price as reported on such national
securities exchange during such ten trading day period) and (b) the Exercise
Price, and (2) zero; or (B) if the Common Stock is not publicly traded, or
otherwise is not listed on a national securities exchange, the fair market value
shall be equal to the value per share as determined in good faith by the Board
of Directors of the Company (the "Board of Directors").
If Preferred Stock or Exchange Notes are surrendered in
payment of the Exercise Price, the Warrant Agent shall deliver such Preferred
Stock or Exchange Notes, as applicable, to the Company and the Company shall
deliver such Preferred Stock to the Transfer Agent or such Exchange Notes to the
Exchange Note Trustee, as applicable, for cancellation and the Transfer Agent or
Exchange Note Trustee, as applicable, shall notify the Company in writing
whether such Preferred Stock or Exchange Notes, as applicable, were in good form
and, if such Preferred Stock or Exchange Notes, as applicable, were in good form
the Company shall notify the Warrant Agent in writing that the Company has
received full and proper payment of the Exercise Price.
Subject to the provisions of Section 10 hereof, upon such
surrender of Warrants and payment of the Exercise Price, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the holder and in such name or names as the Warrant holder may
designate, a certificate or certificates for the number of full Warrant Shares
issuable upon the exercise of such Warrants together with cash, if any, as
provided in Section 16 hereof; provided, however, that
6
if any consolidation, merger or lease or sale of assets is proposed to be
effected by the Company as described in subsection (o) of Section 14 hereof, or
a tender offer or an exchange offer for shares of Common Stock of the Company
shall be made, upon such surrender of Warrants and payment of the Exercise Price
as aforesaid, the Successor Guarantor (as hereinafter defined) or the Company,
as applicable, shall, as soon as possible, but in any event not later than two
business days thereafter, issue and cause to be delivered the full number of
Warrant Shares issuable upon the exercise of such Warrants in the manner
described in this sentence together with cash, if any, as provided in Section 16
hereof. Such certificate or certificates shall be deemed to have been issued and
any person so designated to be named therein shall be deemed to have become a
holder of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price. No fractional shares shall be issued
upon exercise of any Warrants in accordance with Section 16 hereof. The Company
will pay to the holder of the Warrant at the time of exercise an amount in cash
equal to the current market value of any such fractional share of Common Stock
less a corresponding fraction of the Exercise Price.
The Warrants shall be exercisable, at the election of the
holders thereof, either in full or from time to time in part (in whole shares)
and, in the event that a certificate evidencing Warrants is exercised in respect
of fewer than all of the Warrant Shares issuable on such exercise at any time
prior to the Expiration Date, a new certificate evidencing the remaining Warrant
or Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Warrant Certificate or
Certificates pursuant to the provisions of this Section and of Section 4 of this
Agreement, and the Company, whenever required by the Warrant Agent, will supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates
shall then be disposed of by the Company in accordance with applicable law. The
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies or surrender to the
Company all shares of Preferred Stock or Exchange Notes received by the Warrant
Agent for the purchase of the Warrant Shares through the exercise of such
Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the holders
during normal business hours at its office. The Company shall supply the Warrant
Agent from time to time with such numbers of copies of this Agreement as the
Warrant Agent may request.
SECTION 9. Reports. Whether or not required by the rules and
regulations of the SEC, so long as any Warrants are outstanding, the Company
shall furnish to the Warrant Agent and mail to the holders of Warrants (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such Forms, including "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the SEC, the
Company will file a copy of all such information and reports with the SEC for
public availability (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request.
SECTION 10. Payment of Taxes. No service charge shall be made
to any holder of a Warrant for any exercise, exchange or registration of
transfer of Warrant Certificates, and the Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the
7
exercise of Warrants or to any Separation; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issue of any Warrant Certificates or any
certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
SECTION 11. Mutilated or Missing Warrant Certificates. If any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and the Warrant Agent may countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and in substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity and security therefor, if requested, also
satisfactory to them. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company or the Warrant Agent may prescribe.
SECTION 12. Reservation of Warrant Shares. The Company will at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or authorized and issued
Common Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
The Company or the transfer agent for the Common Stock (the
"Common Stock Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase represented by the Warrants will be irrevocably authorized
and directed at all times to reserve such number of authorized shares as shall
be required for such purpose. The Company will keep a copy of this Agreement on
file with the Common Stock Transfer Agent and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the rights of purchase represented by the Warrants. The Warrant Agent is
hereby irrevocably authorized to requisition from time to time from such Common
Stock Transfer Agent the stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement.
The Company will supply such Common Stock Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 16 hereof. The Company will
furnish such Common Stock Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder pursuant to Section
17 hereof.
Before taking any action which would cause an adjustment
pursuant to Section 14 hereof to reduce the Exercise Price below the then par
value (if any) of the Warrant Shares, the Company will take all corporate action
necessary, in the opinion of its counsel (which may be counsel employed by the
Company), in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants will be, upon payment of the Exercise Price and
issuance thereof, fully paid, nonassessable, free of preemptive rights and free
from all taxes, liens, charges and security interests with respect to the issue
thereof.
8
SECTION 13. Obtaining Stock Exchange Listings. The Company
shall also from time to time take all action necessary so that the Warrant
Shares, immediately upon their issuance upon the exercise of Warrants, will be
listed on the Nasdaq National Market or such other principal securities
exchanges, interdealer quotation systems and markets within the United States of
America, if any, on which other shares of Common Stock are then listed or
quoted.
SECTION 14. Adjustment of Exercise Price and Number of Warrant
Shares Issuable. The Exercise Price and the number of Warrant Shares issuable
upon the exercise of each Warrant are subject to adjustment from time to time
upon the occurrence of the events enumerated in this Section 14. For purposes of
this Section 14, "Common Stock" means the Common Stock and any other stock of
the Company, however designated, that has the right (subject to any prior rights
of any class or series of preferred stock) to participate in any distribution of
the assets or earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock
into a greater number of shares;
(3) combines its outstanding shares of Common Stock
into a smaller number of shares;
(4) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock
any shares of its capital stock,
then the Exercise Price and the number and kind of shares of capital stock of
the Company issuable upon the exercise of a Warrant (as in effect immediately
prior to such action) shall be proportionately adjusted so that the holder of
any Warrant thereafter exercised may receive the aggregate number and kind of
shares of capital stock of the Company which he would have owned immediately
following such action if such Warrant had been exercised immediately prior to
such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon exercise may
receive shares of two or more classes or series of capital stock of the Company,
the Company shall determine the allocation of the adjusted Exercise Price
between the classes or series of capital stock. After such allocation, the
exercise privilege and the Exercise Price of each class or series of capital
stock shall thereafter be subject to adjustment on terms comparable to those
applicable to Common Stock in this Section 14.
Such adjustment shall be made successively whenever any event
listed above shall occur.
9
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to
all holders of its Common Stock entitling them for a period expiring within 60
days after the record date mentioned below to purchase shares of Common Stock or
securities convertible into, or exchangeable or exercisable for, Common Stock at
a price per share (or with an initial conversion, exchange or exercise price)
less than the current market price per share on that record date, the Exercise
Price shall be adjusted in accordance with the following formula:
O + N x P
-----
E' = E x M
------------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record
date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record
date.
The adjustment pursuant to this subsection (b) shall be made
successively whenever any such rights, options or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive the rights, options or warrants. If at the end
of the period during which such rights, options or warrants are exercisable, not
all rights, options or warrants shall have been exercised, the Exercise Price
shall be immediately readjusted to what it would have been if "N" in the above
formula had been the number of shares actually issued.
(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock
any of its assets (including cash), debt securities, preferred stock or any
rights or warrants to purchase debt securities, assets or other securities of
the Company, the Exercise Price shall be adjusted in accordance with the
following formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
10
M = the current market price per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of
Common Stock. The Board of Directors shall determine the fair
market value.
The adjustment pursuant to this subsection (c) shall be made
successively whenever any such distribution is made and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive the distribution.
Notwithstanding the foregoing, if "F" in the above formula
equals or exceeds "M" in the above formula, then "M" in the above formula shall
be equal to the fair market value per share of the Common Stock on the record
date as determined in good faith by the Board of Directors and described in a
Board resolution which shall be filed with the Warrant Agent.
This subsection (c) does not apply to rights, options or
warrants referred to in subsection (b) of this Section 14.
(d) Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a
consideration per share less than the current market price per share of Common
Stock on the date the Company fixes the offering price of such additional
shares, the Exercise Price shall be adjusted in accordance with the following
formula:
P
--
E' = E x O + M
-----------
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share of Common Stock on the
date of issuance of such additional shares.
A = the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares.
The adjustment pursuant to subsection (d) shall be made
successively whenever any such issuance is made, and shall become effective
immediately after such issuance.
11
This subsection (d) does not apply to:
(1) any of the transactions described in subsections
(a), (b) and (c) of this Section 14;
(2) the exercise of Warrants or other warrants
outstanding on the date of this Agreement, or the conversion or
exchange of other securities convertible or exchangeable for Common
Stock;
(3) Common Stock issued to the Company's employees,
officers or directors (other than to Xxxxxxxx X. Xxxxx (the
"Principal") or (x) any immediate family member of the Principal or (y)
any trust, corporation, partnership or other entity, more than 50% of
the voting equity interests of which are owned directly or indirectly
by, and which is controlled by the Principal and/or such other persons
referred to in the immediately preceding clause (x)) under bona fide
employee benefit plans adopted by the Board of Directors and approved
by the holders of Common Stock when required by law, if such Common
Stock would otherwise be covered by this subsection (d);
(4) Common Stock issuable upon the exercise of rights
or warrants issued to the holders of Common Stock;
(5) Common Stock issued to shareholders of any person
which merges into the Company in proportion to their stock holdings of
such person immediately prior to such merger, upon such merger;
(6) Common Stock issued in a bona fide public
offering pursuant to a firm commitment underwriting;
(7) Common Stock issued in a bona fide private
placement through a placement agent which is a member firm of the
National Association of Securities Dealers, Inc. to Persons that are
not Affiliates (as defined in the Certificate of Designation) of the
Company (except to the extent that any discount from the current market
price attributable to restrictions on transferability of the Common
Stock, as determined in good faith by the Board of Directors and
described in a Board resolution which shall be filed with the Warrant
Agent, shall exceed 20% of the then current market price); or
(8) Common Stock issued to Affiliates of the Company
simultaneous with, and resulting in at least the same net proceeds per
share of Common Stock to the Company as, an issuance referred to in
paragraphs (6) or (7) of this Section 14(d).
(e) Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or
exchangeable for Common Stock (other than securities issued in transactions
described in subsections (a)(4), (a)(5), (b) and (c) of this Section 14) for a
consideration, per share of Common Stock initially deliverable upon conversion
or exchange of such securities, less than the current market price per share on
the date of issuance of such securities, the Exercise Price shall be adjusted in
accordance with the following formula:
12
P
--
E' = E x O + M
-----------
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of issuance of such
securities.
D = the maximum number of shares of Common Stock deliverable upon
conversion of or in exchange for such securities at the initial conversion or
exchange rate.
The adjustment pursuant to this subsection (e) shall be made
successively whenever any such issuance is made, and shall become effective
immediately after such issuance.
If all of the Common Stock deliverable upon conversion or
exchange of such securities has not been issued when such securities are no
longer outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This subsection (e) does not apply to:
(1) convertible securities issued to shareholders of
any person which merges into the Company, or with a subsidiary of the
Company, in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger;
(2) convertible securities issued in a bona fide
public offering pursuant to a firm commitment underwriting;
(3) convertible securities issued in a bona fide
private placement through a placement agent which is a member firm of
the National Association of Securities Dealers, Inc. (except to the
extent that any discount from the current market price attributable to
restrictions on transferability of Common Stock issuable upon
conversion, as determined in good faith by the Board of Directors and
described in a Board resolution which shall be filed with the Warrant
Agent, shall exceed 20% of the then current market price);
(4) convertible securities issued to Affiliates of
the Company simultaneous with, and resulting in at least the same net
proceeds per share of Common Stock to the Company as, an issuance
referred to in paragraphs (2) or (3) of this Section 14(e); or
13
(5) stock options issued to the Company's employees,
officers or directors (other than to the Principal or (x) any immediate
family member of the Principal or (y) any trust, corporation,
partnership or other entity, more than 50% of the voting equity
interests of which are owned directly or indirectly by, and which is
controlled by the Principal and/or such other persons referred to in
the immediately preceding clause (x)) under bona fide employee benefit
plans adopted by the Board of Directors and approved by the holders of
Common Stock when required by law, if such stock options would
otherwise be covered by this subsection (e).
(f) Adjustment for Certain Cash Dividends.
If the Company distributes to all holders of its Common Stock
cash in an aggregate amount that, together with (i) the aggregate amount of any
other distributions to all holders of Common Stock made exclusively in cash
within the 12 months preceding the record date for such distribution and in
respect of which no Exercise Price adjustment pursuant to subsection (c) or this
subsection (f) has been made previously and (ii) the aggregate of any cash plus
the fair market value (as determined in good faith by the Board of Directors and
described in a Board resolution) as of such record date of consideration payable
in respect of any tender offer by the Company or a subsidiary of the Company for
all or any portion of Common Stock consummated within the 12 months preceding
such record date and in respect of which no Exercise Price adjustment pursuant
to subsection (g) of this Section has been made previously, exceeds 7.50% of the
product of the current market price on such record date times the number of
shares of Common Stock outstanding on such date, the Exercise Price shall be
adjusted in accordance with the following formula:
E' = E x M - C
-----
M
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
M = the current market price per share of Common Stock on the record
date.
C = the amount of cash to be distributed applicable to one share of
Common Stock.
Notwithstanding the foregoing, if "C" in the above formula
equals or exceeds "M" in the above formula, then "M" in the above formula shall
be equal to the fair market value per share of the Common Stock on the record
date as determined in good faith by the Board of Directors and described in a
Board resolution which shall be filed with the Warrant Agent.
This subsection (f) does not apply to any cash that is
distributed as part of a distribution referred to in subsection (c) of this
Section or in connection with a transaction to which subsections (d) or (o) of
this Section applies.
14
(g) Adjustment for Tender Offer.
If the Company or any subsidiary of the Company consummates a
tender offer for all or any portion of Common Stock and purchases shares
pursuant to such tender offer for an aggregate consideration having a fair
market value (as determined in good faith by the Board of Directors and
described in a Board resolution) as of the last time (the "Expiration Time")
that tenders may be made pursuant to such tender offer (as it shall have been
amended) that, together with (i) the aggregate of the cash plus the fair market
value (as determined in good faith by the Board of Directors and described in a
Board resolution) of the consideration paid in respect of any other tender offer
by the Company or a subsidiary of the Company for all or any portion of Common
Stock consummated within the 12 months preceding the Expiration Time and in
respect of which no Exercise Price adjustment pursuant to this subsection (g)
has been made previously and (ii) the aggregate amount of any distributions to
all holders of Common Stock made exclusively in cash within the 12 months
preceding the Expiration Time and in respect of which no Exercise Price
adjustment pursuant to Subsection (c) of this Section has been made previously,
exceeds 7.50% of the product of the current market price immediately prior to
the Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time, the Exercise Price shall
be adjusted in accordance with the following formula:
E' = E x (M x O) - F
-----------
M x (O - N)
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
M = the current market price per share of Common Stock immediately
prior to the Expiration Time.
O = the number of shares of Common Stock outstanding (including any
tendered shares) at the Expiration Time.
F = the fair market value of the aggregate consideration paid for all
shares of Common Stock purchased pursuant to the tender offer.
N = the number of shares of Common Stock accepted for payment in such
tender offer.
If the number of shares accepted for payment in such tender
offer or the aggregate consideration payable therefor have not been finally
determined by the opening of business on the day following the Expiration Time,
the adjustment required by this subsection (g) shall, pending such final
determination, be made based upon the preliminary announced results of such
tender offer, and, after such final determination shall have been made, the
adjustment required by this subsection (g) shall be based upon the number of
shares accepted for payment in such tender offer and the aggregate consideration
payable therefor as so finally determined.
Notwithstanding the foregoing, if "F" in the above formula
equals or exceeds "(M x O)" in the above formula, then "M" in the above formula
shall be equal to the fair market value per share of the Common Stock
immediately prior to the Expiration Time as determined in good faith by the
Board of Directors and described in a Board resolution which shall be filed with
the Warrant Agent.
15
The Company shall not and shall cause its subsidiaries not to
allow the number of shares of Common Stock accepted for payment pursuant to any
such tender offer to equal the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time.
In no event shall any adjustment made pursuant to this
subsection (g) be made which would increase the Exercise Price.
(h) Current Market Price.
In subsections (b), (c), (d), (e), (f) and (g) of this Section
14 and in Section 16 the current market price per share of Common Stock on any
date is the average of the Quoted Prices of the Common Stock for 30 consecutive
trading days commencing 45 trading days before the date in question. The "Quoted
Price" of the Common Stock is the last reported sales price of the Common Stock
as reported by the Nasdaq National Market or if the Common Stock is listed on a
securities exchange, the last reported sales price of the Common Stock on such
exchange which shall be for consolidated trading if applicable to such exchange,
or if not so reported or listed, the last reported bid price of the Common
Stock. In the absence of one or more such quotations, the Board of Directors
shall determine the current market price on such basis as it in good faith
considers appropriate.
(i) Consideration Received.
For purposes of any computation respecting consideration
received pursuant to subsections (d), (e), (f) and (g) of this Section 14, the
following shall apply:
(1) in the case of the issuance of shares of Common
Stock 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;
(2) in the case of the issuance of shares of Common
Stock 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 of Directors
(irrespective of the accounting treatment thereof), whose determination
shall be conclusive, and described in a Board resolution which shall be
filed with the Warrant Agent; and
(3) in the case of the issuance of securities
convertible into or exchangeable for shares of Common Stock, the
aggregate consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such
securities plus the additional minimum consideration, if any, to be
received by the Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection).
(j) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment.
All calculations under this Section 14 shall be made to the
nearest cent or to the nearest 1/1000th of a share, as the case may be.
16
(k) When No Adjustment Required.
No adjustment need be made for a transaction referred to in
subsections (a), (b), (c), (d) or (e) of this Section 14 if Warrant holders are
to participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and notice
on which holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock
pursuant to any of the Company's plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value, or
from par value to no par value, or from no par value to par value, of the Common
Stock.
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.
Notwithstanding any other provision of this Section 14, no
adjustment to the Exercise Price shall reduce the Exercise Price below the then
par value per share of the Common Stock, and any such purported adjustment shall
instead reduce the Exercise Price to such par value. The Company hereby
covenants not to take any action to increase the par value per share of the
Common Stock.
(l) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall
provide the notices required by Section 17 hereof.
(m) Voluntary Reduction.
The Company from time to time may, as the Board of Directors
deems appropriate, reduce the Exercise Price by any amount for any period of
time if the period is at least 20 days and if the reduction is irrevocable
during the period; provided, however, that in no event may the Exercise Price be
less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail
to Warrant holders a notice of the reduction. The Company shall mail the notice
at least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A reduction of the Exercise Price pursuant to this Section
14(m), other than a reduction which the Company has irrevocably committed will
be in effect for so long as any Warrants are outstanding, does not change or
adjust the Exercise Price otherwise in effect for purposes of subsections (a),
(b), (c), (d), (e), (f) or (g) of this Section 14.
(n) Notice of Certain Transactions.
If:
(1) The Company takes any action that would require
an adjustment in the Exercise Price pursuant to subsections (a), (b),
(c), (d), (e), (f) or (g) of this Section 14 and if
17
the Company does not arrange for Warrant holders to participate
pursuant to subsection (k) of this Section 14;
(2) The Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (o) of this
Section 14; or
(3) there is a liquidation or dissolution of the
Company,
the Company shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
(o) Reorganization of the Company.
(1) If the Company consolidates or merges with or
into, or transfers or leases all or substantially all its assets to,
any person, upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of securities,
cash or other assets which the holder of a Warrant would have owned
immediately after the consolidation, merger, transfer or lease if the
holder had exercised the Warrant immediately before the record date
(or, if none, the effective date) of the transaction. Concurrently with
the consummation of such transaction, the corporation formed by or
surviving any such consolidation or merger if other than the Company,
or the person to which such sale or conveyance shall have been made
(any such person, the "Successor Guarantor"), shall enter into a
supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to
the adjustments provided for in this Section 14. The Successor
Guarantor shall mail to Warrant holders a notice describing the
supplemental Warrant Agreement. If the issuer of securities deliverable
upon exercise of Warrants under the supplemental Warrant Agreement is
an affiliate of the formed, surviving, transferee or lessee
corporation, that issuer shall join in the supplemental Warrant
Agreement.
(2) Notwithstanding paragraph (1) of this Section
14(o), in the case of any merger, reverse stock split, or other
transaction in which the publicly held Common Stock shall be converted
into the right to receive a consideration consisting solely of cash,
(A) this Warrant Agreement and each Warrant shall terminate and (B)
each holder of a Warrant, without having to take any action other than
the surrendering of such Warrant to the Company, shall receive an
amount equal to the amount (if any) by which the price per share
payable to, or which would be received by, any public holder of Common
Stock in connection with such transaction exceeds the Exercise Price
effective at that time.
(3) If this subsection (o) applies, subsections (a),
(b), (c), (d), (e), (f) and (g) of this Section 14 do not apply.
(p) The Company Determination Final.
Any determination that the Company or the Board of Directors
must make pursuant to subsection (a), (c), (d), (e), (f), (g), (h), (i) or (k)
of this Section 14 is conclusive.
18
(q) Warrant Agent's Disclaimer.
The Warrant Agent has no duty to determine when an adjustment
under this Section 14 should be made, how it should be made or what it should
be. The Warrant Agent has no duty to determine whether any provisions of a
supplemental Warrant Agreement under subsection (o) of this Section 14 are
correct. The Warrant Agent makes no representation as to the validity or value
of any securities or assets issued upon exercise of Warrants. The Warrant Agent
shall not be responsible for the Company's failure to comply with this Section
14.
(r) When Issuance or Payment May Be Deferred.
In any case in which this Section 14 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 Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
and (ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 16 hereof; 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 Warrant Shares, other capital stock
and cash upon the occurrence of the event requiring such adjustment.
(s) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this
Section 14, each Warrant outstanding prior to the making of the adjustment in
the Exercise Price shall thereafter evidence the right to receive upon payment
of the adjusted Exercise Price that number of shares of Common Stock (calculated
to the nearest thousandth) obtained from the following formula:
N'= N x E
--
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise
of a Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise Price prior
to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(t) Form of Warrants.
Irrespective of any adjustments 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.
19
SECTION 15. No Dilution or Impairment. (a) If any event shall
occur as to which the provisions of Section 14 are not strictly applicable but
the failure to make any adjustment would adversely affect the purchase rights
represented by the Warrants in accordance with the essential intent and
principles of such Section 14, then, in each such case, the Company shall
appoint an investment banking firm of recognized national standing, or any other
financial expert that does not (or whose directors, officers, employees,
affiliates or stockholders do not) have a direct or material indirect financial
interest in the Company or any of its subsidiaries, who has not been, and, at
the time it is called upon to give independent financial advice to the Company,
is not (and none of its directors, officers, employees, affiliates or
stockholders are) a promoter, director or officer of the Company or any of its
subsidiaries, which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles established in Section
14, necessary to preserve, without dilution, the purchase rights, represented by
the Warrants. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the holders of the Warrants and shall make the adjustments
described therein.
(b) The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants, 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 holder of the Warrants against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (1) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock on the exercise of the Warrants from time
to time outstanding and (2) will not take any action which results in any
adjustment of the Exercise Price if the total number of Warrant Shares issuable
after the action upon the exercise of all of the Warrants would exceed the total
number of shares of Common Stock then authorized by the Company's certificate of
incorporation and available for the purposes of issue upon such exercise. A
consolidation, merger, reorganization or transfer of assets involving the
Company covered by Section 14(o) shall not be prohibited by or require any
adjustment under this Section 15.
SECTION 16. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 16,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall notify the Warrant Agent in writing of the amount to be paid in
lieu of the fraction of a Warrant Share and concurrently pay or provide to the
Warrant Agent for payment to the Warrant holder an amount in cash equal to the
product of (i) such fraction of a Warrant Share and (ii) the difference of the
current market price of a share of Common Stock over the Exercise Price.
SECTION 17. Notices to Warrant Holders. Upon any adjustment of
the Exercise Price pursuant to Section 14 hereof, the Company shall within 15
days thereafter (i) cause to be filed with the Warrant Agent a certificate of a
firm of independent public accountants of recognized standing selected by the
Board of Directors (who may be the regular auditors of the Company) setting
forth the Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based and setting forth the number of Warrant Shares (or portion thereof)
issuable after such adjustment in the Exercise Price, upon exercise of a Warrant
and payment of the adjusted Exercise Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the registered holders of the Warrant
Certificates at such registered holder's address appearing on the Warrant
register written notice of such
20
adjustments by first-class mail, postage prepaid. Where appropriate, such notice
may be given in advance and included as a part of the notice required to be
mailed under the other provisions of this Section 17.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or warrants;
or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in shares of Common Stock or
distributions referred to in subsection (a) of Section 14 hereof); or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is required, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange offer for
shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) a Change of Control (as defined in the Certificate of
Designation) occurs; or
(f) the Company proposes to take any action (other than
actions of the character described in Section 14(a)) which would require an
adjustment of the Exercise Price pursuant to Section 14;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered holders of the Warrant Certificates at his
address appearing on the Warrant register, at least 15 days (or 10 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 17 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, lease, dissolution, liquidation or winding up, or the vote
upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
21
SECTION 18. Merger, Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 21 hereof. In case at the time such successor to the
Warrant Agent shall succeed to the agency created by this Agreement, and in case
at that time any of the Warrant Certificates shall have been countersigned but
not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent; and in case at that time any of
the Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor to the Warrant
Agent; and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has been changed
may adopt the countersignature under its prior name, and in case at that time
any of the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant Certificates either in its prior name or in
its changed name, and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement.
SECTION 19. Warrant Agent. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the
Warrant Certificates shall be taken as statements of the Company. The
Warrant Agent assumes no responsibility for the correctness of any of
the same except such as describe the Warrant Agent or action taken or
to be taken by it. The Warrant Agent assumes no responsibility with
respect to the distribution of the Warrant Certificates except as
herein otherwise provided.
(b) The Warrant Agent shall not be responsible for
any failure of the Company to comply with any of the covenants
contained in this Agreement or in the Warrant Certificates to be
complied with by the Company.
(c) The Warrant Agent may consult at any time with
counsel satisfactory to it (who may be counsel for the Company) and the
Warrant Agent shall incur no liability or responsibility to the Company
or to any holder of any Warrant Certificate in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant
Certificate for any action taken in reliance on any Warrant
Certificate, certificate of shares of Common Stock, notice, resolution,
waiver, consent, order, certificate, or other paper, document or
instrument believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties. The Warrant Agent shall
not be bound by any notice or demand, or any waiver, modification,
termination or revision of this
22
Agreement or any of the terms hereof, unless evidenced by a writing
between the Company and the Warrant Agent.
(e) The Company agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent
in the execution of this Agreement, to reimburse the Warrant Agent for
all expenses, taxes (including withholding taxes) and governmental
charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution, delivery and performance of its
responsibilities under this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including
judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the execution, delivery and performance of its
responsibilities under this Agreement except as a result of its
negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other
action likely to involve expense unless the Company or one or more
registered holders of Warrant Certificates shall furnish the Warrant
Agent with reasonable security and indemnity for any costs and expenses
which may be incurred, but this provision shall not affect the power of
the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of
action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the
Warrant Certificates or the production thereof at any trial or other
proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant
Agent and any recovery of judgment shall be for the ratable benefit of
the registered holders of the Warrants, as their respective rights or
interests may appear.
(g) Except as required by law, the Warrant Agent, and
any stockholder, director, officer or employee of the Warrant Agent,
may buy, sell or deal in any of the Warrants or other securities of the
Company or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for
any other legal entity.
(h) The Warrant Agent shall act hereunder solely as
agent for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement
except for its own negligence or bad faith.
(i) The Warrant Agent shall not at any time be under
any duty or responsibility to any holder of any Warrant Certificate to
make or cause to be made any adjustment of the Exercise Price or number
of the Warrant Shares or other securities or property deliverable as
provided in this Agreement, or to determine whether any facts exist
which may require any of such adjustments, or with respect to the
nature or extent of any such adjustments, when made, or with respect to
the method employed in making the same. The Warrant Agent shall not be
accountable with respect to the validity or value or the kind or amount
of any Warrant Shares or of any securities or property which may at any
time be issued or delivered upon the exercise of any Warrant or with
respect to whether any such Warrant Shares or other securities will
when issued be validly issued and fully paid and nonassessable, and
makes no representation with respect thereto.
23
(j) In the absence of bad faith on its part, the
Warrant Agent may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Warrant Agent and conforming
to the requirements of this Warrant Agreement. However, the Warrant
Agent shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Agreement.
(k) The Warrant Agent may rely and shall be fully
protected in relying upon any document believed by it to be genuine and
to have been signed or presented by the proper person.
SECTION 20. Registration Rights.
(a) The Company shall prepare and cause to be filed with the
SEC pursuant to Rule 415 under the Securities Act (the "Shelf Registration") a
shelf registration statement on the appropriate form (the "Registration
Statement") relating to the offer and sale by the Company of the Warrant Shares
to the holders of Warrants upon exercise of the Warrants and resales of the
Warrant Shares by the holders thereof.
(b) The Company shall use its reasonable best efforts to cause
such Registration Statement to be declared effective by the SEC on or prior to
the date of commencement of the Offering (as defined in the Underwriting
Agreement).
(c) The Company shall use its reasonable best efforts to keep
the Registration Statement continuously effective under the Securities Act in
order to permit the prospectus included therein to be lawfully delivered by the
Company to the holders exercising the Warrants until 30 days after the
Expiration Date or such shorter period that will terminate when all the Warrants
have been exercised; provided that, except as provided below with respect to any
Black Out Period (as defined below), the Company shall be deemed not to have
used its best efforts to keep the Registration Statement effective during the
requisite period if it voluntarily takes any action that would result in its not
being able to offer and sell the Warrant Shares upon exercise of the Warrants
during that period, unless such action is required by applicable law.
Notwithstanding the foregoing, the Company shall not be required to amend or
supplement the Registration Statement, any related prospectus or any document
incorporated therein by reference, for a period (a "Black Out Period") not to
exceed, for so long as this Agreement is in effect, an aggregate of 60 days in
any calendar year, in the event that (i) an event occurs and is continuing as a
result of which the Registration Statement, any related prospectus or any
document incorporated therein by reference as then amended or supplemented
would, in the Company's good faith judgment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (ii)(A) the Company determines in its good faith
judgment that the disclosure of such event at such time would have a material
adverse effect on the business, operations or prospects of the Company or (B)
the disclosure otherwise relates to a material business transaction which has
not yet been publicly disclosed; provided that no Black Out Period may be in
effect during the six months prior to the Expiration Date.
(d) The Company shall cause the Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the effective
date of the Registration Statement, amendment or supplement, (i) to comply in
all material respects with the applicable requirements of the Securities Act and
the rules and regulations of the SEC and (ii) not to contain any untrue
statement of
24
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(e) The Company shall give prompt written notice to the
holders of the Warrants and the Warrant Agent of (1) the effectiveness of the
Registration Statement or any post-effective amendment thereto, (2) the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation or threatening of any proceedings for that purpose,
(3) the receipt by the Company or its legal counsel of any notification with
respect to the suspension of the qualification of the Warrant Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (4) the happening of any event that requires the Company to make
changes in the Registration Statement or the prospectus in order to make the
statements therein not misleading and (5) the commencement and termination of
any Black Out Period.
(f) The Company shall use its reasonable best efforts to
prevent the issuance or obtain the withdrawal of any order suspending the
effectiveness of the Registration Statement at the earliest possible time.
(g) Upon the occurrence of any event contemplated by Section
20(e)(4) or (5) of this Agreement (subject to the last sentence of Section 20(c)
of this Agreement) the Company shall promptly prepare a post-effective amendment
to the Registration Statement or a supplement to the related prospectus or file
any other required document so that, as thereafter delivered to holders of the
Warrants, the prospectus will not contain an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and will
contain the current information required by the Securities Act.
(h) Not later than the effective date of the Registration
Statement, the Company will provide a CUSIP number for the Warrant Shares and
provide the Warrant Agent with printed certificates for the Warrant Shares.
(i) The Company will comply with all rules and regulations of
the SEC to the extent and so long as they are applicable to the Shelf
Registration.
(j) The Company shall register or qualify or cooperate with
the holders in connection with the registration or qualification of the Warrant
Shares for offer and sale by the Company upon exercise of the Warrants under the
securities or blue sky laws of such states of the United States as any holder
reasonably requests and do any and all other acts or things necessary or
advisable to enable such offer and sale in such jurisdictions; provided that the
Company shall not be required to (i) qualify to do business in any jurisdiction
in which it is not then so qualified or (ii) take any action which would subject
it to general service of process or to taxation in any jurisdiction in which it
is not then so subject.
(k) The Company shall bear all expenses incurred by it in
connection with the performance of its obligations under this Section 20.
(l) The Company acknowledges and agrees that any remedy at law
for breach of any provision of this Section 20 will be inadequate and that, in
addition to any other remedies that the holder may have, the holders shall be
entitled to the remedy of specific performance to ensure the Company performs
its obligations under this Section 20. The election of any one or more remedies
by the holders hereunder shall not constitute a waiver of the right to pursue
other available remedies.
25
SECTION 21. Change of Warrant Agent. If the Warrant Agent
shall become incapable of acting as Warrant Agent or shall resign as provided
below, the Company shall appoint a successor to such Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after it
has been notified in writing of such incapacity by the Warrant Agent or by the
registered holders of a majority of Warrants, then the registered holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to such Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. After
appointment, the successor to the Warrant Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Warrant Agent without further act or deed; but the former Warrant Agent shall
deliver and transfer to the successor to the Warrant Agent any property at the
time held by it hereunder and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the appointment of a successor to the Warrant
Agent.
The Warrant Agent may resign at any time and be discharged
from the obligations hereby created by so notifying the Company in writing at
least 30 days in advance of the proposed effective date of its resignation. If
no successor Warrant Agent accepts the engagement hereunder by such time, the
Company shall act as Warrant Agent.
SECTION 22. Notices to the Company and Warrant Agent. Any
notice or demand authorized by this Agreement to be given or made by the Warrant
Agent or by the registered holder of any Warrant Certificate to or on the
Company shall be sufficiently given or made when and if deposited in the mail,
first class or registered, postage prepaid, addressed (until another address is
filed in writing by the Company with the Warrant Agent), as follows:
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
Xxxxx 000, 0 Xxxxxx Xxxxxxxxx Xxxxxx,
000 Xxxxxxxxxx Xxxx,
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
with a copy to:
Drinker Xxxxxx & Xxxxx
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Any notice pursuant to this Agreement to be given by the
Company or by the registered holder(s) of any Warrant Certificate to the Warrant
Agent shall be sufficiently given when and if deposited in the mail, first-class
or registered, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Company) to the Warrant Agent at the
Warrant Agent Office as follows:
First Union National Bank
000 X. Xxxxx Xxxxxx, 00xx xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxx
26
Notice may also be given by facsimile transmission (effective
when receipt is acknowledged) or by overnight delivery service (effective the
next business day).
SECTION 23. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement without
the consent of any holders of Warrant Certificates in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not in any way materially adversely affect the interests of the holders of
Warrant Certificates. Any amendment or supplement to this Agreement that has a
material adverse effect on the interests of holders of the Warrants shall
require the written consent of registered holders of a majority of the then
outstanding Warrants (excluding Warrants held by the Company or any of its
Affiliates). The consent of each holder of a Warrant affected shall be required
for any amendment pursuant to which the Exercise Price would be increased or the
number of Warrant Shares purchasable upon exercise of Warrants would be
decreased (other than in accordance with Section 14, 15 or 16 hereof).
SECTION 24. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder, including, without limitation, any Successor Guarantor under Section
14(o) of this Agreement.
SECTION 25. Termination. This Agreement shall terminate at
5:00 p.m., New York, New York time on ___________, 2007. Notwithstanding the
foregoing, this Agreement will terminate on such earlier date on which all
outstanding Warrants have been exercised.
SECTION 26. Governing Law; Jurisdiction. This Agreement and
each Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be governed
by and construed in accordance with the internal laws of said State. The parties
hereto irrevocably consent to the jurisdiction of the courts of the State of New
York and any federal court located in such state in connection with any action,
suit or proceeding arising out of or relating to this Agreement.
SECTION 27. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the registered holders of the Warrant Certificates.
SECTION 28. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
27
SECTION 29. Further Assurances. From time to time on and after
the date hereof, the Company shall deliver or cause to be delivered to the
Warrant Agent such further documents and instruments and shall do and cause to
be done such further acts as the Warrant Agent shall reasonably request (it
being understood that the Warrant Agent shall have no obligation to make such
request) to carry out more effectively the provisions and purposes of this
Agreement, to evidence compliance herewith or to assure itself that it is
protected hereunder.
[Signature Page Follows]
28
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
PEGASUS COMMUNICATIONS CORPORATION
By: _______________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By: ______________________________________
Authorized Signatory
EXHIBIT A
Form of Initial Warrant Certificate
[Face]
EXERCISABLE ON OR AFTER THE SEPARATION DATE (AS DEFINED HEREIN). THE
WARRANTS EVIDENCED BY THIS CERTIFICATE ARE NOT TRANSFERABLE SEPARATELY FROM THE
COMPANY'S ___ % SERIES A CUMULATIVE EXCHANGEABLE PREFERRED STOCK (THE "PREFERRED
STOCK") ORIGINALLY SOLD AS A UNIT WITH SUCH WARRANTS UNTIL THE EARLIER TO OCCUR
OF (I) APRIL 3, 1997 AND (II) IN THE EVENT A CHANGE OF CONTROL (AS DEFINED IN
THE CERTIFICATE OF DESIGNATION RELATING TO THE PREFERRED STOCK) OCCURS, THE DATE
THE COMPANY MAILS NOTICE THEREOF (THE EARLIER OF SUCH DATES BEING HEREIN
REFERRED TO AS THE "SEPARATION DATE").
THE CLASS A COMMON STOCK, PAR VALUE $0.01, OF THE COMPANY (THE "COMMON
STOCK") FOR WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM REGISTRATION REQUIREMENTS. ACCORDINGLY, NO WARRANT HOLDER SHALL
BE ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE TIME
OF EXERCISE, (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATING TO
THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT (THE
"WARRANT SHARES") HAS BEEN FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING THE
EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC OR (ii)
THE ISSUANCE OF THE WARRANT SHARES IS PERMITTED PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
No. _______ _________ Warrants
Warrant Certificate
Pegasus Communications Corporation
This Warrant Certificate certifies that ______, or its
registered assigns, is the registered holder of Warrants expiring _________,
2007 (the "Warrants"), to purchase shares of the Class A Common Stock, par value
$.01 (the "Common Stock"), of Pegasus Communications Corporation, a Delaware
corporation (the "Company"). Each Warrant entitles the registered holder upon
exercise at any time from 9:00 a.m. on the Separation Date referred to below
until 5:00 p.m. New York, New York time on ________, 2007, to receive from the
Company 1.936 fully paid and nonassessable shares of Common Stock (the "Warrant
Shares") at the initial exercise price (the "Exercise Price") of $_______ per
share (A) by tendering shares of Preferred Stock having an aggregate Liquidation
Preference (as defined in the Certificate of Designation), plus, without
duplication, accumulated and unpaid dividends, if any, at the time of tender
equal to the Exercise Price, (B) by tendering Exchange Notes having an aggregate
principal amount, plus accrued and unpaid dividends, if any, at the time of
tender equal to the Exercise Price, (C) by tendering Warrants having a fair
market value equal to the Exercise Price, (D) in the form of cash or by
certified or official bank check payable to the order of the Company in the
amount of the Exercise Price or (E) by any combination of shares of Preferred
Stock, Warrants and cash or Exchange Notes, Warrants and cash, equal to the
exercise price, and upon surrender of this Warrant Certificate and such payment
of the Exercise Price at the office or agency of the Warrant Agent (as
hereinafter defined), but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to below. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the warrant agreement (the "Warrant Agreement"),
dated as of January ___, 1997, between the Company and First Union National
Bank, as warrant agent (the "Warrant Agent"). All capitalized terms not defined
herein shall have the meanings assigned to such terms in the Warrant Agreement.
No Warrant may be exercised before the Separation Date. No
Warrant may be exercised after 5:00 p.m., New York, New York Time on _________,
2007 and to the extent not exercised by such time such Warrants shall become
void.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
IN WITNESS WHEREOF, Pegasus Communications Corporation has
caused this Warrant Certificate to be signed by its President and by its
Secretary and has caused a facsimile of its corporate seal to be affixed
hereunto or imprinted hereon.
Dated: _____________, 1997
Pegasus Communications Corporation
By:
-------------------------------------
Xxxxxxxx X. Xxxxx
President
By:
-------------------------------------
Xxxxxx X. Xxxxxx
Secretary
(seal)
Countersigned:
First Union National Bank,
as Warrant Agent
By:
------------------------
Authorized Signatory
Form of Warrant Certificate
[Reverse]
[Unless and until it is exchanged in whole or in part for
Warrants in definitive form, this Warrant may not be transferred except as a
whole by the depositary to a nominee of the depositary or by a nominee of the
depositary to the depositary or another nominee of the depositary or by the
depositary or any such nominee to a successor depositary or a nominee of such
successor depositary. The Depository Trust Company ("DTC") (55 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx) shall act as the depositary until a successor shall be appointed
by the Company and the Warrant Agent. Unless this certificate is presented by an
authorized representative of DTC to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]1
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring ______________, 2007 entitling the
holder upon exercise to receive shares of Common Stock of the Company, and are
issued or to be issued pursuant to the Warrant Agreement duly executed and
delivered by the Company to the Warrant Agent, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Warrant Agent, the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
Warrants may be exercised at any time from 9:00 a.m. on or
after the earlier to occur of (i) April 3, 1997 and (ii) in the event a Change
of Control (as defined in the Certificate of Designation) occurs, the date the
Company mails notice thereof to holders of the Preferred Stock or the Exchange
Notes, as applicable (such earlier date referred to herein as the "Separation
Date") and until 5:00 p.m., New York, New York time on ______________, 2007. The
holder of Warrants evidenced by this Warrant Certificate may exercise them by
surrendering this Warrant Certificate, with the form of election to purchase set
forth hereon properly completed and executed, together with payment of the
Exercise Price (A) by tendering shares of Preferred Stock having an aggregate
Liquidation Preference (as defined in the Certificate of Designation), plus,
without duplication, accumulated and unpaid dividends, if any, at the time of
tender equal to the Exercise Price, (B) by tendering Exchange Notes having an
aggregate principal amount, plus accrued and unpaid interest, if any, at the
time of tender equal to the Exercise Price, (C) by tendering Warrants having a
fair market value equal to the Exercise Price, (D) in the form of cash or by
certified or official bank check payable to the order of the Company in the
amount of the Exercise Price or (E) by any combination of shares of Preferred
Stock, Warrants and cash or Exchange Notes, Warrants and cash, equal to the
Exercise Price, at the office of the Warrant Agent. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any dividends
on any Common Stock issuable upon exercise of this Warrant.
----------------------
1. This paragraph is to be included only if the Warrant is in global form.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject to
certain conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The Warrant Agreement provides that the Company shall be bound
by certain registration obligations with respect to the Common Stock issuable
upon exercise of the Warrants, as set forth in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided in
the Warrant Agreement, without charge except for any tax or other governmental
charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) thereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, of any distribution to
the holder(s) hereof, and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive __________ shares of
Common Stock and herewith (check item) tenders payment for such shares to the
order of Pegasus Communications Corporation in the amount of $_______ (the
"Purchase Price") in accordance with the terms hereof.
[] Shares of Preferred Stock having an aggregate Liquidation
Preference, plus, without duplication, accumulated and unpaid
dividends, equal to the Purchase Price.
[] Exchange Notes having an aggregate principal amount, plus
accrued and unpaid interest, equal to the Purchase Price.
[] Warrants having a fair market value (as defined in the Warrant
Agreement) equal to the Purchase Price.
[] Cash or certified or official bank check payable to the order
of the Company in an amount equal to the Purchase Price.
[] (A) Shares of Preferred Stock, plus, without duplication,
accumulated and unpaid dividends, (B) Warrants and (C) cash,
in an aggregate amount equal to the Purchase Price.
[] (A) Exchange Notes, plus accumulated and unpaid interest, (B)
Warrants and (C) cash, in an aggregate amount equal to the
Purchase Price.
The undersigned requests that a certificate for such shares be
registered in the name of , whose address is _________________________________
______________________________________ and that such shares be delivered to ___
whose address is ________________________________.
If said number of shares is less than all of the shares of
Common Stock purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be registered in
the name of _____________________, whose address is __________________, and that
such Warrant Certificate be delivered to ________________, whose address is
_____________________.
Date: ____________________
Your Signature:______________________________
(Sign exactly as your name appears on the face
of this Warrant)
Signature Guarantee:
SCHEDULE OF EXCHANGES OF GLOBAL WARRANTS(2)
The following exchanges of a part of this Global Warrant for definitive Warrants
have been made:
Number of Warrants
Amount of decrease Amount of increase in in this Global
in Number of Number of Warrants Warrant following Signature of
Warrants in this in this Global such decrease or authorized officer of
Date of Exchange Global Warrant Warrant increase Warrant Agent
--------------------------------------------------------------------------------------------------------------------------------
--------
2. This is to be included only if the Warrant is in global form.
