Exhibit 4.4
COUNTY SEAT STORES, INC.
WARRANT AGREEMENT
Dated as of October 29, 1997
Series A Warrants to Purchase Shares of Common Stock
Par Value $0.01 Per Share
WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Warrant Agreement"), dated as of October 29,
1997, is executed and delivered by County Seat Stores, Inc., a Minnesota
corporation (together with any successor thereto, the "Company") and First
Trust National Association, as warrant agent (together with any successor
warrant agent, the "Warrant Agent"), for the benefit of the holders (the
"Holders") from time to time of the Warrant Certificates (as hereinafter
defined).
WHEREAS, the Company has entered into a Purchase Agreement dated as of
October 23, 1997 (the "Purchase Agreement") with Jefferies & Company, Inc.
(the "Initial Purchaser"), pursuant to which the Company has agreed, among
other things, (i) to sell to the Initial Purchaser 85,000 units (the
"Units"), each consisting of (A) $1,000 principal amount of 12 3/4% Senior
Notes due 2004 (each a "Note" and, collectively, the "Notes") to be issued
under an indenture dated as of even date herewith (the "Indenture"), between
the Company and First Trust National Association, as trustee (the "Trustee"),
and (B) one Series A warrant (each a "Warrant" and, collectively with the
Series A warrants to be issued to the Initial Purchaser as described in (ii)
below, the "Warrants" and the certificates evidencing the Warrants being
hereinafter referred to as the "Warrant Certificates") to initially purchase
26.8908 shares of the Company's common stock, $.01 par value per share (the
"Common Stock"), at an initial exercise price of $.01 per share, subject to
adjustment in accordance with the terms hereof and (iii) to issue to the
Initial Purchaser Warrants to initially purchase 571,429 shares of Common
Stock at an initial exercise price of $.01 per share, subject to adjustment
in accordance with the terms hereof; and
WHEREAS, the Warrants and the Notes shall be separately transferable on
and after the Separation Date (as hereinafter defined); and
NOW, THEREFORE, in consideration of the purchase of the Units by the
Initial Purchaser and other valuable consideration, the adequacy and receipt
of which is hereby acknowledged, and for the purpose of defining the
respective rights and obligations of the Company, the Warrant Agent and the
Holders, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.1. Issuance of Warrants. Each Warrant Certificate shall,
when countersigned by the Warrant Agent, evidence the number of Warrants
specified therein, and each Warrant evidenced thereby shall represent the
right, subject to the provisions contained herein and therein, to purchase
from the Company (and the Company shall issue and sell to such Holder)
26.8908 fully paid and non-assessable shares of Common Stock (the shares of
Common Stock purchasable upon exercise of a Warrant being hereinafter
referred to as the "Warrant Shares" and, where appropriate, such term shall
also mean the other securities or property purchasable and deliverable upon
exercise of a Warrant as provided in Article v) at the price specified herein
and therein, in each case subject to adjustment as provided herein and
therein.
SECTION 1.2. Form of Warrant Certificates. The Warrant Certificates
will initially be issued either in global form (the "Global Warrants") or in
registered form as definitive Warrant certificates (the "Definitive
Warrants"). The Warrant Certificates evidencing the Global Warrants or the
Definitive Warrants to be delivered pursuant to this Warrant Agreement shall
be substantially in the form set forth in Exhibit A attached hereto, dated
the date on which countersigned. Such Global Warrants shall represent such of
the outstanding Warrants as shall be specified therein and each shall provide
that it shall represent the aggregate amount of outstanding Warrants from
time to time endorsed thereon and that the aggregate mount 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 Depositary (as defined) in
accordance with instructions given by the Holder thereof. The Depository
Trust Company ("DTC"), a New York corporation, shall act as the depository
with respect to the Global Warrants (the "Depositary") until a successor
shall be appointed by the Company. Upon written request, a Holder may receive
from the Warrant Agent Definitive Warrants as set forth in Section 1.9 hereof.
SECTION 1.3. Execution of Warrant Certificates. The Warrant
Certificates shall be executed on behalf of the Company by its President or
any Vice President and attested to by its Secretary or Assistant Secretary,
under its corporate seal. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the
Company may be in the form of a facsimile hereof and may be impressed,
affixed, imprinted or otherwise reproduced on the Warrant Certificates.
Typographical and other minor errors or defects in any such reproduction of
the seal or any such signature shall not affect the validity or
enforceability of any Warrant Certificate that has been duly countersigned
and delivered by the Warrant Agent.
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
Certificate so signed shall be countersigned and delivered by the Warrant
Agent or disposed of by the Company, such Warrant Certificate nevertheless
may be countersigned and delivered or disposed of as though the person who
signed such Warrant Certificate had not ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of the Company
by such persons as, at the actual date of the execution of such Warrant
Certificate, shall be the proper officers of the Company, although at the
date of the execution and delivery of this Warrant Agreement any such person
was not such an officer.
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SECTION 1.4. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the terms and conditions set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 1.5. Authentications and Delivery. Subject to the immediately
following paragraph of this Section 1.5, Warrant Certificates shall be
authenticated by manual signature and dated the date of authentication by the
Warrant Agent and shall not be valid for any purpose unless so authenticated
and dated. The Warrant Certificates shall be numbered and shall be registered
in the Warrant Register (as defined in Section 1.8 hereof).
Upon the receipt by the Warrant Agent of a written order of the Company,
which order shall be signed by its President or any Vice President and
attested to by its Secretary or Assistant Secretary and shall specify the
amount of Warrants to be authenticated, whether the Warrants are to be Global
Warrants or Definitive Warrants, the date of such Warrants and such other
information as the Warrant Agent may reasonably request, without any further
action by the Company, the Warrant Agent is authorized, upon receipt from the
Company at any time and from time to time of the Warrant Certificates, duly
executed as provided in Section 1.3 hereof, to authenticate the Warrant
Certificates and deliver them. Such authentication shall be by a duly
authorized signatory of the Warrant Agent (although it shall not be necessary
for the same signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such
authorized signatory before the Warrant Certificate shall be disposed of by
the Company, such Warrant Certificate nevertheless may be delivered or
disposed of as though the person who authenticated such Warrant Certificate
had not ceased to be such authorized signatory of the Warrant Agent; and any
Warrant Certificate may be authenticated on behalf of the Warrant Agent by
such persons as, at the actual time of authentication of such Warrant
Certificates, shall be the duly authorized signatories of the Warrant Agent,
although at the time of the execution and delivery of this Warrant Agreement
any such person is not an authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall be
in substantially the form set forth in Exhibit A hereto.
SECTION 1.6. Temporary Warrant Certificates. Pending the preparation
of the definitive Warrant Certificates, the Company may execute, and the
Warrant Agent shall authenticate and deliver, temporary Warrant Certificates,
which are printed, lithographed, typewritten or otherwise produced,
substantially of the tenor of the definitive Warrant Certificates in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Warrant
Certificates may determine, as evidenced by their execution of such Warrant
Certificates.
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If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of definitive Warrant Certificates, the temporary
Warrant Certificates shall be exchangeable for definitive Warrant
Certificates upon surrender of the temporary Warrant Certificates at any
office or agency maintained by the Company for the purpose pursuant to
Section 1.11 hereof. Subject to the provisions of Section 4.1 hereof, such
exchange shall be without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Warrant Certificates, the Company
shall execute, and the Warrant Agent shall authenticate and deliver in
exchange therefor, one or more definitive Warrant Certificates representing
in the aggregate a like number of Warrants. Until so exchanged, the Holder of
a temporary Warrant Certificate shall in all respects be entitled to the same
benefits under this Warrant Agreement as a Holder of a definitive Warrant
Certificate.
SECTION 1.7. Separation of Warrants and Notes. The Notes and Warrants
will not be separately transferable until the date (the "Separation Date")
that the Initial Purchaser shall designate and specify to the Company and the
Warrant Agent in writing. Prior to the Separation Date, no Warrant may be
sold, assigned or otherwise transferred to any Person unless simultaneously
with such transfer, the Warrant Agent receives confirmation from the Trustee
that the Holder thereof has requested a transfer of the related Notes to the
same transferee. On and after the Separation Date, the Holder of a Warrant
Certificate containing the Separability Legend (as defined in Section 1.9(g)
hereof) may surrender such Warrant Certificate accompanied by a written
application to the Warrant Agent, duly executed by the Holder thereof, for a
new Warrant Certificate not containing the Separability Legend.
SECTION 1.8. Registrar and Warrant Register. The Company will keep, at
the office or agency maintained by the Company for such purpose, a register
or registers in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of, and
registration of transfer and exchange of, Warrants as provided in this
Article. Each Person designated by the Company from time to time as a Person
authorized to register the transfer and exchange of the Warrants is
hereinafter called, individually and collectively, the "Registrar".
Initially, the Warrant Agent shall act as Registrar. Upon written notice to
the Warrant Agent and any acting Registrar, the Company may appoint a
successor Registrar for such purposes.
The Company will at all times designate one Person (who may be the
Company and who need not be a Registrar) to act as repository of a master
list of names and addresses of the Holders (the 'Warrant Register"). The
Company will act as such repository unless and until some other Person is, by
written notice from the Company to the Warrant Agent and the Registrar,
designated by the Company to act as such. The Company shall cause each
Registrar to furnish to such repository, on a current basis, such information
as to all registrations of transfer and exchanges effected by such Registrar,
as may be necessary to enable such repository to maintain the Warrant
Register on as current a basis as is practicable.
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SECTION 1.9. 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, the Warrant Agent shall register the
transfer or make the exchange as requested if the requirements
under this Warrant Agreement as set forth in this Section 1.9 for
such transactions are met; provided, however, that the Definitive
Warrants presented or surrendered for registration of transfer or
exchange:
(x) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Company and the Warrant Agent, duly executed by the
Holder thereof or by its attorney, duly authorized
in writing and
(y) in the case of Warrants the offer and sale of which
has not been registered under the Securities Act,
and are presented for transfer or exchange prior to
(x) the date which is one year after the later of
the date of original issue (the "Issue Date") and
the last date on which the Company or any affiliate
of the Company was the owner of such Warrant, or any
predecessor thereto and (y) such later date, if any,
as may be required by any subsequent change in
applicable law (the "Resale Restriction Termination
Date'), such Warrants shall be accompanied, in the
sole discretion of the Company, by the following
additional information and documents, as applicable:
(A) if such Warrant is being delivered to the
Warrant Agent by a Holder for registration in
the name of such Holder, without transfer, a
certification from such Holder to that effect
(in substantially the form of Exhibit B
hereto); or
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(B) if such Warrant is being transferred to a
qualified institutional buyer (as defined in
Rule 144A under the Securities Act) in
accordance with Rule IaAA under the Securities
Act or pursuant to an exemption from
registration in accordance with Rule 144 or
Regulation S under the Securities Act, a
certification to that effect (in substantially
the form of Exhibit B hereto); or
(C) if such Warrant is being transferred to an
institutional "accredited investor" within the
meaning of subparagraph (a)(1), (a)(2), (a)(3)
or (a)(7) of Rule 501 under the Securities Act,
delivery of a certification to that effect (in
substantially the form of Exhibit B hereto) and
a letter of representation from the transferee
in substantially the form of Exhibit C hereto
and, if requested by the Company, an opinion of
counsel reasonably acceptable to the Company
that such transfer is in compliance with the
Securities Act; or
(D) if such Warrant is being transferred in
reliance on another exemption from the
registration requirements of the Securities
Act, a certification to that effect (in
substantially the form of Exhibit B hereto) and
an opinion of counsel reasonably acceptable to
the Company to the effect that such transfer is
in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Warrant for a
Beneficial Interest in a Global Warrant. A Definitive Warrant may not be
transferred for a beneficial interest in a Global Warrant except 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:
(i) certification, substantially in the form of Exhibit B
hereto, that such Definite Warrant is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act; and
(ii) written instructions directing the Warrant Agent to make,
or to direct the Depositary to make, an endorsement on the Global
Warrant to reflect an
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increase in the aggregate amount of the 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 Warrant is then outstanding, the Company shall
issue and the Warrant Agent shall authenticate a new Global Warrant in the
appropriate amount.
(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 Section 1.9 and the procedures of the
Depositary therefor.
(d) Transfer 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 transfer 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 and upon
receipt by the Warrant Agent of a written order or such other form
of instructions as is customary for the Depositary or the Person
designated by the Depositary as having such a beneficial interest
containing registration instructions and, in the case of any such
transfer or exchange prior to the Resale Restriction Termination
Date, the following additional information and documents:
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the
beneficial owner, a certificate from such Person to that
effect (in substantially the form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a
qualified institutional buyer (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Regulation S
under the Securities Act, a certification to that effect
from the transferee or transferor (in substantially the
form of Exhibit B hereto); or
(C) if such beneficial interest is being transferred to an
institutional "accredited investor" within the meaning of
subparagraph (a)(1),
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(a)(2), (a)(3) or (a)(7) of Rule 501 under the Securities
Act, delivery of a certification to that effect (in
substantially the form of Exhibit B hereto), a letter of
representation from the transferee in substantially the
form of Exhibit C hereto and an opinion of counsel
reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act; or
(D) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect (in substantially the form of Exhibit B
hereto) and an opinion of counsel reasonably acceptable
to the Company to the effect that such transfer is in
compliance with the Securities Act,
then the aggregate amount of the Global Warrant will be reduced by
the Depositary or its custodian and, following such reduction, the
Company will execute and, upon receipt of an authentication order
in the form of an Officers' Certificate (as hereinafter defined),
the Warrant Agent will authenticate and deliver to the transferee a
Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to Section 1.8(d) shall be
registered in such names and in such authorized denominations as
the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Warrant
Agent in writing. The Warrant Agent shall deliver such Definitive
Warrant 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 Section 1.9(f)), 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) Authentication of Definitive Warrants in Absence of Depositary. If
at any time:
(i) the Depositary for the Warrants notifies the Company that
the Depositary is unwilling or unable to continue as Depositary for
the Global Warrant and a successor Depositary for the Global
Warrant is not appointed by the Company within 90 days after
delivery of such notice or
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(ii) the Company, at 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 will execute, and the Warrant Agent, upon receipt of an
officers' certificate signed by two duly authorized officers of the Company
(one of whom must be the principal executive officer, principal financial
officer or principal accounting officer) (an "Officers' Certificate")
requesting the authentication and delivery of Definitive Warrants, will
authenticate and deliver Definitive Warrants, in an aggregate number equal to
the aggregate number of warrants represented by the Global Warrant, in
exchange for such Global Warrant.
(g) Legends.
Each Warrant Certificate evidencing the Global Warrants and
the Definitive Warrants (and all Warrants issued in exchange
therefor or substitution thereof) issued prior to the second
anniversary of the original issuance of the Units, unless otherwise
agreed by the Company and the Holder thereof shall bear the
following legends:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER."
"THE HOLDER OF THESE SECURITIES, BY ITS ACCEPTANCE HEREOF, AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THESE SECURITIES PRIOR TO THE
DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
OF THESE SECURITIES AND THE LAST DATE ON WHICH COUNTY SEAT STORES,
INC. ("THE COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THESE SECURITIES (OR ANY PREDECESSOR OF THESE SECURITIES) (THE
"RESALE RESTRICTION TERMINATION DATE"), ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
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EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THESE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THESE SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE WARRANT AGENT'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE OTHER SIDE OF THESE SECURITIES IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE WARRANT AGENT. THIS LEGEND SHALL BE REMOVED
UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.'
"THIS SECURITY IS SUBJECT TO A REGISTRATION RIGHTS AGREEMENT DATED
OCTOBER 29, 1997 BETWEEN THE COMPANY AND JEFFERIES & COMPANY, INC.
(THE "INITIAL PURCHASER"), A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY."
Each Warrant Certificate issued in definitive form will also bear the
following additional legends:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH
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CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS."
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR' (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S."
To the extent a Warrant Certificate evidences a Global Warrant, such
Warrant Certificate shall also bear the following legends:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.'
"TRANSFERS OF THIS GLOBAL WARRANT SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND THE TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE WARRANT
AGREEMENT REFERRED TO HEREIN. "
Each Warrant Certificate issued prior to the Separation Date shall also
bear the following legends on the face thereof:
"THE WARRANTS EVIDENCED BY THIS WARRANT CERTIFICATE ARE INITIALLY
ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF
$1,000 PRINCIPAL AMOUNT OF 12 3/4%
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SENIOR NOTES DUE 2004 (THE "NOTES") OF THE COMPANY AND ONE WARRANT
INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE 26.8908 SHARES
OF THE COMPANY'S COMMON STOCK, PAR VALUE $.01 PER SHARE. PRIOR TO
THE CLOSE OF BUSINESS ON SUCH DATE AS THE INITIAL PURCHASER SHALL
DESIGNATE AND SPECIFY TO THE COMPANY AND THE WARRANT AGENT IN
WRITING, THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR
EXCHANGED ONLY TOGETHER WITH, THE NOTES. "
(h) Cancellation and/or Adjustment of a Global Warrant. At such time as
all beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or canceled, such Global Warrant
shall be returned to or retained and canceled by the Warrant Agent. At any
time prior to such cancellation, if any beneficial interest in a Global
Warrant is exchanged for Definitive Warrants, redeemed, repurchased or
canceled, the number of Warrants represented by such Global Warrant shall be
reduced and an endorsement shall be made on such Global Warrant by the
Warrant Agent or the Depositary to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of Definitive
Warrants.
(i) To permit registrations of transfers and exchanges, the
Company shall execute, at the Warrant Agent's request, and the
Warrant Agent shall authenticate Definitive Warrants and Global
Warrants.
(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 the
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.
(j) Payment of Taxes. The Company or the Warrant Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any exchange or transfer pursuant to
this Section 1.9.
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SECTION 1.10. Lost, Stolen, Destroyed, Defaced or Mutilated Warrant
Certificates. Upon receipt by the Company and the Warrant Agent (or any agent
of the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or
mutilation of any Warrant Certificate and of indemnity reasonably
satisfactory to them and, in the case of mutilation or defacement, upon
surrender thereof to the Warrant Agent for cancellation, then, in the absence
of notice to the Company or the Warrant Agent that such Warrant Certificate
has been acquired by a bona fide purchaser or holder in due course, the
Company shall execute, and an authorized signatory of the Warrant Agent shall
manually authenticate and deliver, in exchange for or in lieu of the lost,
stolen, destroyed, defaced or mutilated Warrant Certificate, a new Warrant
Certificate representing a like number of Warrants, bearing a number or other
distinguishing symbol not contemporaneously outstanding. Upon the issuance of
any new Warrant Certificate under this Section 1.10, the Company may require
the payment from the Holder of such Warrant Certificate of a sum sufficient
to cover any tax, stamp tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses
of the Warrant Agent and the Registrar) in connection therewith. Every
substitute Warrant Certificate executed and delivered pursuant to this
Section 1.10 in lieu of any lost, stolen or destroyed Warrant Certificate
shall constitute an additional contractual obligation of the Company, whether
or not the lost, stolen or destroyed Warrant Certificate shall be at any time
enforceable by anyone, and shall be entitled to the benefits of (but shall be
subject to all the limitations of rights set forth in) this Warrant Agreement
equally and proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder. The provisions of this Section 1.10 are
exclusive with respect to the replacement of lost, stolen, destroyed, defaced
or mutilated Warrant Certificates and shall preclude (to the extent lawful)
any and all other rights or remedies notwithstanding any law or statute
existing or hereafter enacted to the contrary with respect to the replacement
of lost, stolen, destroyed, defaced.or mutilated Warrant Certificates.
The Warrant Agent is hereby authorized to authenticate and deliver the
new Warrant Certificates required pursuant to the provisions of this Section
1.10.
SECTION 1.11. Offices for Exercise, etc. So long as any of the Warrants
remain outstanding, the Company will designate and maintain in the
continental United States: (a) an office or agency where the Warrant
Certificates may be presented for exercise, (b) an office or agency where the
Warrant Certificates may be presented for registration of transfer and for
exchange (including the exchange of temporary Warrant Certificates for
definitive Warrant Certificates pursuant to Section 1.6 hereof), and (c) an
office or agency where notices and demands to or upon the Company in respect
of the Warrants or of this Warrant Agreement may be served. The Company may
from time to time change or rescind such designation, as it may deem
desirable or expedient. The Company will give to the Warrant Agent written
notice of the location of any such office or agency and of any change of
location thereof. The Company hereby designates the corporate trust office of
the Warrant Agent in New York,
14
New York (the "Warrant Agent Office"), as the initial agency maintained for
each such purpose.
ARTICLE II
DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE
SECTION 2.1. Duration of Warrants. Subject to the terms and
conditions established herein, the Warrants shall expire at 5:00 p.m., New
York City time on November 1, 2007 (the "Expiration Date"). Each Warrant may
be exercised on any Business Day (as hereinafter defined) on or after the
Exercisability Date (as hereinafter defined) and on or prior to the
Expiration Date.
Any Warrant not exercised before the close of business on the Expiration
Date relating to such Warrant shall become void, and all rights of the Holder
under the Warrant Certificate evidencing such Warrant and under this Warrant
Agreement shall cease.
SECTION 2.2. Exercise, Exercise Price, Settlement and Delivery.
(a) Subject to the provisions of this Warrant Agreement, each Holder
shall have the right to purchase from the Company, on or after the date
hereof (the "Exercisability Date") and on or prior to the Expiration Date,
26.8908 fully paid and non-assessable Warrant Shares per each Warrant such
Holder owns, subject to adjustment in accordance with Article V hereof, at
the initial purchase price of $0.01 for each Warrant Share purchased, subject
to adjustment in accordance with Article V hereof (the "Exercise Price").
(b) Warrants may be exercised, in whole or in part, on or after the
Exercisability Date by (i) surrendering at any Warrant Agent office the
Warrant Certificate evidencing such Warrants with the form of election to
purchase Warrant Shares set forth on the reverse side of the Warrant
Certificate (the "Election to Exercise") duly completed and signed by the
registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney, and (ii) paying in
full the Exercise Price for each such Warrant Share purchased and any other
amounts required to be paid pursuant to Section 4.1 hereof.
(c) Simultaneously with the exercise of each Warrant, payment in full of
the Exercise Price shall be made (i) in cash or by certified or official bank
check payable to the order of the Company, delivered to the office or agency
where the Warfare Certificate is being surrendered; or (ii) by delivery of
Warrant Certificates pursuant to Section 2.2(d).
(d) In the event that any Holder of Warrant Certificates delivers such
Warrant Certificates to the Company and indicates on the Election to Exercise
that such Holder intends to exercise all, or any portion of, the Warrants
represented by such Warrant Certificate and to satisfy its obligation to pay
the Exercise Price in respect thereof by virtue of the provisions of
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this Section 2.2(d), such Holder shall become entitled to receive, instead of
the number of Warfare Shares such Holder would have received had the Exercise
Price been paid in cash pursuant to Section 2.2(c), a number of Warrant
Shares in respect of the exercises of such Warrants equal to the product of:
(A) the number of Warrant Shares issuable upon such exercise
of such Warrant Certificates (or, if only a portion of such Warrant
Certificates are being exercised, issuable upon the exercise of
such portion) multiplied by
(B) the quotient of:
(i) the difference of:
(X) the per share Fair Market Value of the Common
Stock at the time of such exercise; minus
(Y) the Exercise Price at the time of such exercise;
divided by
(ii) the per share Fair Market Value of the Common Stock
at the time of such exercise.
For purposes of Rule 144 and Rule 144A under the Securities Act, the
Company and the Warrant Agent, on behalf of the Holders, hereby agree that
the exercise of any Warrants in accordance with this Section 2.2(d) shall be
deemed to be a conversion of such Warrants, pursuant to the terms of this
Warrant Agreement and the Warrants, into Warrant Shares.
(e) Upon such surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Agent Office, such Warrant
Certificate and payment shall be promptly delivered to the Warrant Agent. The
"Exercise Date" for a Warrant shall be the date when all of the items
referred to in the first sentence of paragraphs (b) and (c) of this Section
2.2 are received by the Warrant Agent at or prior to 2:00 p.m., New York City
time, on a Business Day and the exercise of the Warrants will be effective as
of such Exercise Date. If any items referred to in the first sentence of
paragraphs (b) and (c) of this Section 2.2 are received after 2:00 p.m., New
York City time, on a Business Day, the exercise of the Warrants to which such
item relates will be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Warrants on the
Expiration Date, if all of the items referred to in the first sentence of
paragraphs (b) and (c) of this Section 2.2 are received by the Warrant Agent
at or prior to 5:00 p.m., New York City time, on such Expiration Date, the
exercise of the Warrants to which such items relate will be effective on the
Expiration Date.
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(f) Upon the exercise of a Warrant in accordance with the terms hereof,
the receipt of a Warrant Certificate and payment of the Exercise Price, the
Warrant Agent shall: (i) cause an amount equal to the Exercise Price, whether
in cash or Warrant Certificates, to be delivered or paid to the Company by
crediting the same to the account designated by the Company in writing to the
Warrant Agent for that purpose; (ii) in the case of a payment of the Exercise
Price in cash, advise the Company immediately by telephone of the amount so
deposited to the Company's account and promptly confirm such telephonic
advice in writing; and (iii) as soon as practicable, advise the Company in
writing of the number of Warrants exercised in accordance with the terms and
conditions of this Warrant Agreement and the Warrant Certificates, the
instructions of each exercising Holder with respect to delivery of the
Warrant Shares to which such Holder is entitled upon such exercise, and such
other information as the Company shall reasonably request.
(g) Subject to Section 5.2 hereof, as soon as practicable after the
exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
registered Holder evidencing such exercised Warrant or Warrants, a
certificate or certificates evidencing the Warrant Shares to which such
Holder is entitled, in fully registered form, registered in such name or
names as may be directed by such Holder pursuant to the Election to Exercise,
as set forth on the reverse of the Warrant Certificate. The Warrant Agent
shall have no obligation to ascertain the number of Warrant Shares to be
issued with respect to the exercised Warrant or Warrants. Such certificate or
certificates evidencing the Warrant Shares shall be deemed to have been
issued and any Persons who are designated to be named therein shall be deemed
to have become the Holder of record of such Warrant Shares as of the close of
business on the Exercise Date. After such exercise of any Warrant or
Warrants, the Company shall also issue or cause to be issued to or upon the
written order of the registered holder of such Warrant Certificate, a new
Warrant Certificate, countersigned by the Warrant Agent pursuant to the
Company's written instruction, evidencing the number of Warrants, if any,
remaining unexercised (unless such Warrants shall have expired).
SECTION 2.3. Cancellation of Warrant Certificates. In the event the
Company shall purchase or otherwise acquire Warrants, the Warrant
Certificates evidencing such Warrants may thereupon be delivered to the
Warrant Agent, and if so delivered, shall be canceled by it and retired. The
Warrant Agent shall cancel all Warrant Certificates properly surrendered for
exchange, substitution, transfer or exercise. The Warrant Agent shall destroy
canceled Warrant Certificates held by it and deliver a certificate of
destruction to the Company. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the
Company all money received by the Warrant Agent for the purchase of Warrant
Shares through the exercise of such Warrants.
ARTICLE III
OTHER PROVISIONS RELATING TO
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RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.1. Enforcement of Rights.
(a) Notwithstanding any of the other provisions of this Warrant
Agreement, any Holder of Warrant Certificates or holder of Warrant Shares,
without the consent of the Warrant Agent, may, in and for its own behalf,
enforce, and may institute and maintain any suit, action or proceeding
against the Company suitable to enforce, its right to exercise the Warrant or
Warrants evidenced by its Warrant Certificate as provided in such Warrant
Certificate and in this Warrant Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall entitle the
Holders thereof to any of the rights of a holder of Common Stock, including,
without limitation, the right to vote or to receive any dividends or other
payments or to consent or to receive notice as stockholders in respect of the
meetings of stockholders or for the election of directors of the Company or
to share in the assets of the Company in the event of the liquidation,
dissolution or winding up of the Company's affairs or any other matter, or
any rights whatsoever as stockholders of the Company.
SECTION 3.2. Repurchase Right.
(a) If (A) the Company, in a single transaction or series of related
transactions, (i) sells, assigns, transfers, leases, conveys or otherwise
disposes of all or substantially all of the assets of the Company to any
Person that does not have publicly traded common equity for which the
Warrants will become exercisable; or (ii) consolidates or merges with or into
another Person that does not have publicly traded common equity for which the
Warrants will become exercisable and the Company is not the surviving entity;
and (B) the consideration payable in respect of any event described in the
immediately preceding clauses (i) or (ii) does not consist solely of cash
(any such event, hereinafter, a "Repurchase Event"), then the Company shall
offer to repurchase (a "Repurchase Offer"), in accordance with the procedures
set forth in this Section 3.2, all Warrants at the per share Fair Market
Value of the Common Stock issuable upon exercise thereof, less the Exercise
Price (the "Repurchase Price"). The Company shall, subject to the provisions
described in this Section 3.2, be required to purchase all Warrants properly
tendered pursuant to a Repurchase Offer and not withdrawn.
(b) The Repurchase Offer shall remain open for at least 20 Business Days
and until the close of business on the fifth Business Day prior to the
Repurchase Date (as hereinafter defined).
(c) Not later than the 30th day following the occurrence of the
Repurchase Event, the Company shall mail to the Warrant Agent and to each
Holder a notice (the "Repurchase Notice") stating, among other things:
18
(1) that a Repurchase Event has occurred and that such Holder has
the right to require the Company to repurchase such holder's Warrants,
or portion thereof, at the Repurchase Price;
(2) any information regarding such Repurchase Event required to be
furnished under applicable federal and State securities laws, rules and
regulations;
(3) a purchase date (the "Repurchase Date"), which shall be on a
Business Day and no earlier than 45 days nor later than 60 days after
the occurrence of a Repurchase Event;
(4) that any Warrant, or portion thereof, not tendered or accepted
for payment shall be subject to appropriate adjustment as required by
Section 5 of this Warrant Agreement, and continue in full force and
effect in accordance with this Warrant Agreement; and
(5) the instructions a Holder must follow in order to have Warrants
repurchased in accordance with this Section 3.2.
No failure of the Company to give the foregoing notice shall limit any
right to any Holder right to exercise a repurchase right hereunder.
(d) To exercise the repurchase right, the Holder must deliver, on or
before the Repurchase Date, written notice to the Company (or an agent
designated by the Company for such purpose) of the exercise of such
repurchase right, together with the Warrant Certificates with respect to
which the right is being exercised, duly endorsed for transfer; provided,
however, that with respect to Warrants held of record by DTC, the Company or
its designated agent may accept as tendered for repurchase pursuant to this
Section 3.2 Warrants tendered by means of a book entry in accordance with the
normal procedures of DTC.
(e) On the Repurchase Date, the Company shall (i) accept for payment
Warrants or portions thereof tendered pursuant to the Repurchase Notice, (ii)
if the Company appoints a depository or Paying Agent, deposit with such
depository or Paying Agent money sufficient to pay the Repurchase Price of
all Warrants or portions thereof so tendered and (iii) deliver to the Warrant
Agent Warrants so accepted together with an Officers' Certificate stating the
Warrants or portions thereof tendered to the Company. DTC, the Company or the
Paying Agent, as the case may be, shall promptly mail to the Holders whose
Warrants are so accepted payment in an amount equal to the Repurchase Price,
and the Warrant Agent shall promptly authenticate and mail to Holders of
Definitive Warrants new Definitive Warrants equal in principal amount to any
unpurchased portion of the Definitive Warrant surrendered. The Company will
notify the Holders of the results of the Repurchase Offer on or as soon as
practicable after the Repurchase Date. For purposes of this Section 3.2, the
Warrant Agent shall act as the Paying Agent.
19
(f) The Company, to the extent applicable and if required by law, will
comply with the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any other federal and state securities laws, rules and regulations
that may then be applicable to any offer by the Company to purchase the
Warrants pursuant to the provisions of this Section 3.2.
(g) Notwithstanding anything set forth in this Section 3.2, no
incurrence by the Company of a Permitted Lien (as defined in the Indenture)
shall be deemed to be a Repurchase Event.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.1. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrants and of the
Warrant Shares upon the exercise of Warrants or to the separation of the
Warrants and the Notes on the Separability Date; provided, however, that the
Company shall not be required to pay any tax or other governmental charge
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 the registered Holder surrendered upon the exercise of a Warrant. In any
such case, the Company shall not be required to issue or deliver such Warrant
Certificate or certificate for Warrant Shares unless or until the Person or
Persons requesting issuance thereof shall have paid to the Company the amount
of such tax or other governmental charge or shall have established to the
satisfaction of the Company that such tax or other governmental charge has
been paid or an exemption is available therefrom.
SECTION 4.2. Notice of Expiration Date. The Company will give notice
of the Expiration Date to all Holders of the then outstanding Warrants, not
less than 90 and not more than 120 days prior to the Expiration Date.
SECTION 4.3. Reservation of Common Stock. The Company covenants and
agrees that it will at all times cause to be reserved and kept available out
of its authorized and unissued shares of Common Stock such number of shares
of Common Stock as will be sufficient to permit the exercise in full of all
Warrants issued hereunder and all other rights, warrants or options
exercisable into, and the conversion of all securities convertible into,
Common Stock.
SECTION 4.4. Warrant Shares to be Duly Authorized and Issued,
Fully Paid and Nonassessable. The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all Warrant Shares
delivered upon the exercise in full of any Warrants, at the time of delivery
of the certificates representing such shares, shall be duly and validly
authorized and issued and fully paid and nonassessable, free of any
preemptive rights in favor of any Person in respect of such issuance and free
of any security interest, lien or
20
other encumbrance of any kind or nature created by, arising out of actions
of, the Company, any subsidiary or any affiliate of the Company.
SECTION 4.5. Reports.
(a) For so long as any Warrants are outstanding, the Company shall
deliver to the Warrant Agent and the Warrant Agent shall mail to each Holder,
within 15 days after the filing of the same with the Securities and Exchange
Commission ("SEC"), copies of its quarterly and annual reports and of the
information, documents and other reports, if any, which the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act.
(b) For so long as any Warrants are outstanding, whether or not the
Company is required to file any financial information with the SEC, the
Company shall file with the Warrant Agent and the Warrant Agent shall mail to
each Holder and to prospective purchasers of Warrants, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act for so long as is required for an offer or sale of the
Warrants or the Warrant Shares under Rule 144A. The financial and other
information to be distributed to Holders shall be filed with the Warrant
Agent and mailed to the Holders at their respective addresses appearing in
the Warrant Register maintained by the Warrant Agent, within 120 days after
the end of the Company's fiscal year and within 60 days after the end of each
of the first three quarters of each such fiscal year.
SECTION 4.6. Private Placement Numbers. The Company covenants and
agrees to obtain, and thereafter maintain, a private placement number in
respect of the Warrants and a private placement number or CUSIP number, as
appropriate, in respect of the Warrant Shares from the CUSIP Service Bureau
of Standard & Poor's, a division of XxXxxx-Xxxx, Inc.
SECTION 4.7. Right of Action. All rights of action in respect of the
Warrants are vested in the respective registered Holders of the Warrant
Certificates, and any registered Holder of any Warrant Certificate, without
the consent of the Holder of any other Warrant Certificate, may, on its own
behalf and for its own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, its right to exercise the Warrants evidenced by such Warrant
Certificate in the manner provided in such Warrant Certificate and in this
Warrant Agreement.
SECTION 4.8. Survival. The agreements of the Company contained in
Section 4. l and Section 4.7 shall survive the exercise of and the expiration
of the Warrants.
ARTICLE V
21
SECTION 5.1. Adjustment of Exercise Price and Number of Warrant
Shares Issuable. The Exercise Price and the number and kind of Warrant Shares
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as follows:
(a) Stock Dividends, Subdivisions and Combinations. In case the Company
shall hereafter (A) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to all holders of its Common Stock,
(B) subdivide its outstanding shares of Common Stock into a greater number of
shares or (C) combine its outstanding shares of Common Stock into a smaller
number of shares, (i) the number of Warrant Shares purchasable upon exercise
of each Warfare immediately prior thereto shall be adjusted so that the
Holder of any Warrant Certificate thereafter exercised shall be entitled to
receive the number of Warrant Shares which such Holder would have owned
immediately following such action had such Warrant been exercised immediately
prior thereto, and (ii) the Exercise Price shall be adjusted by multiplying
such Exercise Price immediately prior to such adjustment by a fraction, the
numerator of which shall be the number of Warrant Shares purchasable upon the
exercise of each Warrant immediately prior to such adjustment, and the
denominator of which shall be the number of Warrant Shares purchasable
immediately thereafter. An adjustment made pursuant to this Section 5. l(a)
shall become effective immediately after the record date, in the case of a
dividend or distribution, and shall become effective immediately after the
effective date, in the case of a subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to this
Section 5. 1(a), the Holder of any Warrant Certificate thereafter exercised
shall become entitled to receive shares of two or more classes of capital
stock of the Company, the Board of Directors of the Company shall determine,
in its reasonable discretion, the allocation of the adjusted Exercise Price
between or among shares of such classes of capital stock.
(b) Reclassification, Combinations, Mergers, etc. Subject to Section
3.2, if (A) any capital reorganization, reclassification or change of
outstanding shares of Common Stock (other than as set forth in Section 5.
l(a) and other than a change in par value, or from par value to no par value,
or from no par value to par value), or (B) in case of any consolidation or
merger of the Company with or into another corporation or other entity (other
than a merger in which the Company is the continuing corporation and which
does not result in any reclassification or change of the then outstanding
shares of Common Stock or other capital stock of the Company (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 (C) in case
of any sale or other conveyance of all or substantially all of the assets of
the Company shall be effected in such a way that the holders of Common Stock
shall be entitled to receive shares of common stock, other securities or
assets (whether such stock, other securities or assets are issued or
distributed by the Company or another Person) with respect to or in exchange
for Common Stock, then, as a condition of such reclassification,
reorganization, change, consolidation, merger, sale or conveyance, the
Company or such a successor or purchasing Person or entity, as the case may
be, shall forthwith make lawful and adequate provision whereby the Holder of
such Warrant Certificate then outstanding shall have the right thereafter
22
to receive on exercise of such Warrant the kind and amount of shares of stock
and other securities and assets receivable upon such reclassification,
reorganization, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock that such holders would have been
entitled to receive upon exercise of such Warrant had such Warrant been
exercised immediately before such reclassification, reorganization, change,
consolidation, merger, sale or conveyance that shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Article V and
enter into a supplemental warrant agreement so providing.
For purposes of this Section 5. l(b), "shares of common stock, other
securities or assets" receivable upon a reclassification, reorganization,
change, consolidation, merger, sale or conveyance shall include securities of
any successor or acquiring Person or entity of any class which is not subject
to redemption and shall also include any evidence of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for any
such securities, either immediately or upon the arrival of a specified date
or the happening of a specified event or any warrants or other rights to
subscribe for or purchase any such stock. If the issuer of securities
deliverable upon exercise of Warrants under the supplemental warrant
agreement is an affiliate of the formed, surviving or transferee corporation
or other entity, such issuer shall join in the supplemental warrant agreement.
In case of any such reclassification, reorganization, change, merger,
consolidation or sale or other conveyance of assets, any successor or
acquiring corporation or other entity shall expressly assume the due and
punctual observance and performance of each and every covenant and condition
of this Warrant Agreement to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as
may be deemed appropriate (as determined in good faith by resolution of the
Board of Directors of the Company) in order to provide for adjustments of
Warrant Shares into which each Warrant is exercisable, which shall be as
nearly equivalent as practicable to the adjustments provided for in this
Article V.
(c) Issuances of Common Stock or Rights. In the event that the Company
shall, at any time or from time to time after the date hereof, issue, sell,
grant or otherwise distribute (in any such case, a "Distribution") shares of
Common Stock or Rights, whether or not such Rights are immediately
exercisable, convertible or exchangeable, at a Consideration Per Share lower
than the per share Fair Market Value of the Common Stock on the date of such
issuance, sale, grant or distribution, or if the Company shall amend any of
the provisions of any Rights, including, without limitation, a change in the
purchase, conversion, exchange or exercise price per share of underlying
Common Stock, as the case may be, of each such Right, or the Aggregate
Consideration Receivable applicable to any such Right (other than under or by
reason of provisions designed to protect against dilution upon an event which
results in a related adjustment pursuant to this Article v), then,
immediately after the date of such issuance or sale,
23
(A) the number of Warrant Shares purchasable upon exercise of each
Warrant shall be increased so that the Holders thereafter will be entitled
to receive the number of Warrant Shares determined by multiplying:
(i) the number of shares of Common Stock such Holders
would have been entitled to receive immediately before the
date of such issuance or sale had such Holders exercised their
Warrants immediately prior thereto; by
(ii) a fraction, the numerator of which shall be the sum
of: (X) the number of shares of Common Stock outstanding on
such date plus (Y) the number of additional shares of Common
Stock offered for subscription or purchase (or into which the
Rights so offered are initially convertible or exchangeable or
exercisable, as the case may be), and the denominator of which
shall be the sum of: (x) the number of shares of Common Stock
outstanding on such date plus (Y) the number of shares of
Common Stock that the Aggregate Consideration Receivable would
purchase at a price per share equal to the Fair Market Value
of the Common Stock on the date of such issuance or sale, and
(B) the Exercise Price in effect immediately after such Distribution
shall be adjusted by multiplying the Exercise Price in effect immediately
prior to such Distribution by the quotient of:
(i) the sum of: (A) the number of shares of Common Stock
outstanding immediately prior to such Distribution; plus (B)
the quotient of: (X) the Aggregate Consideration Receivable;
divided by (Y) the per share Fair Market Value of the Common
Stock; in each case immediately prior to such Distribution;
divided by
(ii) the sum of: (A) the number of shares of Common Stock
outstanding immediately prior to such Distribution; plus (B)
the number of shares of Common Stock so issued or sold (or
initially issuable pursuant to any Rights).
For purposes of the foregoing calculation, the total maximum number of
shares of Common Stock issuable upon exercise, conversion or exchange, as
applicable, of all Rights shall be deemed to have been issued as of the date
of such Distribution and thereafter shall be deemed to be outstanding and the
Company shall be deemed to have received as consideration therefor the
Aggregate Consideration Receivable applicable thereto after giving effect to
such exercise, conversion or exchange. Except as provided in Section 5. 1(g),
no additional adjustments of the Exercise Price shall be made upon the actual
exercise, exchange or conversion, as applicable, of such Rights.
(d) Dividends and Distributions. In the event the Company shall, at any
time or from time to time after the date hereof, make or pay any dividend of,
or distribute to holders of
24
Common Stock (in any such case, a "Dividend'), shares of capital stock, any
of its property or assets, including, without limitation, cash, evidences of
its indebtedness, Rights or other securities (in each case, other than
dividends payable in Common Stock) (collectively, 'Dividend Property'), then,
the Company shall make the same distribution of Dividend Property to the
Holders as the Holders would have received if the Holders had, immediately
prior to the record date for the distribution of the Dividend Property,
exercised the Warrants provided, however, that at the option of the Company,
in lieu of distributing any Dividend Property to Holders, the following
adjustments shall be made:
(A) the Exercise Price in effect after the record date in respect
of which Dividend Property is distributed or issued shall be adjusted by
multiplying the Exercise Price in effect immediately prior to such record
date by the quotient of:
(i) the difference of (A) the per share Fair Market Value
of the Common Stock on such record date; minus (B) the quotient
of:
(X) in the case of a Dividend made in cash, the
aggregate amount of cash so dividend or distributed and,
in the case of a Dividend made other than in cash, the
then Fair Market Value of the Dividend Property so
distributed or issued; divided by
(Y) the number of shares of Common Stock outstanding
on the record date; divided by
(ii) the per share Fair Market Value of the Common Stock
on such record date, and
(B) the number of Warrant Shares purchasable upon the exercise of
each Warrant shall be increased to a number determined by multiplying
the number of Warrant Shares such Holders would have been entitled to
receive immediately before the record date for such Dividend, had the
Holders exercised their Warrants immediately prior thereto, by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (A) of this
sentence, and the denominator of which shall be the Exercise Price in
effect immediately after such adjustment.
The adjustments required by this Section 5. l(d) shall be made whenever any
such Dividend is made retroactive to the record date for the determination of
stockholders entitled to receive such Dividend and shall be effective on the
date of such Dividend.
(e) Self-Tenders. If, at any time or from time to time after the date
hereof, the Company or any subsidiary of the Company shall repurchase, by
self-tender offer or otherwise, any shares of Common Stock of the Company or
any Right at a weighted average
25
purchase price in excess of the per share Fair. Market Value of the Common
Stock on the Business Day immediately prior to the earliest of (i) the date
of such repurchase, (ii) the commencement of an offer to repurchase or (iii)
the public announcement of either (such date being referred to as the
".Determination ]Date"), the number of Warrant Shares purchasable upon
exercise of the Warrants shall be increased so that the Holders thereafter
will be entitled to receive the number of Warrant Shares determined by
multiplying the number of Warrant Shares such Holders would have been
entitled to receive before the Determination Date, had the Holders exercised
their Warrant Shares immediately prior thereto, by a fraction, the numerator
of which shall be the product of:
(A) the difference between (X) the number of shares of Common Stock
outstanding immediately prior to such Determination Date minus (Y) the
number of shares of Common Stock (or shares of Common Stock into which
the Rights are convertible or exchangeable or exercisable, as the case
may be) represented by the Common Stock or Rights repurchased or to be
purchased by the Company or any subsidiary of the Company in such
repurchase, multiplied by
(B) the per share Fair Market Value of the Common Stock immediately
prior to such Determination Date, and
the denominator of which shall be the difference between:
(A) the product of (X) the number of shares of Common Stock
outstanding immediately prior to the Determination Date multiplied by
(Y) the per share Fair Market Value of the Common Stock immediately
prior to such Determination Date minus
(B) the sum of (X) the aggregate consideration paid by the Company
or any of subsidiary of the Company in connection with such repurchase
plus (Y) in the case of Rights, the additional consideration required to
be received by the Company or any subsidiary of the Company upon the
conversion, exchange or exercise of such Rights, and
the Exercise Price shall be adjusted by multiplying such Exercise Price
immediately prior to such repurchase by a fraction, the numerator of which
shall be the number of Warrant Shares purchasable upon exercise of the
Warrants prior to such repurchase, and the denominator of which shall be the
number of Warrant Shares purchasable upon exercise of the Warrants
immediately thereafter.
(f) Exercise of Series B Warrants and Series C Warrants. The
following adjustments will be made on the date on which any Series B Warrants
or Series C Warrants are exercised (each, a "Series Exercise"):
26
(A) The number of Warrant Shares purchasable upon exercise of each
Warrant immediately prior to a Series Exercise shall be increased so
that the Holders thereafter will be entitled to receive the number of
Warrant Shares determined by multiplying: (i) the number of shares of
Common Stock such Holders would have been entitled to receive
immediately before the date of such Series Exercise had such Holders
exercised their Warrants immediately prior thereto by (ii) the number of
shares of Common Stock outstanding on the date of the Series Exercise
after giving effect to the Series Exercise and by dividing the product
of (i) and (ii) by the number of shares of Common Stock outstanding on
the date of the Series Exercise without giving effect to the Series
Exercise, and
(B) The Exercise Price in effect immediately after a Series
Exercise shall be adjusted by multiplying (i) the Exercise Price in
effect immediately prior to such Series Exercise by (ii) the number of
shares of Common Stock outstanding on the date of the Series Exercise
after giving effect to the Series Exercise and by dividing the product
of (i) and (ii) by the number of shares of Common Stock outstanding on
the date of the Series Exercise without giving effect to the Series
Exercise.
(g) Fair Market Value of Consideration Received. Notwithstanding any
provision to the contrary herein, for purposes of this Article V, if any
Rights shall be issued in connection with the issuance and sale of other
securities of the Company, together comprising one integral transaction in
which no specific consideration is allocated to such Rights by the parties
thereto, such Rights shall be deemed to have been issued without
consideration, provided, however, that if any such Rights have an exercise
price (to the extent applicable) equal to or greater than the per share Fair
Market Value of the Common Stock on the date of issuance of such Rights, then
such Rights shall be deemed to have been issued for consideration equal to
such exercise price.
(h) Deferral of Certain Adjustments. No adjustment to the Exercise Price
or the number of Warrant Shares purchasable upon the exercise of each Warrant
that would otherwise be required shall be made unless such adjustment,
together with other adjustments carried forward as provided below, would
result in an increase or decrease of at least one percent (1%) of the
Exercise Price or the number of Warrant Shares purchasable upon the exercise
of each Warrant immediately prior to the making of such adjustment; provided,
however, that any adjustments which by reason of this 5. 1(g) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. No adjustment need be made for a change in the par
value of the Common Stock; provided, however, the Company shall not increase
the par value of the Common Stock to exceed the Exercise Price. All
calculations under this Section 5. I shall be made to the nearest 1/1,000 of
one cent or to the nearest 1/1,000th of a Warrant Share, as the case may be.
(i) Statement of Warrant Certificates. Irrespective of any adjustment
in the number of Warrant Shares issuable upon the exercise of each Warrant or
the Exercise Price, Warrant
27
Certificates theretofore or thereafter issued shall continue to express the
same number and kind of Warrant Shares and Exercise Price as are stated in
the Warrant Certificates initially issuable pursuant to this Warrant
Agreement.
(j) Increased Warrant Shares. From time to time, the Company may, for a
period of not less than 20 Business Days, in its discretion, increase the
number of Warrant Shares purchasable upon the exercise of each Warrant,
without making any adjustment to the Exercise Price.
(k) No Adjustments for Certain Incentive Compensation or Issuance of
Warrant Shares. Notwithstanding any other provision hereof, it is expressly
understood that the Warrants shall not be adjusted with respect to (i) the
issuance at any time of such number of shares of Common Stock or Rights
entitling holders thereof to purchase Common Stock constituting in the
aggregate no more than 5 % of the outstanding Common Stock on a fully diluted
basis that may be issued to any of the Company's or its Subsidiaries'
officers or employees whether pursuant to any stock option, stock incentive
or other employee benefit plan or similar plans of the Company (collectively,
the "Plans"), or otherwise to the extent that shares of Common Stock or other
securities issued or granted under such Plans or otherwise are issued or
granted at a price, or with an exercise price, that is no less than the per
share Fair Market Value of the Common Stock at the date of grant or issuance
or (ii) the issuance of any Warrant Shares.
(l) No Impairment. The Company will not, by amendment of its
certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, liquidation, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 5.1 and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the Holders against impairment.
(m) Further Equitable Adjustments. If, after one or more adjustments to
the Exercise Price pursuant to this Section 5.1, the Exercise Price cannot be
reduced further without falling below the greater of (i) $0.01 or (ii) the
lowest positive exercise price legally permissible for warrants to acquire
shares of common stock, the Company shall make further adjustments in the
number of Warrant Shares issuable upon exercise of outstanding Warrants to
compensate the Holders. Notwithstanding the preceding sentence, nothing set
forth in this Section 5. 1(m) shall prevent the making of any adjustments to
the Exercise Price pursuant to Section 5. 1(d)(A) for the purpose of
calculating adjustments in the number of Warrant Shares issuable upon
exercise of a Warrant pursuant to Section 5. 1(d)(B).
(n) Other Adjustments.
(i) In the event that at any time, as a result of an
adjustment made pursuant to this Article V, Holders shall become
entitled to receive any
28
securities of the Company other than shares of Common Stock,
thereafter the number of such other securities so receivable
upon exercise of each Warrant and the Exercise Price
applicable to such exercise shall be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to
the Warrant Shares and the Exercise Price contained in this
Article V, and all other relevant provisions of this Article V
that are applicable to shares of Common Stock shall be
applicable to such other securities. In case at any time or
from time to time the Company shall take any action in respect
of its outstanding shares of Common Stock, other than any
action described in this Article V, or any event occurs as to
which the provisions of this Article V are not strictly
applicable, then the number of Warrant Shares for which each
Warrant is exercisable shall be adjusted in such manner as may
be equitable in the circumstances and on terms as nearly
equivalent as practicable to the provisions with respect to
the Warrant Shares and the Exercise Price contained in this
Article V and as shall be reasonably necessary, in the good
faith opinion of the Board of Directors of the Company, to
protect the exercise rights of the Holders, but in no event
shall any such adjustment have the effect of increasing the
Exercise Price or decreasing the number of Warrant Shares
issuable upon the exercise of any Warrant.
(ii) Adjustments shall be made pursuant to this Section
5.1 successively whenever any of the events referred to in
Section 5.1 (a) through Section 5.1(e), inclusive, shall occur.
(iii) If any Warrant shall be exercised subsequent to the
record date for any of the events referred to in this Section
5.1, but prior to the effective date thereof, appropriate
adjustments shall be made immediately after such effective
date so that the Holder of such Warrant on such record date
shall have received, in the aggregate, the kind and number of
shares of Common Stock or other securities or property or
assets that it would have owned or been entitled to receive on
such effective date had such Warrant been exercised prior to
such record date.
(iv) Shares of Common Stock owned by or held for the
account of the Company shall not, for purposes of the
adjustments set forth in this Section 5.1 be deemed
outstanding.
SECTION 5.2. Fractional Interest. The Company shall not be required
to issue fractional shares of Common Stock 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 shares of Common Stock which
shall be issuable upon such exercise shall be computed on the basis of the
aggregate number of shares of Common Stock acquirable on exercise of the
Warrants so presented. If any fraction of a share of Common Stock would,
except for the
29
provisions of this Section 5.2, be issuable on the exercise of any Warrant,
the Company shall either (i) pay an amount in cash calculated by the Company
to equal the per share Fair Market Value of the Common Stock multiplied by
such fraction of a share of Common Stock computed to the nearest whole cent
or (ii) aggregate all such fractional shares of Common Stock into a whole
number of shares and sell such aggregated fractional shares on behalf of the
Holders entitled thereto in a public or private sale and distribute, on a pro
rata basis, the net cash proceeds therefrom to such Holders. While the
Company will use its reasonable efforts to secure the best available sale
price for such aggregated fractional shares, such price shall not necessarily
be the highest price obtainable for such shares. By their acceptances of the
Warrant Certificates, Holders expressly waive any and all rights to receive
any fraction of a share of Common Stock or a stock certificate or scrip
representing a fraction of a share of Common Stock.
SECTION 5.3. When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them
to receive a dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
SECTION 5.4. Treasury_ Stock. The sale or other disposition of any
issued shares of Common Stock owned or held by or for the account of the
Company shall be deemed an issuance thereof and, except for a voluntary
tender or exchange offer made by the Company or any subsidiary of the Company
subject to Section 13(e) of the Exchange Act, a repurchase thereof and
designation of such shares as treasury stock shall not be deemed to be a
redemption thereof for the purposes of this Warrant Agreement.
SECTION 5.5. Notices to Warrant Agent and Holders. Whenever the
number of Warrant Shares is adjusted or the Exercise Price in respect thereof
is adjusted, as herein provided, the Company shall promptly or, if notice of
such adjustment is required to be given to DTC, at least five (5) days prior
to the date on which notice of such adjustment is given to DTC, give to the
Warrant Agent and the Warrant Agent shall give to each Holder notice of such
adjustment or adjustments and shall promptly deliver to the Warrant Agent an
Officer's Certificate (confirmed by a certificate from the Company's
independent certified public accountants) setting forth: (i) the number of
Warrant Shares issuable upon the exercise of each Warrant and the Exercise
Price for each Warrant Share purchased after such adjustment; (ii) a brief
statement of the facts requiring such adjustment; and (iii) the computation
by which such adjustment was made.
ARTICLE VI
CONCERNING THE WARRANT AGENT
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SECTION 6.1. Warrant Agent. At no time when the Company may be acting
as its own Warrant Agent shall any of its obligations to the Holders be in
any respect reduced as a result thereof. The Warrant Agent shall have the
powers and authority specifically granted to and conferred upon it in the
Warrant Certificates and this Warrant Agreement and such further powers and
authority to act on behalf of the Company as the Company may hereafter grant
to or confer upon it and it shall accept in writing. All of the terms and
provisions with respect to such powers and authority contained in the Warrant
Certificates are subject to and governed by the terms and provisions hereof.
SECTION 6.2. Conditions of Warrant Agent's Obligations. The Warrant
Agent accepts its obligations herein set forth upon the terms and conditions
hereof and in the Warrant Certificates, including the following, to all of
which the Company agrees and to all of which the rights hereunder of the
Holders from time to time of the Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to compensation to be agreed
upon with the Company in writing for all services rendered by it and the
Company agrees promptly to pay such compensation and to reimburse the Warrant
Agent for its reasonable out-of-pocket expenses (including reasonable fees
and expenses of counsel) incurred without negligence, bad faith or willful
misconduct on its part in connection with the services rendered by it
hereunder. The Company also agrees to indemnify the Warrant Agent, each
predecessor Warrant Agent, and their respective directors, officers,
affiliates, agents and employees for, and to hold it and its directors,
officers, affiliates, agents and employees harmless against, any loss,
liability or expense of any nature whatsoever (including, without limitation,
fees and expenses of counsel) incurred without negligence, bad faith or
willful misconduct on the part of the Warrant Agent or predecessor Warrant
Agent, arising out of or in connection with its acting as such Warrant Agent
hereunder and its exercise or failure to exercise of its rights and
performance of its obligations hereunder. The obligations of the Company
under this Section 6.2 shall survive the exercise and the expiration of the
Warrant Certificates and the resignation and removal of the Warrant Agent.
(b) In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the
Company and does not assume any obligation or relationship of agency or trust
for or with any of the owners or Holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel and any advice or written
opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
31
(d) The Warrant Agent shall be fully protected and shall incur no
liability for or in respect of any action taken or omitted to be taken or
thing suffered by it in reliance upon any Warrant Certificate, notice,
direction, consent, certificate, affidavit, opinion of counsel, instruction,
statement or other paper or document reasonably believed by it to be genuine
and to have been presented or signed by the proper parties.
(e) The Warrant Agent and its Related Parties may become the owners of,
or acquire any interest in, Warrant Certificates, shares or other obligations
of the Company with the same rights that it or they would have it if were not
the Warrant Agent hereunder and, to the extent permitted by applicable law,
it or they may engage or be interested in any financial or other transaction
with the Company and may act on, or as depositary, trustee or agent for, any
committee or body of holders of shares or other obligations of the Company,
including, without limitation, the Notes, as freely as if it were not the
Warrant Agent hereunder. Nothing in this Warrant Agreement shall be deemed to
prevent the Warrant Agent or such Related Parties from acting in any other
capacity for the Company.
(f) The Warrant Agent shall not be under any liability for interest on,
and shall not be required to invest, any money at any time received by it
pursuant to any of the provisions of this Warrant Agreement or of the Warrant
Certificates.
(g) The Warrant Agent shall not be under any responsibility in respect
of the validity of this Warrant Agreement (or any term or provision hereof)
or the execution and delivery hereof or in respect of the validity or
execution of any Warrant Certificate (except its authentication thereof).
(h) The recitals and other statements contained herein and in the
Warrant Certificates (except as to the Warrant Agent's authentication
thereon) shall be taken as the statements of the Company, and the Warrant
Agent assumes no responsibility for the correctness of such recitals or other
statements. The Warrant Agent does not make any representation as to the
validity or sufficiency of this Warrant Agreement or the Warrant
Certificates; provided, however, that the Warrant Agent shall not be relieved
of its duty to authenticate the Warrant Certificates as authorized by this
Warrant Agreement. The Warrant Agent shall not be accountable for the use or
application by the Company of the proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrain from acting with respect
to any matter contemplated by this Warrant Agreement, it may require:
(A) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Warrant Agreement relating to the proposed action have been
complied with; and
32
(B) if reasonably necessary in the sole judgment of the
Warrant Agent, an opinion of counsel for the Company stating that,
in the opinion of such counsel, all such conditions precedent have
been complied with.
Each Officers' Certificate or, if requested, an opinion of counsel (with
respect to which such counsel may rely, as to matters of fact, on a certificate
or certificates of Officers of the Company) with respect to compliance with a
condition or covenant provided for in this Warrant Agreement shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is
necessary to enable him or her to express an informed opinion
as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform such duties as are
herein and in the Warrant Certificates specifically set forth and no implied
duties or obligations shall be read into this Warrant Agreement or the
Warrant Certificates against the Warrant Agent. The Warrant Agent shall not
be accountable or under any duty or responsibility for the use by the Company
of any of the Warrant Certificates authenticated by the Warrant Agent and
delivered by it to the Company pursuant to this Warrant Agreement. The
Warrant Agent shall have no duty or responsibility in case of any default by
the Company in the performance of its covenants or agreements contained in
the Warrant Certificates or in the case of the receipt of any written demand
from a Holder with respect to such default, including, without limiting the
generality of the foregoing, any duty or responsibility to initiate or
attempt to initiate any proceedings at law or otherwise or, except as
provided in Section 7.2 hereof, to make any demand upon the Company. The
Warrant Agent shall not be obligated to perform any duty to the extent
prohibited by law.
(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from the
Company made or given under any provision of this Warrant Agreement shall be
sufficient if signed by its President or Vice President and attested by its
Treasurer, Controller, Secretary or any Assistant Secretary.
33
(l) The Warrant Agent shall have no responsibility in respect of any
adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing by the
Warrant Agent of the provisions of this Warrant Agreement.
(n) The Warrant Agent is hereby authorized and directed to accept
written instructions with respect to the performance of its duties hereunder
from any one of the President, the Treasurer, the Controller, any Vice
President or the Secretary of the Company or any other officer or official of
the Company reasonably believed to be authorized to give such instructions
and to apply to such officers or officials for advice or instructions in
connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions
with respect to any matter arising in connection with the Warrant Agent's
duties and obligations arising under this Warrant Agreement. Such application
by the Warrant Agent for written instructions from the Company may, at the
option of the Warrant Agent, set forth in writing any action proposed to be
taken or omitted by the Warrant Agent with respect to its duties or
obligations under this Warrant Agreement and the date on or after which such
action shall be taken, and the Warrant Agent shall not be liable for any
action taken or omitted to be taken in accordance with a proposal included in
any such application on or after the date specified therein (which date shall
be not less than 10 Business Days after the Company receives such application
unless the Company consents to a shorter period), provided that (i) such
application includes a statement to the effect that it is being made pursuant
to this Section 6.2(n) and that unless objected to prior to such date
specified in the application, the Warrant Agent will not be liable for any
such action or omission to the extent set forth in such application and (ii)
prior to taking or omitting any such action, the Warrant Agent has not
received written instructions objecting to such proposed action or omission.
(o) Whenever in the performance of its duties under this Warrant
Agreement the Warrant Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
President, the Treasurer, the Controller, any Vice President or the Secretary
of the Company or any other officer or official of the Company reasonably
believed by the Warrant Agent to be authorized to give such instructions and
delivered to the Warrant Agent and such certificate shall grant full
authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Warrant Agreement in reliance upon
such certificate.
(p) The Warrant Agent shall not be required to risk or expend its own
funds in the performance of its obligations and duties hereunder.
34
SECTION 6.3. Resignation and Appointment of Successor.
(a) The Company agrees, for the benefit of the Holders, that there
shall at all times be a Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent by giving
written notice to the Company of such intention on its part, specifying the
date on which its desired resignation shall become effective, provided that
such date shall be at least 30 days after the date on which such notice is
given unless the Company agrees to accept less notice. Upon receiving such
notice of resignation, or in the event the Company shall determine not to
continue to act as its own Warrant Agent, the Company shall promptly appoint
a successor Warrant Agent, qualified as provided in Section 6.3(d) hereof, by
written instrument in duplicate signed on behalf of the Company, one copy of
which shall be delivered to the resigning Warrant Agent and one copy to the
successor Warrant Agent. As provided in Section 6.3(d) hereof, such
resignation shall become effective upon the earlier of (x) the acceptance of
the appointment by the successor Warrant Agent or (y) 30 days after receipt
by the Company of notice of such resignation. The Company may, at any time
and for any reason, and shall, upon any event set forth in the next
succeeding sentence, remove the Warrant Agent and appoint a successor Warrant
Agent by written instrument in duplicate, specifying such removal and the
date on which it is intended to become effective, signed on behalf of the
Company, one copy of which shall be delivered to the Warrant Agent being
removed and one copy to the successor Warrant Agent. The Warrant Agent shall
be removed as aforesaid if it shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Warrant Agent or of
its property shall be appointed, or any public officer shall take charge or
control of it or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation. Any removal of the Warrant Agent
and any appointment of a successor Warrant Agent shall become effective upon
acceptance of appointment by the successor Warrant Agent as provided in
Section 6.3(d). As soon as practicable after appointment of the successor
Warrant Agent, the Company shall cause written notice of the change in the
Warrant Agent to be given to each of the registered Holders in the manner
provided for in Section ?.4 hereof.
(c) Upon resignation or removal of the Warrant Agent, if the Company
shall fail to appoint a successor Warrant Agent within a period of 30 days
after receipt of such notice of resignation or removal, then the Holders or
the Warrant Agent may apply to a court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to the Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company.
(d) Any successor Warrant Agent, whether appointed by the Company or by
a court, shall be a bank or trust company in good standing, incorporated
under the laws of the United States of America or any State thereof and
having, at the time of its appointment, a combined capital surplus of at
least $150 million. Such successor Warrant Agent shall execute and
35
deliver to its predecessor and to the Company an instrument accepting such
appointment hereunder and all the provisions of this Warfare Agreement, and
thereupon such successor Warrant Agent, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Warrant Agent hereunder, and such predecessor shall thereupon become
obligated to (i) transfer and deliver, and such successor Warrant Agent shall
be entitled to receive, all securities, records or other property on deposit
with or held by such predecessor as Warrant Agent hereunder and (ii) upon
payment of the amounts then due it pursuant to Section 6.2(a) hereof, pay
over, and such successor Warrant Agent shall be entitled to receive, all
money deposited with or held by any predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent hereunder may
be merged or converted, or any corporation or bank with which the Warrant
Agent may be consolidated, or any corporation or bank resulting from any
merger, conversion or consolidation to which the Warrant Agent shall be a
party, or any corporation or bank to which the Warrant Agent shall sell or
otherwise transfer all or substantially all of its corporate trust business
or assets, shall be the successor to the Warrant Agent under this Warrant
Agreement (provided that such corporation or bank shall be qualified as
aforesaid) without the execution or filing of any document or any further act
on the part of any of the parties hereto.
(f) No Warrant Agent under this Warrant Agreement shall be personally
liable for any action or omission of any successor Warrant Agent or of the
Company.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Defined Terms. Unless otherwise defined in this Warrant
Agreement, the capitalized terms set forth below and used in this Warrant
Agreement shall have the meanings given to such terms below:
"Aggregate Consideration Receivable" means, in the case of a sale,
issuance or other distribution of shares of Common Stock, the aggregate
amount paid to the Company in connection therewith and, in the case of an
issuance, sale or other distribution of Rights, or any amendment thereto, the
sum of: (a) the aggregate amount paid to the Company for such Rights; plus
(b) the aggregate consideration or premium stated in such Rights to be
payable for the shares of Common Stock covered thereby, in each case, without
deduction for any fees, expenses or underwriters discounts; provided,
further, that if all or any portion of the aggregate amount paid to the
Company for such Rights was not paid in cash, the amount of such
consideration other than cash received by the Company shall be deemed to be
the then Fair Market Value of such consideration.
36
"Business Day" means any Monday, Tuesday, Wednesday, Thursday and Friday
on which (i) banks in New York City or the city in which the principal
corporate trust office of the Warrant Agent is located, (ii) the principal
national securities exchange or market, if any, on which the Common Stock or
the Warrants are listed or admitted to trading, in each case, are not
obligated or permitted by law or executive order to be closed.
"Closing Prices" means, per share of Common Stock or any other security,
on any date specified herein:
(i) the last sale price, regular way, on such date or, if no such
sale takes place on such date, the average of the closing bid
and asked prices on such date, in each case as officially
reported on the principal national securities exchange on
which the Common Stock or other security is then listed or
admitted to trading; and
(ii) if the Common Stock or other security is not then listed or
admitted to trading on any national securities exchange, but
is designated as a national market system security by the
National Association of Securities Dealers, Inc. ("NASD"), the
last trading price of the Common Stock or such other security
on such date, or if there shall have been no trading on such
date or if the Common Stock or such other security is not so
designated, the average of the reported closing bid and asked
prices on such date as shown by the National Association of
Securities Dealers Annotated Quotation System ("NASDAQ").
"Consideration Per Share" means, with respect to shares of Common Stock
or Rights, the quotient of: (a) the Aggregate Consideration Receivable in
respect of such shares of Common Stock or such Rights, divided by (b) the
total number of such shares of Common Stock or, in the case of Rights, the
total number of shares of Common Stock into which such Rights are exercisable
or convertible.
"Fair Market Value" means, per share of Common Stock or any other
security, as of any date of determination, the arithmetic mean of the daily
Closing Prices for the 30 consecutive trading days before such date of
determination; provided, however, that if the Common Stock or such other
security is then neither listed or admitted to trading on any national
securities exchange, designated as a national market system security by the
NASD or quoted by NASDAQ, then "Fair Market Value" means the fair market
value of one share of Common Stock or such other security as determined by an
Independent Financial Advisor as of the date of determination.
"Independent Financial Advisor" means a nationally recognized
independent public accounting firm or investment banking firm (i) which does
not, and whose directors, officers and employees or affiliates do not have a
direct or indirect financial interest in the Company
37
and (ii) which, in the judgment of the Board of Directors of the Company, is
otherwise independent and qualified to perform the task for which it is to be
engaged.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Related Party" means, with respect to any Person: (A) any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person, (B) any spouse or immediate family
member of such Person or (C) a trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, owners or Persons holding
a 75% or more controlling interest of which consist of such Person and/or
such other Persons or entities referred to in the immediately preceding
clause (A). A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise.
"Right" means and includes:
(a) any warrant (including, without limitation, any Warrant)
other than the Series B Warrants and the Series C Warrants or any
option (including, without limitation, employee stock options) to
acquire Common Stock or other securities convertible into or
exchangeable for shares of Common Stock;
(b) any right permitting the holder thereof to subscribe for
shares of Common Stock or other securities convertible into or
exchangeable for shares of Common Stock pursuant to a rights
offering or otherwise;
(c) any right to acquire Common Stock pursuant to the
provisions of any security convertible into or exchangeable for
Common Stock; and
(d) any similar right permitting the holder thereof to
subscribe for or purchase shares of Common Stock.
"Securities Act' means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Series B Warrants" means those warrants issued or issuable pursuant to
the Company's Plan of Reorganization which was confirmed by the United States
Bankruptcy Court for the District of Delaware on October 1, 1997, to certain
holden of preferred stock interests in the Company.
38
"Series C Warrants' means those warrants issued or issuable to Xxx
Xxxxxx ("Xx. Xxxxxx") pursuant to a Warrant Agreement dated October 29, 1997
between Xx. Xxxxxx and the Company.
SECTION 7.2. Amendment. This Warrant Agreement and the terms of the
Warrants may be amended by the Company and the Warrant Agent, without the
consent of any Holder, for the purpose of curing any ambiguity, or for
curing, correcting or supplementing any defective or inconsistent provision
contained herein or therein or in any other manner which the Company may deem
necessary or desirable and which shall not adversely affect in any respect
the interests of the Holden.
Any amendment or supplement to this Warrant Agreement that has an
adverse effect on the interests of the Holden shall require the written
consent of the Holders of a majority of the then outstanding Warrants. The
consent of each Holder affected shall be required for any amendment pursuant
to which the Exercise Price would be increased or the number of Warrant
Shares issuable upon exercise of Warrants would be decreased (other than
pursuant to adjustments provided herein). In determining whether the Holders
of the required number of Warrants have concurred in any direction, waiver or
consent, Warrants owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Warrant
Agent shall be protected in relying on any such direction, waiver or consent,
only Warrants which the Warrant Agent knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Warrants outstanding at the
time shall be considered in any such determination.
Any modification or amendment made in accordance with this Warrant
Agreement will be conclusive and binding on all present and future Holders
whether or not they have consented to such modification or amendment or
waiver and whether or not notation of such modification or amendment is made
upon such Warrant Certificates. Any instrument given by or on behalf of any
Holder in connection with any consent to any modification or amendment will
be conclusive and binding on all subsequent Holders.
SECTION 7.3. Notices and Demand,4 to the Company and Warrant Agent.
If the Warrant Agent shall receive any notice or demand addressed to the
Company by the Holder of a Warrant Certificate pursuant to the provisions
hereof or of the Warrant Certificates, the Warrant Agent shall promptly
forward such notice or demand to the Company.
SECTION 7.4. Address for Notices to the Company and for Transmission
of Documents. All notices hereunder to the Company and the Warrant Agent
shall be deemed to have been given when sent by certified or registered mail,
postage prepaid, or by telecopy, confirmed by first class mail, postage
prepaid, addressed as follows:
39
To the Company:
County Seat Stores, Inc.
0000 Xxxx Xxxx Xxxxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Telecopy: 000-000-0000
Telephone: 000-000-0000
Attention: General Counsel
To the Warrant Agent:
First Trust National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Corporate Finance Department
The Company or the Warrant Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears in the Warrant Register and
shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 7.5. Notices to Holders. Notices to Holders shall be mailed
to such Holders at the addresses of such Holders as they appear in the
Warrant Register. Any such notice shall be sufficiently given if sent by
first-class mail, postage prepaid.
SECTION 7.6. Applicable Law. THE VALIDITY, INTERPRETATION AND
PERFORMANCE OF THIS WARRANT AGREEMENT AND EACH WARRANT ISSUED HEREUNDER AND
OF THE RESPECTIVE TERMS AND PROVISIONS THEREOF SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.
SECTION 7.7. Obtaining of Governmental Approvals. The Company will
from time to time take all action required to be taken by it which may be
necessary to obtain and keep effective any and all permits, consents and
approvals of governmental agencies and authorities and securities laws
filings under United States Federal and State laws, and the rules and
regulations of all stock exchanges or markets on which the Warrants may be
listed, which
40
may be or become requisite in connection with the issuance, sale, transfer,
and delivery of the Warrant Certificates, the exercise of the Warrants or the
issuance, sale, transfer and delivery of the Warrant Shares, it being
understood, however, that the only contractual registration rights of the
Holders are those set forth in the Registration Rights Agreement, dated of
even date herewith (the 'Registration Rights Agreement"), between the Company
and the Initial Purchaser.
SECTION 7.8. Persons Having Rights Under Agreement. Nothing in this
Warrant Agreement expressed or implied and nothing that may be inferred from
any of the provisions hereof is intended, or shall be construed, to confer
upon, or give to, any Person other than the Company, the Warrant Agent and
the Holders from time to time of the Warrant Certificates any right, remedy
or claim under or by reason of this Warrant Agreement or of any covenant,
condition, stipulation, promise or agreement hereof and all covenants,
conditions, stipulations, promises and agreements in this Warrant Agreement
contained shall be for the sole and exclusive benefit of the Company and the
Warrant Agent and their successors and of the Holders from time to time of
the Warrant Certificates.
SECTION 7.9. Headings. The descriptive headings of the several
Articles and Sections of this Warrant Agreement are inserted for convenience
of reference only and shall not control or affect the meaning or construction
of any of the provisions hereof.
SECTION 7.10. Counterparts. This Warrant Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be
an original; but such Counterparts shall together constitute but one and the
same instrument.
SECTION 7.11. Inspection of Warrant Agreement. A copy of this Warrant
Agreement shall be available at all reasonable times at the Warrant Agent
Office, for inspection by the Holder of any Warrant Certificate. The Warrant
Agent may require such Holder to submit his Warrant Certificate for
inspection by it.
SECTION 7.12. Successors. All the covenants and provisions of this
Warrant Agreement by or for the benefit of the Company or the Warrant Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the
Company and the Warrant Agent as of the day and year first above written.
COUNTY SEAT STORES, INC.
By: /s/ Xxx Xxxxxx
--------------------------------
Name: Xxx Xxxxxx
Title: President
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FIRST TRUST NATIONAL ASSOCIATION, as
Warrant Agent
By: /s/ Xxxx X. XxXxx
---------------------------------
Name: Xxxx X. XxXxx
Title: Vice President
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