________________________________________________________________________________
AirGate PCS, Inc.
Warrants to Purchase
644,400 Shares of Common Stock
WARRANT AGREEMENT
Dated as of September 30, 1999
Bankers Trust Company
Warrant Agent
________________________________________________________________________________
WARRANT AGREEMENT, dated as of September 30, 1999, by and among
AirGate PCS, Inc., a Delaware corporation ("AirGate" or the "Company"), and
Bankers Trust Company, a New York banking corporation, as warrant agent (the
"Warrant Agent").
WHEREAS, the Company proposes to issue warrants (the "Warrants") to
initially purchase up to an aggregate of 644,400 shares of Common Stock, par
value $.01 per share (the "Common Stock"), of the Company (the Common Stock
issuable on exercise of the Warrants being referred to herein as the "Warrant
Shares"), in connection with the offering (the "Offering") by AirGate, of
300,000 Units (the "Units"), each consisting of $1,000 principal amount at
maturity of AirGate's 13 1/2% Senior Subordinated Discount Notes due 2009 (the
"Notes") and one Warrant, each Warrant initially representing the right to
purchase 2.148 Warrant Shares.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act in connection with the
issuance of Warrant Certificates (as defined) and other matters as provided
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
"Accreted Value" of any outstanding Note as of or to any date of
determination means an amount equal to the sum of (1) the issue price of such
Note as determined in accordance with Section 1273 of the Internal Revenue Code
plus (2) the aggregate of the portions of the original issue discount, i.e., the
excess of the amounts considered as part of the "stated redemption price at
maturity" of such Note within the meaning of Section 1273(a)(2) of the Internal
Revenue Code or any successor provisions, whether denominated as principal or
interest, over the issue price of such Note, that shall theretofore have accrued
pursuant to Section 1272 of the Internal Revenue Code, without regard to Section
1272(a)(7) of the Internal Revenue Code, from the date of issue of such Note (a)
for each six-month or shorter period ending October 1 or April 1 prior to the
date of determination and (b) for the shorter period, if any, from the end of
the immediately preceding six-month or shorter period, as the case may be, to
the date of determination plus (3) accrued and unpaid interest to the date such
Accreted Value is paid (without duplication of any amount set forth in (2)
above), minus all amounts theretofore paid in respect of such Note, which
amounts are considered as part of the "stated redemption price at maturity" of
such Note within the meaning of Section 1273(a)(2) of the Internal Revenue Code
or any successor provisions whether such amounts paid were denominated principal
or interest.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person shall mean
the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such specified Person, whether through the ownership
of voting securities, by agreement or otherwise; provided that beneficial
ownership of 10% or more of the voting securities of a Person shall be deemed to
be control.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Warrant, the rules and
procedures of the Depositary, Euroclear and Cedel Bank that apply to such
transfer or exchange.
"Business Day" means any day other than a Legal Holiday.
"Cedel Bank" means Cedel Bank, SA.
"Closing Date" means the date hereof.
"Commission" means the Securities and Exchange Commission.
"Depositary" means, with respect to the Warrants issuable or issued in
whole or in part in global form, the Person specified in Section 3.3 hereof as
the Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of the Indenture.
"Euroclear" means Xxxxxx Guaranty Trust Company of New York, Brussels
office, and all successors thereto, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Global Warrants" means, individually and collectively, each of the
Global Warrants substantially in the form of Exhibit A hereto issued in
accordance with Section 3.1(b) and 3.5 hereof.
"Global Warrant Legend" means the legend set forth in Section
3.5(f)(i), which is required to be placed on all Global Warrants issued under
this Warrant Agreement.
"Holder" means a person who is listed as the record owner of Warrants,
Warrant Shares and any other securities issued or issuable with respect to the
Warrants or the Warrant Shares by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization.
"Indenture" means the indenture, dated the date hereof, by and among
the Company, AGW Leasing Company, Inc. and Bankers Trust Company, as trustee
relating to the Notes.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Warrant through a Participant.
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"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Offering" means the concurrent offering by the Company of the
Company's Common Stock, and Units.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Warrant Agent in form and substance reasonably
acceptable to the Warrant Agent. The counsel may be an employee of or counsel to
the Company, any subsidiary of the Company or the Warrant Agent.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business.
"Prospectus" means the prospectus included in a Registration Statement
at the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments and all material incorporated by reference
into such Prospectus.
"Registration Statement" means "registration statement, "as such term
is defined in Section 2(a)(8) of the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Separation Date" means the earliest of (i) 180 days after the
closing of the Offering, (ii) the occurrence of a Change of Control or an Event
of Default (each as defined in the Indenture) and (iii) such date as Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation in its sole discretion shall determine.
"Shelf Registration" means a shelf registration statement filed
pursuant to Rule 415 under the Securities Act relating to the Warrant Shares.
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"Trustee" means the trustee under the Indenture.
"Underwriting Agreement" means that certain underwriting agreement,
dated as of September 27, 1999, by and among the Company, AGW Leasing Company,
Inc. and the underwriters party thereto pursuant to which the Company agrees to
sell units, of which the Warrants form a part, to the underwriters.
SECTION 2. APPOINTMENT OF WARRANT AGENT.
The Company hereby appoints the Warrant Agent to act as agent for the
Company in accordance with the instructions set forth hereinafter in this
Agreement and the Warrant Agent hereby accepts such appointment.
SECTION 3. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.
3.1 Form and Dating.
(a) General.
The Warrants shall be substantially in the form of Exhibit A hereto
(the "Warrant Certificates") and shall be issued initially, together with Notes,
as Units, substantially in the form of Exhibit B hereto. The Warrants may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Warrant shall be dated the date of the countersignature.
The terms and provisions contained in the Warrants shall constitute,
and are hereby expressly made, a part of this Warrant Agreement. The Company
and the Warrant Agent, by their execution and delivery of this Warrant
Agreement, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Warrant conflicts with the express
provisions of this Warrant Agreement, the provisions of this Warrant Agreement
shall govern and be controlling.
(b) Global Warrants.
Warrants issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Warrant Legend thereon and the
"Schedule of Exchanges of Interests in the Global Warrant" attached thereto).
Warrants issued in definitive form shall be substantially in the form of Exhibit
A attached hereto (but without the Global Warrant Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Warrant" attached thereto).
Each Global Warrant shall represent such of the outstanding Warrants as shall be
specified therein and each shall provide that it shall represent the number of
outstanding Warrants from time to time endorsed thereon and that the number of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Warrant to reflect the amount of any increase or
decrease in the number of outstanding Warrants represented thereby shall be made
by the Warrant Agent in accordance with instructions given by the Holder thereof
as required by Section 3.5 hereof.
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(c) Euroclear and Cedel Procedures Applicable, if Necessary.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests, if any, in the Global Warrant
that are held by Participants through Euroclear or Cedel Bank.
3.2 Execution.
An Officer shall sign the Warrants for the Company by manual or
facsimile signature.
If the Officer whose signature is on a Warrant no longer holds that
office at the time a Warrant is countersigned, the Warrant shall nevertheless be
valid.
A Warrant shall not be valid until countersigned by the manual
signature of the Warrant Agent. The signature shall be conclusive evidence that
the Warrant has been properly issued under this Warrant Agreement.
The Warrant Agent shall, upon a written order of the Company signed by
an Officer (a "Warrant Countersignature Order"), countersign Warrants for
original issue up to the number stated in the preamble hereto.
The Warrant Agent may appoint an agent acceptable to the Company to
countersign Warrants. Such an agent may countersign Warrants whenever the
Warrant Agent may do so. Each reference in this Warrant Agreement to a
countersignature by the Warrant Agent includes a countersignature by such agent.
Such an agent has the same rights as the Warrant Agent to deal with the Company
or an Affiliate of the Company.
3.3 Warrant Registrar.
The Company shall maintain an office or agency where Warrants may be
presented for registration of transfer or for exchange ("Warrant Registrar").
The Warrant Registrar shall keep a register of the Warrants and of their
transfer and exchange. The Company may appoint one or more co-Warrant
Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar.
The Company may change any Warrant Registrar without notice to any Holder. The
Company shall notify the Warrant Agent in writing of the name and address of any
agent not a party to this Warrant Agreement. If the Company fails to appoint or
maintain another entity as Warrant Registrar, the Warrant Agent shall act as
such. The Company or any of its subsidiaries may act as Warrant Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Warrants.
The Company initially appoints the Warrant Agent to act as the Warrant
Registrar with respect to the Global Warrants.
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3.4 Holder Lists.
The Warrant Agent shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders. If the Warrant Agent is not the Warrant Registrar, the Company
shall promptly furnish to the Warrant Agent at such times as the Warrant Agent
may request in writing, a list in such form and as of such date as the Warrant
Agent may reasonably require of the names and addresses of the Holders.
3.5 Transfer and Exchange.
(a) Transfer and Exchange of Global Warrants.
A Global Warrant may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Warrants will be exchanged by the Company for Definitive
Warrants if (i) the Company delivers to the Warrant Agent notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and, in
either case, a successor Depositary is not appointed by the Company within 120
days after the date of such notice from the Depositary,(ii) the Company in its
sole discretion determines that the Global Warrants (in whole but not in part)
should be exchanged for Definitive Warrants which the Company will provide to
the Warrant Agent and delivers a written notice to such effect to the Warrant
Agent or (iii) an event of default under the Indenture of which an officer of
the Warrant Agent has actual notice has occurred and is continuing and the
Warrant Registrar has received a request from DTC to issue Definitive Warrants.
Upon the occurrence of either of the preceding events in (i), (ii) or (iii)
above, Definitive Warrants shall be issued in such names as the Depositary shall
instruct the Warrant Agent. Global Warrants also may be exchanged or replaced,
in whole or in part, as provided in Sections 3.6 and 3.7 hereof. A Global
Warrant may not be exchanged for another Warrant other than as provided in this
Section 3.5(a), however, beneficial interests in a Global Warrant may be
transferred and exchanged as provided in Section 3.5(b) or (c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Warrants.
The transfer and exchange of beneficial interests in the Global
Warrants shall be effected through the Depositary, in accordance with the
provisions of this Warrant Agreement and the Applicable Procedures. Transfers
of beneficial interests in the Global Warrants also shall require compliance
with either subparagraph (i) or (ii) below, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Warrant.
Beneficial interests in any Global Warrant may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in a Global
Warrant. No written orders or instructions shall be required to be
delivered to the Warrant Registrar to effect the transfers described in
this Section 3.5(b)(i).
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(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Warrants. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 3.5(b)(i) above, the
transferor of such beneficial interest must deliver to the Warrant
Registrar either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Warrant in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B)
(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Warrant in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Warrant Registrar containing information
regarding the Person in whose name such Definitive Warrant shall be
registered. Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Warrants contained in this
Agreement and the Warrants or otherwise applicable under the Securities
Act, the Warrant Agent shall adjust the principal amount of the relevant
Global Warrant(s) pursuant to Section 3.5(g) hereof.
(c) Transfer and Exchange of Beneficial Interests for Definitive
Warrants.
(i) Beneficial Interests in Global Warrants to Definitive
Warrants. If any holder of a beneficial interest in an Global Warrant
proposes to exchange such beneficial interest for a Definitive Warrant or
to transfer such beneficial interest to a Person who takes delivery thereof
in the form of a Definitive Warrant, then, upon satisfaction of the
conditions set forth in Section 3.5(b)(ii) hereof, the Warrant Agent shall
cause the amount of the applicable Global Warrant to be reduced accordingly
pursuant to Section 3.5(g) hereof, and the Company shall execute and
deliver to the Warrant Agent a Definitive Warrant and the Warrant Agent
shall countersign and deliver to the Person designated in the instructions
the Definitive Warrant in the appropriate principal amount. Any Definitive
Warrant issued in exchange for a beneficial interest pursuant to this
Section 3.5(c)(i) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Warrant Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Warrant Agent
shall deliver such Definitive Warrants to the Persons in whose names such
Warrants are so registered.
(d) Transfer and Exchange of Definitive Warrants for Beneficial
Interests.
(i) Definitive Warrants to Beneficial Interests in Global
Warrants. A Holder of a Definitive Warrant may exchange such Warrant for a
beneficial interest in a Global Warrant or transfer such Definitive
Warrants to a Person who takes delivery thereof in the form of a beneficial
interest in a Global Warrant at any time. Upon receipt of a request for
such an exchange or transfer, the Warrant Agent shall cancel the applicable
Definitive Warrant and increase or cause to be increased the amount of one
of the Global Warrants.
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(e) Transfer and Exchange of Definitive Warrants for Definitive
Warrants.
Upon request by a Holder of Definitive Warrants and such Holder's
compliance with the provisions of this Section 3.5(e), the Warrant Registrar
shall register the transfer or exchange of Definitive Warrants. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Warrant Registrar the Definitive Warrants duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Warrant Registrar duly executed by such Holder or by its attorney, duly
authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable, required
pursuant to the following provisions of this Section 3.5(e).
(i) Definitive Warrants to Definitive Warrants. A Holder of
Definitive Warrants may transfer such Warrants to a Person who takes
delivery thereof in the form of a Definitive Warrant. Upon receipt of a
request to register such a transfer, the Warrant Registrar shall register
the Definitive Warrants pursuant to the instructions from the Holder
thereof.
(f) Legends.
The following legends shall appear on the face of all Global Warrants
and Definitive Warrants issued under this Warrant Agreement unless specifically
stated otherwise in the applicable provisions of this Warrant Agreement.
(i) Global Warrant Legend. Each Global Warrant shall bear a
legend in substantially the following form:
"THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.5 OF THE
WARRANT AGREEMENT, (II) THIS GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 3.5(a) OF THE WARRANT AGREEMENT, (III) THIS
GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION
PURSUANT TO SECTION 3.8 OF THE WARRANT AGREEMENT AND (IV) THIS GLOBAL
WARRANT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY."
(ii) Unit Legend. Each Warrant issued prior to the Separation
Date shall bear a legend in substantially the following form:
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED
AS PART OF AN ISSUANCE OF UNITS (THE "UNITS"), EACH
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OF WHICH CONSIST OF $1,000 PRINCIPAL AMOUNT AT MATURITY OF THE __% SENIOR
SUBORDINATED DISCOUNT NOTES DUE 2009 OF AIRGATE PCS, INC. (THE "NOTES") AND
WARRANTS (THE "WARRANTS") INITIALLY ENTITLING THE HOLDER THEREOF TO
PURCHASE SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF AIRGATE PCS,
INC.
"PRIOR TO THE EARLIEST OF (I) 180 DAYS AFTER THE CLOSING OF THE
OFFERING OF THE UNITS, (II) THE OCCURRENCE OF A CHANGE OF CONTROL OR AN
EVENT OF DEFAULT (EACH AS DEFINED IN THE INDENTURE GOVERNING THE NOTES) AND
(III) SUCH DATE AS XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION IN
ITS SOLE DISCRETION SHALL DETERMINE, 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."
(g) Cancellation and/or Adjustment of Global Warrants.
At such time as all beneficial interests in a particular Global
Warrant have been exercised or exchanged for Definitive Warrants or a particular
Global Warrant has been exercised, redeemed, repurchased or canceled in whole
and not in part, each such Global Warrant shall be returned to or retained and
canceled by the Warrant Agent in accordance with Section 3.8 hereof. At any time
prior to such cancellation, if any beneficial interest in a Global Warrant is
exercised or exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Warrant or for
Definitive Warrants, the amount of Warrants represented by such Global Warrant
shall be reduced accordingly and an endorsement shall be made on such Global
Warrant by the Warrant Agent or by the Depositary at the direction of the
Warrant Agent to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Warrant, such other Global
Warrant shall be increased accordingly and an endorsement shall be made on such
Global Warrant by the Warrant Agent or by the Depositary at the direction of the
Warrant Agent to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Warrant Agent shall countersign Global
Warrants and Definitive Warrants upon the Company's order or at the Warrant
Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Warrant or to a holder of a Definitive Warrant for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith.
(iii) All Global Warrants and Definitive Warrants issued upon any
registration of transfer or exchange of Global Warrants or Definitive
Warrants shall be the
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duly authorized, executed and issued warrants for Common Stock of the
Company, not subject to any preemptive rights, and entitled to the same
benefits under this Warrant Agreement, as the Global Warrants or Definitive
Warrants surrendered upon such registration of transfer or exchange.
(iv) Prior to due presentment for the registration of a 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 for all purposes and neither the Warrant Agent nor the Company
shall be affected by notice to the contrary.
(v) The Warrant Agent shall countersign Global Warrants and
Definitive Warrants in accordance with the provisions of Section 3.2
hereof.
(i) Facsimile Submissions to Warrant Agent.
All certifications, certificates and Opinions of Counsel required to
be submitted to the Warrant Registrar pursuant to this Section 3.5 to effect a
registration of transfer or exchange may be submitted by facsimile with the
original to follow immediately thereafter.
The Warrant Registrar shall not be responsible for confirming the
truth or accuracy of representations made in any such certifications or
certificates. As to any Opinions of Counsel delivered pursuant to this Section
3.5, the Warrant Registrar may rely upon, and be fully protected in relying
upon, such opinions.
3.6 Replacement Warrants.
If any mutilated Warrant is surrendered to the Warrant Agent or the
Company and the Warrant Agent receives evidence to its satisfaction of the
destruction, loss or theft of any Warrant, the Company shall issue and the
Warrant Agent, upon receipt of a Warrant Countersignature Order, shall
countersign a replacement Warrant if the Warrant Agent's requirements are met.
If required by the Warrant Agent or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Warrant Agent
and the Company to protect the Company, the Warrant Agent, any Agent and any
agent for purposes of the countersignature from any loss that any of them may
suffer if a Warrant is replaced. The Company may charge for its expenses in
replacing a Warrant.
Every replacement Warrant is an additional warrant of the Company and
shall be entitled to all of the benefits of this Warrant Agreement equally and
proportionately with all other Warrants duly issued hereunder.
3.7 Temporary Warrants.
Until certificates representing Warrants are ready for delivery, the
Company may prepare and the Warrant Agent, upon receipt of a Warrant
Countersignature Order, shall issue temporary Warrants. Temporary Warrants
shall be substantially in the form of certificated Warrants
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but may have variations that the Company considers appropriate for temporary
Warrants and as shall be reasonably acceptable to the Warrant Agent. Without
unreasonable delay, the Company shall prepare and the Warrant Agent shall
countersign definitive Warrants in exchange for temporary Warrants.
Holders of temporary Warrants shall be entitled to all of the
benefits of this Warrant Agreement.
3.8 Cancellation.
Subject to Section 3.5(g) hereof, the Company at any time may deliver
Warrants to the Warrant Agent for cancellation. The Warrant Registrar and
Warrant Paying Agent shall forward to the Warrant Agent any Warrants surrendered
to them for registration of transfer, exchange or exercise. The Warrant Agent
and no one else shall cancel all Warrants surrendered for registration of
transfer, exchange, exercise, replacement or cancellation and shall destroy
canceled Warrants (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Warrants shall be
delivered to the Company. The Company may not issue new Warrants to replace
Warrants that have been exercised or that have been delivered to the Warrant
Agent for cancellation.
SECTION 4. SEPARATION OF WARRANTS; TERMS OF WARRANTS; EXERCISE OF WARRANTS.
(a) The Notes and Warrants will not be separately transferable until
the Separation Date. Subject to the terms of this Agreement, each Holder shall
have the right, which may be exercised during the period commencing at the
opening of business on the Separation Date and until 5:00 p.m., New York City
time on October 1, 2009 (the "Exercise Period"), to receive from the Company
the number of fully paid and nonassessable Warrant Shares which the Holder may
at the time be entitled to receive on exercise of such Warrants and payment of
the exercise price (the "Exercise Price") (i) by tendering Notes having an
aggregate principal amount at maturity, plus accrued and unpaid interest, if any
thereon to the date of exercise (or, if such exercise takes place prior to
October 1, 2004, an Accreted Value on the date of exercise) or (ii) in cash, by
wire transfer or by certified or official check payable to the order of the
Company, in each case, equal to the Exercise Price then in effect for such
Warrant Shares; provided that Holders shall be able to exercise their Warrants
only if a Registration Statement relating to the Warrant Shares is then in
effect, or the exercise of such Warrants is exempt from the registration
requirements of the Securities Act, and such securities are qualified for sale
or exempt from qualification under the applicable securities laws of the states
in which the various Holders of the Warrants or other persons to whom it is
proposed that the Warrant Shares be issued on exercise of the Warrants reside.
Each Warrant not exercised prior to 5:00 p.m., New York City time, on October 1,
2009 (the "Expiration Date") shall become void and all rights thereunder and all
rights in respect thereof under this agreement shall cease as of such time. No
adjustments as to dividends will be made upon exercise of the Warrants.
(b) In order to exercise all or any of the Warrants represented by a
Warrant Certificate, the holder thereof must deliver to the Warrant Agent at its
corporate trust office set forth
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in Section 15 hereof the Warrant Certificate and the form of election to
purchase on the reverse thereof duly filled in and signed, which signature shall
be medallion guaranteed by an institution which is a member of a Securities
Transfer Association recognized signature guarantee program, and upon payment to
the Warrant Agent for the account of the Company of the Exercise Price, which is
set forth in the form of Warrant Certificate attached hereto as Exhibit A, as
adjusted as herein provided, for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made (i) in cash, by wire transfer or by certified or official bank
check payable to the order of the Company or (ii) by tendering Notes in the
manner provided in Section 4(a) hereof.
(c) Subject to the provisions of Section 5 hereof, upon compliance
with clause (b) above, the Warrant Agent shall deliver or cause to be delivered
with all reasonable dispatch, to or upon the written order of the Holder and in
such name or names as the Holder may designate, a certificate or certificates
for the number of whole Warrant Shares issuable upon the exercise of such
Warrants, together with cash as provided in Section 9 hereof; provided that if
any consolidation, merger or lease or sale of assets is proposed to be effected
by the Company as described in Section 8(l) hereof, or a tender offer or an
exchange offer for shares of Common Stock shall be made, upon such surrender of
Warrants and payment of the Exercise Price as aforesaid, the Warrant Agent
shall, as soon as possible, but in any event not later than two Business Days
thereafter, deliver or cause to be delivered the full number of Warrant Shares
issuable upon the exercise of such Warrants in the manner described in this
sentence or other securities or property to which such Holder is entitled
hereunder, together with cash as provided in Section 9 hereof. Such certificate
or certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a Holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price.
(d) The Warrants shall be exercisable, at the election of the Holders
thereof, either in full or from time to time in part. If less than all the
Warrants represented by a Definitive Warrant are exercised, such Definitive
Warrant shall be surrendered and a new Definitive Warrant of the same tenor and
for the number of Warrants which were not exercised shall be executed by the
Company and delivered to the Warrant Agent and the Warrant Agent shall
countersign the new Definitive Warrant, registered in such name or names as may
be directed in writing by the Holder, and shall deliver the new Definitive
Warrant to the Person or Persons entitled to receive the same. The Warrant Agent
shall make such notations on the Schedule of Exchange of Interests of Global
Warrants to each Global Warrant as are required to reflect any change in the
number of Warrants represented by such Global Warrant resulting from any
exercise in accordance with the terms hereof.
(e) All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates
shall then be disposed of by the Warrant Agent in a manner satisfactory to the
Company. The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently pay to the Company all monies received by
the Warrant Agent for the purchase of the Warrant Shares through the exercise of
such Warrants.
12
(f) The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the Holders
during normal business hours at its office. The Company shall supply the
Warrant Agent from time to time with such numbers of copies of this Agreement as
the Warrant Agent may request.
SECTION 4A. SHELF REGISTRATION AND PROCEDURES
(a) The Company shall (i) cause the Shelf Registration to be filed
with the Commission in no event later than 60 days after the Closing Date (such
60/th/ day being the "Filing Deadline") and (ii) use its reasonable best efforts
to cause such Shelf Registration to become effective as promptly as reasonably
practical, but in no event later than 120 days after the Closing Date (such
120/th/ day being the "Effectiveness Deadline").
(b) In connection with the preparation and filing of the initial
Shelf Registration, the Company shall as promptly as practicable furnish to
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation copies, as proposed to be
filed, of the Registration Statement and any Prospectus included therein and any
amendments or supplements to such Registration Statement and Prospectus, in each
with respect to only those proposed filings during the period prior to the
Effectiveness Deadline, which documents will be subject to the review and
comment of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation for a period of
at least five Business Days. The Company will not file any such initial
Registration Statement or Prospectus or any amendment or supplement to such
Registration Statement or Prospectus, in each with respect to only those
proposed filings during the period prior to the Effectiveness Deadline, to which
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation shall reasonably object
within five Business Days after the receipt of copies thereof. An objection by
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation shall be deemed reasonable
if such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains an untrue statement of a material
fact or omits to state a material fact necessary to make the statements therein
not misleading or fails to comply with the applicable requirements of the
Securities Act;
(c) To the extent necessary to ensure that the Shelf Registration is
available for the exercise of the Warrants by the Holders thereof entitled to
the benefits of this Section 4A, the Company shall use its best efforts to keep
any Shelf Registration required by this Section 4A continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Section 4A(e) hereof and in conformity with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as amended from time to time until the later of the date on which (a)
all of the Warrants have been exercised or (b) the Warrants have expired.
(d) [Intentionally left blank]
(e) In connection with any Registration Statement and any related
Prospectus required by this Agreement, the Company shall:
13
(i) use its reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 4A of this Agreement. Upon
the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain an untrue
statement of material fact or omit to state any material fact necessary to
make the statements therein not misleading or (B) not to be effective and
usable for the exercise of Warrants during the period required by this
Agreement, the Company shall file promptly an appropriate amendment to such
Registration Statement curing such defect, and, if Commission review is
required, use its reasonable best efforts to cause such amendment to be
declared effective as soon as practicable.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 hereof; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Securities Act, and to comply
fully with Rules 424, 430A and 462, as applicable, under the Securities Act
in a timely manner; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of exercise by the Holders of Warrants thereof
set forth in such Registration Statement or supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by such
Person, confirm such advice in writing, (A) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to any applicable Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement under the Securities Act or of the suspension by any
state securities commission of the qualification of the Warrant Shares for
offering or sale in any jurisdiction, or the initiation of any proceeding
for any of the preceding purposes, (C) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in
the Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Registration
Statement in order to make the statements therein not misleading, or that
requires the making of any additions to or changes in the Prospectus in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Warrant Shares or the exercise of the Warrants under
state securities or Blue Sky laws, the Company shall use its best efforts
to obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) subject to Section 4A(e)(i), if any fact or event
contemplated by Section 4A(e)(iii)(C) above shall exist or have occurred,
prepare a supplement or post-
14
effective amendment to the Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Warrant
Shares, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(v) advise each Holder promptly if the Company, pursuant to
this Section, decides to suspend the use of any prospectus (and shall not
be required to amend or supplement the Shelf Registration, any related
prospectus or any document incorporated therein by reference other than an
effective registration statement being used for an underwritten offering)
in the event that, and for periods not to exceed 60 consecutive days and no
more than two times in any calendar year if (1) an event or circumstance
occurs and is continuing as a result of which the Shelf Registration, any
related prospectus or any document incorporated therein by reference as
then amended or supplemented or proposed to be filed would, in the good
faith judgment of the Company, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (2)(A) the Company determines in its good faith
judgment that the disclosure of such event at such time would have a
material adverse effect on its business, operations or prospects or (B) the
disclosure otherwise relates to a material business transaction or
development which has not yet been publicly disclosed;
(vi) deliver to each Holder without charge a copy of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto;
(vii) provide a CUSIP number for all Warrant Shares not later
than the effective date of a Registration Statement covering such Warrant
Shares and provide the Trustee under the Indenture with printed
certificates for the Warrant Shares which are in a form eligible for
deposit with the Depository Trust Company; and
(viii) otherwise use their its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Securities Act.
(f) Restrictions on Holders. Each Holder agrees by acquisition of
-----------------------
Warrant Shares that, upon receipt of the notice referred to in Section
4A(e)(iii)(B) or any notice from the Company of the existence of any fact of the
kind described in Section 4A(e)(iii)(C) hereof or the determination by the
Company of any event described in Section 4A(e)(vi) (in each case, a "Suspension
Notice"), such Holder will forthwith discontinue the exercise of Warrants
pursuant to the applicable Registration Statement until (i) such Holder has
received copies of the supplemented or amended Prospectus contemplated by
Section 4A(e)(iv) hereof, or (ii) such Holder is advised in
15
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus (in each case, the "Recommencement Date"). Each
Holder receiving a Suspension Notice hereby agrees that it will either (i)
destroy any Prospectuses, other than permanent file copies, then in such
Holder's possession which have been replaced by the Company with more recently
dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's possession of
the Prospectus covering such Warrant Shares that was current at the time of
receipt of the Suspension Notice. The time period regarding the effectiveness of
such Registration Statement set forth in Section 4A hereof shall be extended by
a number of days equal to the number of days in the period from and including
the date of delivery of the Suspension Notice to the date of delivery of the
Recommencement Date.
(g) Liquidated Damages. The Company and the underwriters party to the
------------------
Underwriting Agreement agree that the Holders will suffer damages if the Company
fails to fulfill its obligations pursuant to paragraphs (a), (c) and (e) of
Section 4A of this Warrant Agreement and that it would not be possible to
ascertain the extent of such damages. Accordingly, in the event of such failure
by the Company to fulfill such obligations, the Company hereby agrees to pay
liquidated damages ("Liquidated Damages") to each Holder under the circumstances
and to the extent set forth below:
(i) if the Shelf Registration has not been filed with the
Commission within 60 days after the Closing Date;
(ii) if the Shelf Registration has not been declared effective
by the Commission within 120 days after the Closing Date; or
(iii) if the Shelf Registration has been declared effective by
the Commission and such Shelf Registration ceases to be effective or usable
at any time, subject to Section 4A(e)(vi), until the later of the date on
which (A) all of the Warrants have been exercised or (B) the Warrants have
expired (the "Effectiveness Period"), without being succeeded on the same
day immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective on the same day;
(any of the foregoing, a "Registration Default") then the Company shall pay
Liquidated Damages to each Holder in an amount equal to $0.03 per week per
Warrant held by such Holder for each week or portion thereof that the
Registration Default continues for the first 90-day period immediately following
the occurrence of such Registration Default. This amount will increase by an
additional $0.02 per week per Warrant with respect to each subsequent 90-day
period, up to a maximum amount of Liquidated Damages equal to $0.07 per week per
Warrant. The provision for Liquidated Damages will continue until such
Registration Default has been cured. The Company will not be required to pay
Liquidated Damages for more than one Registration Default at any given time. A
Registration Default under clause (i) above shall be cured on the date that the
Shelf Registration is filed with the Commission; a Registration Default under
clause (ii) above shall be cured on the date that the Shelf Registration is
declared effective by the Commission; a Registration Default under
16
clause (iii) above shall be cured on the earlier of (A) the date that the post-
effective amendment curing the deficiency in the Shelf Registration is declared
effective or (B) the Effectiveness Period expires.
(h) Payment of Liquidated Damages. The Company shall notify the
-----------------------------
Warrant Agent within one Business Day after each and every date on which a
Registration Default occurs (an "Event Date"). Liquidated Damages shall accrue
from the most recent date to which Liquidated Damages have been paid or, if no
Liquidated Damages have been paid, from the date hereof. Liquidated Damages
accrued as of April 1 or October 1 of each year (each a "Payment Date") will be
payable on such Payment Date. The Company shall pay Liquidated Damages on the
applicable Payment Date to the Persons who are Holders of Warrants at the close
of business on the March 15 or September 15 next preceding the Payment Date.
Liquidated Damages shall be payable at the office of the Warrant Agent or, at
the option of the Company, payment of Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
provided that payment by wire transfer of immediately available funds shall be
required with respect to the Liquidated Damages on all Warrants the Holders of
which shall have provided written wire transfer instructions to the Company and
the Warrant Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
SECTION 5. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes attributable to the
initial issuance of Warrant Shares upon the exercise of Warrants; provided that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issue of any Warrant Certificates or
any certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
SECTION 6. RESERVATION OF WARRANT SHARES.
(a) The Company will at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock or its authorized and issued Common Stock held in its treasury, for
the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants.
(b) The Company or, if appointed, the transfer agent for the Common
Stock (the "Transfer Agent") and every subsequent transfer agent for any shares
of the Company's capital stock issuable upon the exercise of any of the rights
of purchase aforesaid will be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the
17
exercise of the rights of purchase represented by the Warrants. The Warrant
Agent is hereby irrevocably authorized to requisition from time to time from
such Transfer Agent the stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement.
The Company will supply such Transfer Agent with duly executed certificates for
such purposes and will provide or otherwise make available any cash which may be
payable as provided in Section 9 hereof. The Company will furnish such Transfer
Agent a copy of all notices of adjustments, and certificates related thereto,
transmitted to each Holder pursuant to Section 10 hereof.
(c) Before taking any action which would cause an adjustment pursuant
to Section 8 hereof to reduce the Exercise Price below the then par value (if
any) of the Warrant Shares, the Company will take any corporate action which
may, in the opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
(d) The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants will, upon issue, be fully paid, nonassessable, free
of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issuance thereof.
SECTION 7. OBTAINING STOCK EXCHANGE LISTINGS.
The Company will from time to time take all action which may be
necessary so that the Warrant Shares, immediately upon their issuance upon the
exercise of Warrants, will be listed on the principal securities exchanges,
automated quotation systems or other markets within the United States of
America, if any, on which other shares of Common Stock are then listed, if any.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.
The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 8. For purposes of this
Section 8, "Common Stock" means shares now or hereafter authorized of any class
of common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company (i) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock, (ii) subdivides its outstanding
shares of Common Stock into a greater number of shares, (iii) combines its
outstanding shares of Common Stock into a smaller number of shares, (iv) makes a
distribution on its Common Stock in shares of its capital stock other than
Common Stock or (v) issues by reclassification of its Common Stock any shares of
its capital stock, then the Exercise Price in effect immediately prior to such
action shall be proportionately adjusted
18
so that the Holder of any Warrant thereafter exercised may receive the aggregate
number and kind of shares of capital stock of the Company which he would have
owned immediately following such action if such Warrant had been exercised
immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, after an adjustment, a Holder of a Warrant upon exercise of it may receive
shares of two or more classes of capital stock of the Company, the Company shall
determine, in good faith, the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section 8. Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them for a period expiring within 45 days
after the record date mentioned below to purchase shares of Common Stock at a
price per share less than the Fair Value (as defined herein) per share on that
record date, the Exercise Price shall be adjusted in accordance with the
formula:
N x P
O + -----
M
E' = E x ---------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock issued
pursuant to such rights, options or warrants.
P = the aggregate price per share of the additional shares.
M = the Fair Value per share of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or
19
warrants shall have been exercised, the Exercise Price shall be immediately
readjusted to what it would have been if "N" in the above formula had been the
number of shares actually issued.
(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of
its assets or debt securities or any rights or warrants to purchase debt
securities of the Company, the Exercise Price shall be adjusted in accordance
with the formula:
M - F
E' = E x -----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Fair Value per share of Common Stock on the record date
mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants to be distributed in respect
of one share of Common Stock as determined in good faith by
the Board of Directors of the Company (the "Board of
Directors").
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This Section 8(c) does not apply to cash dividends or cash
distributions paid out of consolidated current or retained earnings as shown on
the books of the Company prepared in accordance with generally accepted
accounting principles. Also, this Section 8(c) does not apply to rights,
options or warrants referred to in Section 8(b) hereof.
(d) Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a consideration per
share less than the Fair Value per share on the date the Company fixes the
offering price of such additional shares, the Exercise Price shall be adjusted
in accordance with the formula:
20
P
O + ---
M
E' = E x -------
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of
such additional shares.
M = the Fair Value per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (a), (b),
(c) and (i) of this Section 8,
(2) the exercise of Warrants, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock the issuance
of which caused an adjustment to be made under Section 8(e),
(3) Common Stock issued to the Company's employees (or employees
of its subsidiaries) under bona fide employee benefit plans adopted by the
Board of Directors and approved by the holders of Common Stock when
required by law, if such Common Stock would otherwise be covered by this
subsection (d) (but only to the extent that the aggregate number of shares
excluded hereby and issued after the date of this Warrant
21
Agreement shall not exceed 5% of the Common Stock outstanding at the time
of the adoption of each such plan, exclusive of anti-dilution adjustments
thereunder),
(4) Common Stock issuable upon the exercise of warrants issued
to the holders of Common Stock.
(5) Common Stock issued to shareholders of any person which
merges into the Company, or with a subsidiary of the Company, in proportion
to their stock holdings of such person immediately prior to such merger,
upon such merger, provided that if such person is an Affiliate of the
Company, the Board of Directors shall have obtained a fairness opinion from
a nationally recognized investment banking, appraisal or valuation firm,
which is not an Affiliate of the Company, stating that the consideration
received in such merger is fair to the Company from a financial point of
view, or
(6) the issuance of shares of Common Stock pursuant to rights,
options or warrants which were originally issued in a Non-Affiliate Sale
(as defined below) together with one or more other securities as part of a
unit at a price per unit.
(e) Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or exchangeable
for Common Stock (other than securities issued in transactions described in
subsections (b) and (c) of this Section 8) for a consideration per share of
Common Stock initially deliverable upon conversion or exchange of such
securities less than the Fair Value per share on the date of issuance of such
securities, the Exercise Price shall be adjusted in accordance with this
formula:
P
O + ---
M
E' = E x ------
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such securities.
P = the aggregate consideration received for the issuance of
such securities.
22
M = the Fair Value per share on the date of issuance of such
securities.
D = exchange for such securities at the initial conversion or
exchange rate. the maximum number of shares deliverable upon
conversion or in
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities have not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This subsection (e) does not apply to convertible securities issued to
shareholders of any person which merges into the Company, or with a subsidiary
of the Company, in proportion to their stock holdings of such person immediately
prior to such merger, upon such merger, provided that if such person is an
Affiliate of the Company, the Board of Directors shall have obtained a fairness
opinion from a nationally recognized investment banking, appraisal or valuation
firm, which is not an Affiliate of the Company, stating that the consideration
received in such merger is fair to the Company from a financial point of view.
(f) Consideration Received.
For purposes of any computation respecting consideration received
pursuant to subsections (d), and (e) of this Section 8, the following shall
apply:
(i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common Stock for
a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive, and
described in a Board resolution which shall be filed with the Warrant
Agent;
(iii) in the case of the issuance of securities convertible into
or exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (i) and (ii) of this subsection); and
23
(iv) in the case of the issuance of shares of Common Stock
pursuant to rights, options or warrants which rights, options or warrants
were originally issued together with one or more other securities as part
of a unit at a price per unit, the consideration shall be deemed to be the
fair value of such rights, options or warrants at the time of issuance
thereof as determined in good faith by the Board of Directors whose
determination shall be conclusive and described in a Board resolution which
shall be filed with the Warrant Agent plus the additional minimum
consideration, if any, to be received by the Company upon the exercise,
conversion or exchange thereof (as determined in the same manner as
provided in clauses (i) and (ii) of this subsection).
(g) Fair Value.
In Sections 8(d) and (e) hereof, the "Fair Value" per security at any
date of determination shall be (1) in connection with a sale by the Company to a
party that is not an Affiliate of the Company in an arm's-length transaction (a
"Non-Affiliate Sale"), the price per security at which such security is sold and
(2) in connection with any sale by the Company to an Affiliate of the Company,
(a) the last price per security at which such security was sold in a Non-
Affiliate Sale within the three-month period preceding such date of
determination or (b) if clause (a) is not applicable, the fair market value of
such security determined in good faith by (i) a majority of the Board of
Directors, including a majority of the Disinterested Directors, and approved in
a Board resolution delivered to the Warrant Agent or (ii) a nationally
recognized investment banking, appraisal or valuation firm, which is not an
Affiliate of the Company, in each case, taking into account, among all other
factors deemed relevant by the Board of Directors or such investment banking,
appraisal or valuation firm, the trading price and volume of such security on
any national securities exchange or automated quotation system on which such
security is traded. Notwithstanding the foregoing, any sale to Xxxxxxxxx, Xxxxxx
& Xxxxxxxx Securities Corporation (or any successor thereto) pursuant to an
underwritten public offering registered under the Securities Act shall be deemed
to be and treated as a Non-Affiliate Sale.
In Sections 8(b) and (c) hereof, the "Fair Value" per security at any
date of determination shall be (a) the last price per security at which such
security was sold by the Company in a Non-Affiliate Sale within the three-month
period preceding such date of determination or (b) if clause (a) is not
applicable, the fair market value of such security determined in good faith by
(i) a majority of the Board of Directors, including a majority of the
Disinterested Directors, and approved in a Board resolution delivered to the
Warrant Agent or (ii) a nationally recognized investment banking, appraisal or
valuation firm, which is not an Affiliate of the Company, in each case, taking
into account, among all other factors deemed relevant by the Board of Directors
or such investment banking, appraisal or valuation firm, the trading price and
volume of such security on any national securities exchange or automated
quotation system on which such security is traded.
For purposes of this Section 8(g), "Disinterested Director" means, in
connection with any issuance of securities that gives rise to a determination of
the Fair Value thereof, each member of the Board of Directors who is not an
officer, employee, director or other Affiliate of the party to whom the Company
is proposing to issue the securities giving rise to such determination.
24
For purposes of this Section 8(g), "Affiliate" of any specified Person
means (A) any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person and (B)
any director, officer or employee of such specified person. For purposes of
this definition "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 8 shall be made
to the nearest cent or to the nearest 1/100th of a share, as the case may be, it
being understood that no such rounding shall be made under subsection (p).
(i) When No Adjustment Required.
No adjustment need be made for a transaction referred to Section 8(a),
(b), (c), (d), (e) or (f) hereof, if Warrant Holders are to participate (without
being required to exercise their Warrants) in the transaction on a basis and
with notice that the Board of Directors determines to be fair and appropriate in
light of the basis and notice on which holders of Common Stock participate in
the transaction. No adjustment need be made for (i) rights to purchase Common
Stock pursuant to a Company plan for reinvestment of dividends or interest,(ii)
a change in the par value or no par value of the Common Stock, or (iii) the
adoption of a plan commonly referred to as a "Stockholders' Rights Plan" which
provides for the issuance of rights to acquire shares of capital stock upon the
occurrence of some event that is not within the control of the rights holders,
or the issuance of rights under such plan; provided that the issuance of capital
stock pursuant to such rights shall require adjustment to the Exercise Price and
number of shares of Common Stock purchasable upon the exercise of each Warrant
as set forth in this Agreement. To the extent the Warrants become convertible
into cash, no adjustment need be made thereafter as to the cash. Interest will
not accrue on the cash.
(j) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Section 10 hereof.
(k) Voluntary Reduction. The Company from time to time may reduce the
Exercise Price by any amount for any period of time, if the period is at least
20 days and if the reduction is irrevocable during the period; provided that in
no event may the Exercise Price be less than the par value of a share of Common
Stock. Whenever the Exercise Price is reduced, the Company shall mail to
Warrant Holders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state
25
the reduced Exercise Price and the period in which it will be in effect. A
reduction of the Exercise Price does not change or adjust the Exercise Price
otherwise in effect for purposes of Section 8(a), (b), (c), (d), (e) and (f)
hereof.
(l) Notice of Certain Transactions.
If (i) the Company takes any action that would require an adjustment
in the Exercise Price pursuant to Section 8(a), (b), (c), (d), (e) or (f) hereof
and if the Company does not arrange for Warrant Holders to participate pursuant
to Section 8(i) hereof, (ii) the Company takes any action that would require a
supplemental Warrant Agreement pursuant to Section 8(m) hereof or (iii) there is
a liquidation or dissolution of the Company, then the Company shall mail to
Warrant Holders a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, transfer, lease, liquidation or
dissolution. The Company shall mail the notice at least 15 days before such
date. Failure to mail the notice or any defect in it shall not affect the
validity of the transaction.
(m) Reorganization of Company.
Immediately after the date hereof, if the Company consolidates or
merges with or into, or transfers or leases all or substantially all its assets
to, any person, upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of securities, cash or
other assets which the Holder of a Warrant would have owned immediately after
the consolidation, merger, transfer or lease if the Holder had exercised the
Warrant immediately before the effective date of the transaction. Concurrently
with the consummation of such transaction, the corporation formed by or
surviving any such consolidation or merger if other than the Company, or the
person to which such sale or conveyance shall have been made, shall enter into a
supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 8(m). The successor Company shall mail
to Warrant Holders a notice describing the supplemental Warrant Agreement. If
the issuer of securities deliverable upon exercise of Warrants under the
supplemental Warrant Agreement is an affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
Warrant Agreement. If this Section 8(m) applies, Sections 8(a), (b), (c), (d),
(e) and (f) hereof do not apply.
(n) Company Determination Final.
Any determination that the Company or the Board of Directors must make
pursuant to Section 8(a), (c), (d), (e), (f), (g), (h) or (i) hereof is
conclusive.
(o) Warrant Agent's Disclaimer.
The Warrant Agent has no duty to determine when an adjustment under
this Section 8 should be made, how it should be made or what it should be. The
Warrant Agent has no duty to determine whether any provisions of a supplemental
Warrant Agreement under Section 8(m) hereof are correct. The Warrant Agent
makes no representation as to the validity or value of any securities
26
or assets issued upon exercise of Warrants. The Warrant Agent shall not be
responsible for the Company's failure to comply with this Section 8.
(p) When Issuance or Payment May Be Deferred.
In any case in which this Section 8 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event (i)
issuing to the Holder of any Warrant exercised after such record date the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
and (ii) paying to such Holder any amount in cash in lieu of a fractional share
pursuant to Section 9 hereof; provided that the Company shall deliver to such
Holder a due xxxx or other appropriate instrument evidencing such Holder's right
to receive such additional Warrant Shares, other capital stock and cash upon the
occurrence of the event requiring such adjustment.
(q) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this Section 8,
each Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to the
nearest hundredth) obtained from the following formula:
E
N' = N x ---
E
where:
N' = the adjusted number of Warrant Shares issuable upon exercise
of a Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise Price prior
to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(r) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
27
SECTION 9. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant Shares
on the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same Holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 9, be issuable on the exercise of any Warrants
(or specified portion thereof), the Company shall pay an amount in cash equal to
the Fair Value per Warrant Share, as determined on the day immediately preceding
the date the Warrant is presented for exercise, multiplied by such fraction,
computed to the nearest whole U.S. cent.
SECTION 10. NOTICES TO WARRANT HOLDERS.
(a) Upon any adjustment of the Exercise Price pursuant to Section 8
hereof, the Company shall promptly thereafter (i) cause to be filed with the
Warrant Agent a certificate of a firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company (who may
be the regular auditors of the Company) setting forth the Exercise Price after
such adjustment and setting forth in reasonable detail the method of calculation
and the facts upon which such calculations are based and setting forth the
number of Warrant Shares (or portion thereof) issuable after such adjustment in
the Exercise Price, upon exercise of a Warrant and payment of the adjusted
Exercise Price, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein, and (ii) cause to be given to each
of the registered holders of Warrants at the address appearing on the Warrant
register for each such registered holder written notice of such adjustments by
first-class mail, postage prepaid. Where appropriate, such notice may be given
in advance and included as a part of the notice required to be mailed under the
other provisions of this Section 10.
(b) In case:
(i) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants;
(ii) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than dividends or cash distributions paid out of consolidated
current or retained earnings as shown on the books of the Company prepared
in accordance with generally accepted accounting principles or dividends
payable in shares of Common Stock or distributions referred to in Section
8(a) hereof);
(iii) of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is
required, or of the conveyance or transfer of the properties and assets of
the Company substantially as an entirety, or of any reclassification or
change of Common Stock issuable upon exercise of the Warrants (other
28
than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or
a tender offer or exchange offer for shares of Common Stock;
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(v) the Company proposes to take any action (other than actions
of the character described in Section 8(a) hereof) which would require an
adjustment of the Exercise Price pursuant to Section 8 hereof;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered holders of Warrants at his or her address
appearing on the Warrant register, at least 20 days (or 10 days in any case
specified in clauses (i) or (ii) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (x)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, (y) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (z) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 10 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
(c) Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the Holders of Warrants the
right to vote or to consent or to receive notice as stockholders in respect of
the meetings of stockholders or the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the Company.
SECTION 11. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
(a) Any corporation into which the Warrant Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 13 hereof. In case at the time such successor to the
Warrant Agent shall succeed to the agency created by this Agreement, and in case
at that time any of the Warrant Certificates shall have been
29
countersigned but not delivered, any such successor to the Warrant Agent may
adopt the countersignature of the original Warrant Agent; and in case at that
time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such cases such Warrant Certificates shall have
the full force and effect provided in the Warrant Certificates and in this
Agreement.
(b) In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has been changed
may adopt the countersignature under its prior name, and in case at that time
any of the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant Certificates either in its prior name or in
its changed name, and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this
Agreement.
SECTION 12. WARRANT AGENT.
The Warrant Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which the
Company and the Holders of Warrants, by their acceptance thereof, shall be
bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation (which shall include the reasonable fees and expenses of its
counsel) for all services rendered by the Warrant Agent in the execution of this
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement. The Company shall indemnify
the Warrant Agent against
30
any and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Warrant Agreement, including the costs and expenses of enforcing this Warrant
Agreement against the Company and defending itself against any claim (whether
asserted by the Company or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its gross negligence or wilful misconduct. The Warrant Agent
shall notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Warrant Agent to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Warrant Agent shall cooperate in the defense. The Warrant Agent may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrants shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrant Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be brought
in its name as Warrant Agent and any recovery of judgment shall be for the
ratable benefit of the registered holders of the Warrants, as their respective
rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not be liable for anything which it may do or refrain
from doing in connection with this Agreement except for its own negligence or
bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to
31
whether any such Warrant Shares or other securities will when issued be validly
issued and fully paid and nonassessable, and makes no representation with
respect thereto.
SECTION 13. CHANGE OF WARRANT AGENT.
If the Warrant Agent shall become incapable of acting as Warrant
Agent, the Company shall appoint a successor to such Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after it
has been notified in writing of such incapacity by the Warrant Agent or by the
registered holder of a Warrant Certificate, then the registered holder of any
Warrant may apply to any court of competent jurisdiction for the appointment of
a successor to the Warrant Agent. Pending appointment of a successor to such
Warrant Agent, either by the Company or by such a court, the duties of the
Warrant Agent shall be carried out by the Company. The Holders of a majority of
the unexercised Warrants shall be entitled at any time to remove the Warrant
Agent and appoint a successor to such Warrant Agent. Such successor to the
Warrant Agent need not be approved by the Company or the former Warrant Agent.
After appointment, the successor to the Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Warrant Agent without further act or deed; provided that the former
Warrant Agent shall deliver and transfer to the successor to the Warrant Agent
any property at the time held by it hereunder and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure
to give any notice provided for in this Section 13, however, or any defect
therein, shall not affect the legality or validity of the appointment of a
successor to the Warrant Agent.
SECTION 14. REPORTS.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Warrants are outstanding, the Company shall furnish
to the Warrant Agent and the Holders of Warrants (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports. In addition, whether or
not required by the rules and regulations of the Commission, the Company shall
file a copy of all such information and reports with the Commission for public
availability (unless the Commission shall not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request.
(b) The Company shall provide the Warrant Agent with a sufficient
number of copies of all such reports that the Warrant Agent may be required to
deliver to the Holders of the Warrants under this Section 14.
32
SECTION 15. NOTICES TO COMPANY AND WARRANT AGENT.
Any notice or demand authorized by this Agreement to be given or made
by the Warrant Agent or by the registered holder of any Warrant to or on the
Company shall be sufficiently given or made when received if deposited in the
mail, first class or registered, postage prepaid, addressed (until another
address is filed in writing by the Company with the Warrant Agent) as follows:
AirGate PCS, Inc.
Xxxxxx Tower
Suite 1700
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: President and Legal Department
With a copy to:
Xxxxxx Xxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or by
the registered holder(s) of any Warrant to the Warrant Agent shall be
sufficiently given when and if deposited in the mail, first-class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) to the Warrant Agent as follows:
Bankers Trust Company
Four Xxxxxx Xxxxxx - 0/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Corporate Trust and Agency Group,
Corporate Market Services
SECTION 16. SUPPLEMENTS AND AMENDMENTS.
The Company and the Warrant Agent may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrants in order to
cure any ambiguity or
33
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the interests of the Holders of Warrants. Any amendment or
supplement to this Agreement that has an adverse effect on the interests of the
Holders of Warrants shall require the written consent of the Holders of a
majority of the then outstanding Warrants (excluding Warrants held by the
Company or any of its affiliates). The consent of each Holder of Warrants
affected shall be required for any amendment pursuant to which the Exercise
Price would be increased or the number of Warrant Shares purchasable upon
exercise of Warrants would be decreased (other than pursuant to adjustments
provided in this Agreement).
SECTION 17. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder including, without
limitation and without the need for an express assignment, subsequent Holders.
SECTION 18. TERMINATION.
This Agreement shall terminate at 5:00 p.m., New York City time on
September ____, 2009. Notwithstanding the foregoing, this Agreement will
terminate on any earlier date if all Warrants have been exercised. The
provisions of Section 12 shall survive such termination.
SECTION 19. GOVERNING LAW.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the internal laws of said State.
SECTION 20. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Warrant Agent and the registered holders
of Warrants any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the registered holders of Warrants. The Company agrees
that the Holders of the Warrants shall be third-party beneficiaries to the
agreements made hereunder by the Company and each Holder shall have the right to
enforce such agreements directly to the extent it deems enforcement necessary or
advisable to protect its rights hereunder.
SECTION 21. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
34
[Signature Page Follows]
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
AirGate PCS, Inc.
By:_____________________________________
Name:
Title:
Bankers Trust Company, as Warrant Agent
By:_____________________________________
Name:
Title:
EXHIBIT A
[Form of Warrant Certificate]
[Face]
Unit Legend. Each Warrant issued prior to the Separation Date shall
bear the following legend (the "Unit Legend") on the face thereof:
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS (THE "UNITS"), EACH OF WHICH CONSIST OF $1,000 PRINCIPAL
AMOUNT AT MATURITY OF THE __% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009 OF
AIRGATE PCS, INC. (THE "NOTES") AND _______ WARRANTS (THE "WARRANTS") INITIALLY
ENTITLING THE HOLDER THEREOF TO PURCHASE ___ SHARES OF COMMON STOCK, PAR VALUE
$0.01 PER SHARE, OF AIRGATE PCS, INC.
PRIOR TO THE EARLIEST OF (I) 180 DAYS AFTER THE CLOSING OF THE OFFERING OF THE
UNITS, (II) THE OCCURRENCE OF A CHANGE OF CONTROL OR AN EVENT OF DEFAULT (EACH
AS DEFINED IN THE INDENTURE GOVERNING THE NOTES) AND (III) SUCH DATE AS
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION IN ITS SOLE DISCRETION SHALL
DETERMINE, 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.
[THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.5 OF THE
WARRANT AGREEMENT, (II) THIS GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 3.5(a) OF THE WARRANT AGREEMENT, (III) THIS
GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION
PURSUANT TO SECTION 3.8 OF THE WARRANT AGREEMENT AND (IV) THIS GLOBAL
WARRANT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.]/1/
_________________
/1/ This paragraph should be included only if the Warrant is issued in global
form.
A-1
No. ___________ ___Warrants
CUSIP No. ________
A-2
Warrant Certificate
AIRGATE PCS, INC.
This Warrant Certificate certifies that Cede & Co., or its registered
assigns, is the registered holder of Warrants expiring September ____, 2009 (the
"Warrants") to purchase Common Stock, par value $.01 (the "Common Stock"), of
AirGate PCS, Inc., a Delaware corporation (the "Company"). Each Warrant
entitles the registered holder upon exercise at any time from 9:00 a.m. on the
Separation Date referred to below (the "Exercise Date") until 5:00 p.m. New
York City time on September ____, 2009, to receive from the Company ____ fully
paid and nonassessable shares of Common Stock (the "Warrant Shares") at the
initial exercise price (the "Exercise Price") of $0.01 per share payable upon
surrender of this Warrant Certificate and payment of the Exercise Price at the
office or agency of the Warrant Agent, but only subject to the conditions set
forth herein and in the Warrant Agreement referred to on the reverse hereof.
The Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York City time on
September ____, 2009, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the internal laws of the State of New York.
A-3
IN WITNESS WHEREOF, AirGate PCS, Inc. and AGW Leasing Company, Inc.
have caused this Warrant Certificate to be signed below.
Dated: September __, 0000
XxxXxxx PCS, Inc.
By:_____________________________________
Name:
Title:
Countersigned:
Bankers Trust Company
as Warrant Agent
By:_________________________________
Authorized Signature
A-4
[Reverse of Warrant Certificate]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m. New York City time on
September ___, 2009 entitling the holder on exercise to receive shares of Common
Stock, and are issued or to be issued pursuant to a Warrant Agreement dated as
of September ___, 1999 (the "Warrant Agreement"), duly executed and delivered by
the Company to Bankers Trust Company, as warrant agent (the "Warrant Agent"),
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Warrant Agent, the Company and the holders (the words "holders" or "holder"
meaning the registered holders or registered holder) of the Warrants. A copy of
the Warrant Agreement may be obtained by the holder hereof upon written request
to the Company.
Warrants may be exercised at any time on or after the Separation Date
and on or before 5:00 p.m. New York City time on September ___, 2009; provided
that holders shall be able to exercise their Warrants only if a Registration
Statement relating to the exercise of the Warrants is then in effect, or the
exercise of such Warrants is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and such securities
are qualified for sale or exempt from qualification under the applicable
securities laws of the states in which the various holders of the Warrants or
other persons to whom it is proposed that the Warrant Shares be issued on
exercise of the Warrants reside. In order to exercise all or any of the Warrants
represented by this Warrant Certificate, the holder must deliver to the Warrant
Agent at its New York corporate trust office set forth in Section 15 of the
Warrant Agreement this Warrant Certificate and the form of election to purchase
on the reverse hereof duly filled in and signed, which signature shall be
medallion guaranteed by an institution which is a member of a Securities
Transfer Association recognized signature guarantee program, and upon payment to
the Warrant Agent for the account of the Company of the Exercise Price, as
adjusted as provided in the Warrant Agreement, for the number of Warrant Shares
in respect of which such Warrants are then exercised. No adjustment shall be
made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant
A-5
Certificate or Warrant Certificates of like tenor evidencing in the aggregate a
like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-6
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____________ shares of
Common Stock and herewith tenders payment for such shares to the order of
AIRGATE PCS, INC., in the amount of $__________ in accordance with the terms
hereof. The undersigned requests that a certificate for such shares be
registered in the name of _______________, whose address is __________________
and that such shares be delivered to ___________, whose address is
____________________________. If said number of shares is less than all of the
shares of Common Stock purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of such shares be
registered in the name of ______________________, whose address is
_________________, and that such Warrant Certificate be delivered to whose
address is ____________________.
________________________________________
Signature
Date:
________________________________________
Signature Guaranteed
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Warrant Agent, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Warrant Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-7
SCHEDULE OF EXCHANGES OF INTERESTS
OF GLOBAL WARRANTS/2/
The following exchanges of a part of this Global Warrant have been made:
Amount of
decrease in Amount of
Number of increase in Number of Signature of
warrants in Number of Warrants in this Global authorized
Date of this Global Warrants in this Warrant following such officer of
Exchange Warrant Global Warrant decrease or increase Warrant Agent
------------------------------------------------------------------------------------------
__________________
/2/ To be included only on Global Warrants.
A-8
EXHIBIT B
[Form of Unit Certificate]
NO. _____ CUSIP NO. 009367 AB 9
AIRGATE PCS, INC.
AGW LEASING COMPANY, INC.
__________ UNITS
[THIS GLOBAL UNIT IS COMPOSED OF THE ATTACHED GLOBAL SENIOR
SUBORDINATED DISCOUNT NOTE AND GLOBAL WARRANT CERTIFICATE. THE GLOBAL UNIT, THE
GLOBAL SENIOR SUBORDINATED DISCOUNT NOTE AND THE GLOBAL WARRANT CERTIFICATE ARE
COLLECTIVELY REFERRED TO HEREIN AS THE "SECURITIES."]/1/
----------
THIS CERTIFICATE REPRESENTS _______ UNITS OF AIRGATE, PCS, INC. EACH
UNIT CONSISTS OF $1,000 AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF AIRGATE PCS,
INC.'S 13 1/2% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009 AND ONE WARRANT TO
PURCHASE 2.148 SHARES OF COMMON STOCK OF AIRGATE PCS, INC. [THE SENIOR
SUBORDINATED DISCOUNT NOTES AND WARRANTS CONSTITUTING A PART OF THE UNITS
REPRESENTED BY THIS CERTIFICATE ARE REPRESENTED BY THE NOTES AND WARRANT
CERTIFICATES ATTACHED HERETO.]/2/
[THE SECURITIES ARE GLOBAL SECURITIES WITHIN THE MEANING OF THE
INDENTURE GOVERNING THE SENIOR SUBORDINATED DISCOUNT NOTES REPRESENTED BY THE
GLOBAL SENIOR SUBORDINATED DISCOUNT NOTE (THE "INDENTURE") AND THE WARRANT
---------
AGREEMENT GOVERNING THE WARRANTS REPRESENTED BY THE GLOBAL WARRANT CERTIFICATE
(THE "WARRANT AGREEMENT") AND ARE REGISTERED IN THE NAME OF A DEPOSITARY OR A
-----------------
NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THE SECURITIES ARE NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND THE WARRANT AGREEMENT, AND NO TRANSFER OF THE SECURITIES (OTHER
THAN A TRANSFER OF THE SECURITIES AS A WHOLE BY
________________
/1/ This bracketed language should be included only if the Unit certificate is
issued in global form.
/2/ This bracketed language should be included only if the Units represented by
the Unit certificate are issued in definitive form.
B-1
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY
TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND THE WARRANT
AGREEMENT.]/1/
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
---
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN 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 REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]/1/
[THE SENIOR SUBORDINATED DISCOUNT NOTES AND THE WARRANTS CONSTITUTING
A PART OF THE UNITS REPRESENTED BY THIS GLOBAL UNIT WILL TRADE SEPARATELY UPON
THE EARLIEST TO OCCUR OF: (I) 180 DAYS AFTER THE CLOSING OF THE OFFERING OF THE
UNITS, (II) THE OCCURRENCE OF A CHANGE OF CONTROL OR AN EVENT OF DEFAULT ON THE
SENIOR SUBORDINATED DISCOUNT NOTES AND (III) SUCH DATE AS XXXXXXXXX, XXXXXX &
XXXXXXXX SECURITIES CORPORATION IN ITS SOLE DISCRETION SHALL DETERMINE.]/3/
AIRGATE PCS, INC.
By:________________________
Name:
Title:
AGW LEASING COMPANY, INC.
_________________
/3/ This paragraph should be included only if the Unit certificate is issued
prior to the Separation Date.
B-2
By:______________________
Name:
Title:
Date: September ____, 1999
B-3
