EXHIBIT 4.4.4
EXECUTION COPY
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WARRANT AGREEMENT
between
CD RADIO INC.
and
UNITED STATES TRUST COMPANY OF NEW YORK
Warrant Agent
Dated as of May 15, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I
Certain Definitions
SECTION 1.01. Definitions......................................................2
ARTICLE II
Original Issue of Warrants
SECTION 2.01. Form of Warrant Certificates..................................... 8
SECTION 2.02. Restrictive Legends.............................................. 9
SECTION 2.03. Execution and Delivery of Warrant
Certificates.....................................................10
SECTION 2.04. Loss or Mutilation...............................................11
SECTION 2.05. CUSIP Number.....................................................11
SECTION 2.06. Certificated Warrants............................................11
ARTICLE III
Exercise Price; Exercise of Warrants
SECTION 3.01. Exercise Price...................................................12
SECTION 3.02. Exercise; Restrictions on Exercise...............................12
SECTION 3.03. Method of Exercise...............................................13
SECTION 3.04. Issuance of Warrant Shares.......................................14
SECTION 3.05. Fractional Warrant Shares........................................14
SECTION 3.06. Reservation of Warrant Shares....................................15
SECTION 3.07. Compliance with Law..............................................15
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock..........................................16
SECTION 4.02. Cash Dividends and Other Distributions...........................16
SECTION 4.03. Issuance of Common Stock or
Rights or Options................................................17
SECTION 4.04. Fundamental Transaction; Liquidation.............................19
SECTION 4.05. Other Events.....................................................20
SECTION 4.06. Superseding Adjustment...........................................20
SECTION 4.07. Minimum Adjustment...............................................21
SECTION 4.08. Notice of Adjustment.............................................21
SECTION 4.09. Notice of Certain Transactions...................................22
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SECTION 4.10. Adjustment to Warrant Certificate................................23
ARTICLE V
Warrant Transfer Books; Restrictions On Transfer
SECTION 5.01. Transfer and Exchange............................................23
SECTION 5.02. Registration; Registration of Transfer
and Exchange.....................................................24
SECTION 5.03. Book-Entry Provisions for the
Global Warrants..................................................26
SECTION 5.04. Surrender of Warrant Certificates................................27
ARTICLE VI
Registration Rights; Indemnification
SECTION 6.01. Effectiveness of Registration Statement..........................28
SECTION 6.02. Suspension.......................................................30
SECTION 6.03. Liquidated Damages...............................................30
SECTION 6.04. Piggy-Back Registration Rights...................................31
SECTION 6.05. Blue Sky.........................................................32
SECTION 6.06. Accuracy of Disclosure...........................................32
SECTION 6.07. Indemnification..................................................33
SECTION 6.08. Additional Acts..................................................37
SECTION 6.09. Expenses.........................................................37
ARTICLE VII
The Warrant Agent
SECTION 7.01. Duties and Liabilities...........................................38
SECTION 7.02. Right To Consult Counsel.........................................40
SECTION 7.03. Compensation; Indemnification....................................40
SECTION 7.04. No Restrictions on Actions.......................................41
SECTION 7.05. Discharge or Removal; Replacement
Warrant Agent....................................................41
SECTION 7.06. Successor Warrant Agent..........................................42
ARTICLE VIII
Warrant Holders
SECTION 8.01. Warrant Holder Not Deemed a
Holder of Common Stock...........................................42
SECTION 8.02. Right of Action..................................................43
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ARTICLE IX
Miscellaneous
SECTION 9.01. Payment of Taxes.................................................43
SECTION 9.02. Reports to Holders...............................................43
SECTION 9.03. Notices..........................................................44
SECTION 9.04. Severability.....................................................44
SECTION 9.05. Binding Effect...................................................44
SECTION 9.06. Third-Party Beneficiaries........................................45
SECTION 9.07. Amendments.......................................................45
SECTION 9.08. Headings.........................................................45
SECTION 9.09. GOVERNING LAW....................................................45
SECTION 9.10. Counterparts.....................................................46
EXHIBIT A Form of Warrant Certificate
EXHIBIT B Form of Legend for Global Warrants
EXHIBIT C Form of Legend for Warrants Issued as Part of a Unit
EXHIBIT D Form of Transfer Restriction Legend
WARRANT AGREEMENT (this "Agreement") dated
as of May 15, 1999, between CD RADIO INC. (the
"Company"), a Delaware corporation, and UNITED STATES
TRUST COMPANY OF NEW YORK, Warrant Agent (the
"Warrant Agent").
Pursuant to the terms of a Purchase Agreement dated May 13,
1999 (the "Purchase Agreement") among the Company on the one hand and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), Lehman Brothers Inc., Bear, Stearns & Co., Inc., NationsBanc Montgomery
Securities LLC and U.S. Bancorp Libra on the other hand (collectively, the
"Initial Purchasers"), the Company has agreed to issue and sell to the Initial
Purchasers warrants (each, a "Warrant") entitling the holders thereof to
purchase an aggregate of 2,190,000 shares of Common Stock, par value $.001 per
share, of the Company ("Common Stock"), as part of 200,000 units (the "Units"),
each Unit consisting of $1,000 principal amount of 14-1/2% Senior Secured Notes
due 2009 (the "Notes") to be issued pursuant to the provisions of an Indenture
dated as of May 15, 1999 (the "Indenture") between the Company and United States
Trust Company of New York, as trustee, and three Warrants, each to purchase 3.65
shares of Common Stock. The Note and the Warrants included in each Unit will not
be separately transferable until the earliest of (a) August 16, 1999, (b) the
commencement of a registered exchange offer for the Notes or the effective date
of a shelf registration statement with respect to the Notes, (c) the occurrence
of an Exercise Event (as defined herein), (d) the occurrence of an Event of
Default (as defined in the Indenture), (e) the redemption of all or part of the
Notes in accordance with the Indenture and (f) such earlier date as determined
by Merrill Lynch in its sole discretion (the date of the occurrence of an event
specified in clauses (a) through (f) above being the "Separability Date").
In consideration of the foregoing and of the agreements
contained in the Purchase Agreement and for the purpose of defining the terms
and provisions of the Warrants and the respective rights and obligations
thereunder of the Company and the Warrant Agent, the Company and the Warrant
Agent each hereby agree as follows for the benefit of the
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other party and for the equal and ratable benefit of the holders of Warrants
(the "Holders"):
ARTICLE I
Certain Definitions
SECTION 1.01. Definitions. (a) As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" means, with respect to any specified Person, (1)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person or (2) any other
Person that owns, directly or indirectly, 10% or more of such specified Person's
Voting Stock or any executive officer or director of any such specified Person
or other Person or, with respect to any natural Person, any Person having a
relationship with such Person by blood, marriage or adoption not more remote
than first cousin. For the purposes of this definition, "control", when used
with respect to any specified Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board
of Directors.
"Business Day" means any day which is not a Saturday, a
Sunday, or any other day on which banking institutions in New York City are not
required to be open.
"By-laws" means the by-laws of the Company, as the same may be
amended or restated from time to time.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Cashless Exercise Ratio" means a fraction, the numerator of
which is the excess of the Current Market Value per share of Common Stock on the
Exercise Date over the
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Exercise Price per share as of the Exercise Date and the denominator of which is
the Current Market Value per share of the Common Stock on the Exercise Date.
"Commission" means the Securities and Exchange Commission.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman, its Chief Executive
Officer, its President, any Vice President, its Treasurer or an Assistant
Treasurer, and delivered to the Warrant Agent.
"Current Market Value" per share of Common Stock of the
Company or any other security at any date means (1) if the security is not
registered under the Exchange Act, (a) the value of the security, determined in
good faith by the Board of Directors and certified in a board resolution, based
on the most recently completed arms-length transaction between the Company and a
Person other than an Affiliate of the Company and the closing of which occurs on
such date or shall have occurred within the six-month period preceding such
date, or (b) if no such transaction shall have occurred on such date or within
such six-month period, the fair market value of the security as determined by a
nationally or regionally recognized independent financial expert (provided that,
in the case of the calculation of Current Market Value for determining the cash
value of fractional shares, any such determination within six months that is, in
the good faith judgment of the Board of Directors, a reasonable determination of
value, may be utilized) or (2) if the security is registered under the Exchange
Act,(a) the average of the daily closing sales prices of the securities for the
20 consecutive trading days immediately preceding such date, or (b) if the
securities have been registered under the Exchange Act for less than 20
consecutive trading days before such date, then the average of the daily closing
sales prices for all of trading days before such date for which closing sales
prices are available, in the case of each of (2)(a) and (2)(b), as certified to
the Warrant Agent by the President, any Vice President or the Chief Financial
Officer of the Company. The closing sales price for each such trading day shall
be: (A) in the case of a security listed or admitted to trading on any United
States national securities exchange or quotation system, the closing sales
price, regular way, on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day; (B) in the case of a
security not then listed or admitted to trading on any national securities
exchange or quotation system, the last reported sale price on such day, or if no
sale takes
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place on such day, the average of the closing bid and asked prices on such day,
as reported by a reputable quotation source designated by the Company; (C) in
the case of a security not then listed or admitted to trading on any national
securities exchange or quotation system and as to which no such reported sale
price or bid and asked prices are available, the average of the reported high
bid and low asked prices on such day, as reported by a reputable quotation
service, or a newspaper of general circulation in the Borough of Manhattan, City
and State of New York, customarily published on each business day, designated by
the Company, or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than 30 days prior to the date in question) for which prices have
been so reported; and (D) if there are not bid and asked prices reported during
the 30 days prior to the date in question, the Current Market Value shall be
determined as if the securities were not registered under the Exchange Act.
"DTC" means The Depository Trust Company, its nominees and
their respective successors.
"Event of Default" has the meaning set forth in the Indenture.
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended.
"Exercisability Date" means the date on which there shall have
occurred an Exercise Event.
"Exercise Event" means the earlier to occur of (i) immediately
prior to a Warrant Change of Control and (ii) the one year anniversary of the
Issue Date.
"Expiration Date" means May 15, 2009.
"Extraordinary Cash Dividend" means that portion, if any, of
the aggregate amount of all dividends paid by the Company on the Common Stock in
any fiscal year that exceeds $15 million.
"Fundamental Transaction" means any transaction or series of
related transactions by which the Company consolidates with or merges with or
into any other Person or sells, assigns, transfers, leases, conveys or otherwise
disposes of all or substantially all of its properties and assets to another
Person or group of affiliated Persons or is a party to a merger or binding share
exchange which reclassifies or changes its outstanding Common Stock.
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"Issue Date" means the date on which the Warrants are
originally issued.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
payment of assets upon any voluntary or involuntary liquidation or dissolution
of such Person, over shares of Capital Stock of any other class of such Person.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities" means the Warrants and the Warrant Shares.
"Securities Act" means the United States Securities Act of
1933.
"Transfer Restricted Securities" means the Warrants and the
Common Stock which may be issued to Holders upon exercise of the Warrants,
whether or not such exercise has been effected. Each such security shall cease
to be a Transfer Restricted Security when (i) it has been disposed of pursuant
to a registration statement of the Company filed with the Commission and
declared effective by the Commission that covers the disposition of such
Transfer Restricted Security, (ii) it has been distributed pursuant to Rule 144
promulgated under the Securities Act (or any similar provisions under the
Securities Act then in effect) or (iii) it may be resold without registration
under the Securities Act, whether pursuant to Rule 144(k) under the Securities
Act or otherwise.
"Voting Stock" means, with respect to any Person, any class or
classes of Capital Stock pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such Person (irrespective of whether
or not, at the time, stock of any other class or
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classes shall have, or might have, voting power by reason of the happening of
any contingency).
"Warrant Change of Control" is defined to mean the occurrence
of any of the following events:
(a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than a Permitted
Holder (as defined in the Indenture), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have a "beneficial ownership"
of all securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 40% of the total Voting
Stock of the Company;
(b) the Company consolidates with, or merges with or into
another Person or conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets to any Person, or any Person
consolidates with or merges with or into the Company, in any such event
pursuant to a transaction in which the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where
(i) the outstanding Voting Stock of the Company is
not converted into or exchanged at all (except to the extent
necessary to reflect a change in the jurisdiction of
incorporation of the Company) or is converted into or
exchanged for Voting Stock (other than Redeemable Capital
Stock (as defined in the Indenture)) of the surviving or
transferee corporation and cash, securities and other property
(other than Capital Stock of the surviving entity) in an
amount that could be paid by the Company as a Restricted
Payment under the Indenture and
(ii) immediately after such transaction no "person"
or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) is the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 40%
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of the total outstanding Voting Stock of the surviving or
transferee corporation;
(c) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors
(together with any new directors whose election to such Board of
Directors or whose nomination for election by the stockholders of the
Company, was approved by a vote of 66-2/3% of the directors then still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors
then in office; or
(d) the Company is liquidated or dissolved or a special
resolution is passed by the shareholders of the Company approving the
plan of liquidation or dissolution other than in a transaction in
compliance with the Indenture.
"Warrant Shares" mean the shares of Common Stock for which the
Warrants are exercisable or which have been issued upon exercise of Warrants.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
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Term Section
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Agent Members 5.03(a)
Agreement Preamble
Cashless Exercise 3.03
Certificated Warrant 2.03
Common Stock Recitals
Company Preamble
Exercise Price 3.01
Global Warrant 2.03
Holders Recitals
Indemnified Parties 6.07
Indenture Recitals
Initial Purchasers Recitals
Merrill Lynch Recitals
Notes Recitals
Purchase Agreement Recitals
Separability Date Recitals
Stock Transfer Agent 3.04
Successor Company 4.04(a)
Units Recitals
Warrant Recitals
Warrant Agent Preamble
Warrant Certificates 2.01
Warrant Register 5.01
ARTICLE II
Original Issue of Warrants
SECTION 2.01. Form of Warrant Certificates. Certificates
representing the Warrants (the "Warrant Certificates") shall be in registered
form only and substantially in the form attached hereto as Exhibit A. The
Warrant Certificates shall be dated the date on which they are countersigned by
the Warrant Agent and shall have such insertions as are appropriate or required
or permitted by this Agreement and may have such letters, numbers or other marks
of identification and such legends and endorsements typed, stamped, printed,
lithographed or engraved thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation pursuant thereto, or to
conform to usage.
The terms and provisions contained in the form of Warrant
Certificate annexed hereto as Exhibit A shall constitute, and are hereby
expressly made, a part of this Agreement.
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The definitive Warrant Certificates shall be typed, printed,
lithographed or engraved or produced by any combination of these methods, all as
determined by the officer of the Company executing such Warrant Certificates, as
evidenced by such officer's execution of such Warrant Certificates.
Pending the preparation of definitive Warrant Certificates,
temporary Warrant Certificates may be issued, which may be printed,
lithographed, typewritten, mimeographed or otherwise produced, and which will be
substantially of the tenor of the definitive Warrant Certificates in lieu of
which they are issued.
If temporary Warrant Certificates are issued, the Company will
cause definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates to the Warrant Agent, without
charge to the Holder. Until so exchanged the temporary Warrant Certificates
shall in all respects be entitled to the same benefits under this Agreement as
definitive Warrant Certificates.
SECTION 2.02. Restrictive Legends. (a) Each Global Warrant
shall bear the legend set forth in Exhibit B on the face thereof.
(b) Each Warrant Certificate issued prior to the Separability
Date shall bear the legend set forth in Exhibit C on the face thereof.
(c) Warrants offered and sold to a QIB in reliance on Rule
144A or to an institutional "accredited investor" as defined in Rule 501(a) (1),
(2), (3) or (7) under the Securities Act, as provided in the Purchase Agreement,
shall bear the restricted securities legend set forth in Exhibit D on the face
thereof.
(d) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Warrant) pursuant to Rule 144 under the Securities Act the Warrant Agent shall
permit the Holder thereof to exchange such Transfer Restricted Security for a
Certificated Warrant that does not bear the legend set forth in Exhibit D and
rescind any restriction on the transfer of such Transfer Restricted Security.
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(e) After a transfer of any Warrants during the period of the
effectiveness of and pursuant to a Registration Statement with respect to such
Warrants, the requirement pertaining to the legend set forth in Exhibit D on
such Warrant will cease to apply.
SECTION 2.03. Execution and Delivery of Warrant Certificates.
Warrant Certificates evidencing Warrants to purchase an aggregate of up to
2,190,000 shares of Common Stock may be executed, on or after the Issue Date, by
the Company and delivered to the Warrant Agent for countersignature, and the
Warrant Agent shall thereupon countersign and deliver such Warrant Certificates
upon the order and at the direction of the Company to the purchasers thereof on
the date of issuance. The Warrant Agent is hereby authorized to countersign and
deliver Warrant Certificates as required by this Section 2.03 or by Section
2.04, 2.06, 3.03 or 5.03.
The Warrant Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, President or any Vice President, either
manually or by facsimile signature printed thereon. The Warrant Certificates
shall be countersigned manually by the Warrant Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company whose
signature shall have been placed upon any of the Warrant Certificates shall
cease to be such officer of the Company before countersignature by the Warrant
Agent and issuance and delivery thereof, such Warrant Certificates may,
nevertheless, be countersigned by the Warrant Agent and issued and delivered
with the same force and effect as though such person had not ceased to be such
officer of the Company.
Warrants offered and sold to a QIB in reliance on Rule 144A,
as provided in the Purchase Agreement, shall be issued initially in the form of
one or more permanent global Warrant Certificates in definitive, fully
registered form, substantially in the form set forth in Exhibit A (the "Global
Warrant"), deposited with the Warrant Agent (subject to the provisions of
Section 5.02 herein), as custodian for DTC, duly executed by the Company and
countersigned by the Warrant Agent as hereinafter provided. The number of
Warrants represented by the Global Warrant may from time to time be increased or
decreased by adjustments made on the records of the Warrant Agent and DTC or its
nominee as hereinafter provided. Pursuant to Section 5.03, interests in the
Global Warrant may be converted into or exchanged for one or more Warrant
Certificates in definitive, fully
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registered form, substantially in the form set forth in Exhibit A ("Certificated
Warrants").
SECTION 2.04. Loss or Mutilation. Upon receipt by the Company
and the Warrant Agent of evidence satisfactory to them, in their reasonable
discretion, of the ownership and the loss, theft, destruction or mutilation of
any Warrant Certificate and of indemnity satisfactory to them and (in the case
of mutilation) upon surrender and cancelation thereof, then, in the absence of
notice to the Company or the Warrant Agent that the Warrants represented thereby
have been acquired by a bona fide purchaser, the Company shall execute and the
Warrant Agent shall countersign and deliver to the registered Holder of the
lost, stolen, destroyed or mutilated Warrant Certificate, in exchange for or in
lieu thereof, a new Warrant Certificate of the same tenor and for a like
aggregate number of Warrants. Upon the issuance of any new Warrant Certificate
under this Section 2.04, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and other expenses (including the reasonable fees and expenses of the
Warrant Agent and of counsel to the Company) in connection therewith. Every new
Warrant Certificate executed and delivered pursuant to this Section 2.04 in lieu
of any lost, stolen or destroyed Warrant Certificate shall constitute a
contractual obligation of the Company, whether or not the allegedly lost, stolen
or destroyed Warrant Certificates shall be at any time enforceable by anyone,
and shall be entitled to the benefits of this Agreement equally and
proportionately with any and all other Warrant Certificates duly executed and
delivered hereunder. The provisions of this Section 2.04 are exclusive and shall
preclude (to the extent lawful) all other rights or remedies with respect to the
replacement of mutilated, lost, stolen, or destroyed Warrant Certificates.
SECTION 2.05. CUSIP Number. The Company in issuing the
Warrants may use a "CUSIP" number(s), and if so, the Warrant Agent shall use the
CUSIP number(s) in notices as a convenience to Holders; provided, however, that
any such notice may state that no representation is made as to the correctness
or accuracy of the CUSIP number(s) printed in the notice or on the Warrants, and
that reliance may be placed only on the other identification numbers printed on
the Warrants.
SECTION 2.06. Certificated Warrants. If the Depository is at
any time unwilling or unable to continue as a depository for the Global Warrant
and a successor depository is not appointed by the Company within 90 days,
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the Company will issue certificated Warrants in exchange for the Global Warrant.
In connection with the execution and delivery of such certificated Warrants, the
Warrant Agent shall, upon receipt of the order and at the direction of the
Company, reflect on its books and records a decrease in the principal amount of
the relevant Global Warrant equal to the number of such certificated Warrants
and the Company shall execute and the Warrant Agent shall countersign and
deliver one or more certificated Warrants in an equal aggregate number.
ARTICLE III
Exercise Price; Exercise of Warrants
SECTION 3.01. Exercise Price. Each Warrant shall, when the
certificate therefor is countersigned by the Warrant Agent, entitle the Holder
thereof, subject to and upon compliance with the provisions of this Agreement,
to purchase 3.65 shares of Common Stock, subject to adjustment pursuant to the
terms of this Agreement. The exercise price (the "Exercise Price") of each
Warrant is $28.60 per share, subject to adjustment pursuant to the terms of this
Agreement.
SECTION 3.02. Exercise; Restrictions on Exercise. (a) Subject
to the terms and conditions set forth herein, the Warrants shall be exercisable
on any Business Day on or after the Exercisability Date; provided, however, that
holders of Warrants will be able to exercise their Warrants only if (i) a
registration statement relating to the Warrant Shares is effective or (ii) the
exercise of such Warrants is exempt from the registration requirements of the
Securities Act, and the Warrant Shares are qualified for sale or exempt from
qualification under the applicable securities laws of the states or other
jurisdictions in which such holders reside. Any Warrants not exercised by 5:00
p.m., New York City time, on the Expiration Date shall expire and all rights of
the Holders of such Warrants shall terminate.
(b) As soon as practicable after the occurrence of an Exercise
Event which is a Warrant Change of Control, at the Company's written direction
the Warrant Agent, at the expense of the Company, will send to each Holder of
Warrants and each beneficial owner of Warrants, to the extent that the Warrants
are held of record by a depository or other agent, by first-class mail, at the
address appearing on the Warrant Register, a notice of such Exercise Event which
notice shall describe the Exercise Event and the date of occurrence thereof and
the date of expiration of the right
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to exercise the Warrants shall be prominently set forth on the face of such
notice.
SECTION 3.03. Method of Exercise. Warrants may be exercised
only in whole upon (i) surrender to the Warrant Agent at the office of the
Warrant Agent of the related Warrant Certificate, together with the form of
election attached thereto to purchase Common Stock on the reverse thereof duly
filled in and signed by the Holder thereof and (ii) payment to the Warrant
Agent, for the account of the Company, of the Exercise Price for each Warrant
Share or other security issuable upon the exercise of such Warrants then
exercised. Such payment shall be made (i) in cash or by certified or official
bank check payable to the order of the Company or by wire transfer of funds to
an account designated by the Company for such purpose or (ii) without the
payment of cash, by reducing the number of shares of Common Stock obtainable
upon the exercise of a Warrant and payment of the Exercise Price in cash so as
to yield a number of shares of Common Stock upon the exercise of such Warrant
equal to the product of (a) the number of shares of Common Stock issuable as of
the Exercise Date upon the exercise of such Warrant (if payment of the Exercise
Price were being made in cash) and (b) the Cashless Exercise Ratio or (iii) any
combination of (i) or (ii) above; provided, that in the case of payment made
pursuant to (ii) or (iii), the Company shall calculate the number of shares of
Common Stock to which such Holder is entitled, and shall inform the Warrant
Agent in writing of such number. An exercise of a Warrant in accordance with the
immediately preceding sentence is herein called a "Cashless Exercise". Upon
surrender of a Warrant Certificate representing more than one Warrant in
connection with the holder's option to elect a Cashless Exercise, the number of
shares of Common Stock deliverable upon a Cashless Exercise shall be equal to
the number of shares of Common Stock issuable upon the exercise of Warrants that
the holder specifies are to be exercised pursuant to a Cashless Exercise
multiplied by the Cashless Exercise Ratio. All provisions of this Agreement
shall be applicable with respect to a surrender of a Warrant Certificate
pursuant to a Cashless Exercise for less than the full number of Warrants
represented thereby. In the event that a Warrant Certificate is surrendered for
exercise of less than all the Warrants represented by such Warrant Certificate
at any time prior to the Expiration Date, a new Warrant Certificate representing
the remaining Warrants shall be issued. The Warrant Agent shall countersign and
deliver the required new Warrant Certificates, and the Company, at the Warrant
Agent's request, shall supply the Warrant Agent with Warrant Certificates duly
signed on behalf of the Company for such purpose. Upon the request of
14
the Company, the Warrant Agent shall provide to the Company information with
respect to (x) the total number of Warrants which have been exercised as of the
date of such request and (y) the total amount of funds which have been received
pursuant to the exercise of such Warrants as of the date of such request.
SECTION 3.04. Issuance of Warrant Shares. Upon the surrender
of Warrant Certificates and payment of the per share Exercise Price, as set
forth in Section 3.03, the Company shall issue and cause the Warrant Agent or,
if appointed, a transfer agent for the Common Stock ("Stock Transfer Agent") to
countersign and deliver 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 full Warrant Shares so purchased upon the exercise of such Warrants or
other securities or property to which it is entitled, registered or otherwise,
to the Person or Persons entitled to receive the same (including any depositary
institution so designated by a Holder), together with cash as provided in
Section 3.05 in respect of any fractional Warrant Shares otherwise issuable upon
such exercise. 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 Warrant Certificates and payment of the per share Exercise Price, as
aforesaid; provided, however, that if, at such date, the transfer books for the
Warrant Shares shall be closed, the certificates for the Warrant Shares in
respect of which such Warrants are then exercised shall be issuable as of the
date on which such books shall next be opened and until such date the Company
shall be under no duty to deliver any certificates for such Warrant Shares;
provided further, however, that such transfer books, unless otherwise required
by law, shall not be closed at any one time for a period longer than 20 calendar
days and shall not be closed without 10 days prior written notice to the
Holders.
SECTION 3.05. Fractional Warrant Shares. The Company shall not
be required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be exercised in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrant
Shares which may be purchasable pursuant thereto. If any fraction of a Warrant
Share would, except for the provisions of this Section 3.05, be issuable upon
the exercise of any Warrant, the Company shall pay an amount in cash equal to
the Current Market Value per Warrant Share, as determined on the day
15
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction, computed to the nearest whole cent.
SECTION 3.06. Reservation of Warrant Shares. The Company shall
at all times keep reserved out of its authorized shares of Common Stock a number
of shares of Common Stock sufficient to provide for the exercise of all
outstanding Warrants. The registrar for the Common Stock shall at all times
until the Expiration Date 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 Stock Transfer Agent. The Company will supply such Stock Transfer
Agent with duly executed stock certificates for such purpose and will itself
provide or otherwise make available any cash which may be payable as provided in
Section 3.05. The Company will furnish to such Stock Transfer Agent a copy of
all notices of adjustments (and certificates related thereto) transmitted to
each Holder.
Before taking any action which would cause an adjustment
pursuant to Article IV to reduce the Exercise Price below the then par value (if
any) of the Common Stock, the Company shall take any and all corporate action
which may, in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and nonassessable shares of Common
Stock at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants shall, upon issue, be fully paid,
nonassessable, free of preemptive rights, free from all taxes and free from all
liens, charges and security interests with respect to the issue thereof.
SECTION 3.07. Compliance with Law. (a) Notwith standing
anything in this Agreement to the contrary, in no event shall a Holder be
entitled to exercise a Warrant unless (i) a registration statement filed under
the Securities Act in respect of the issuance of the Warrant Shares is then
effective or (ii) in the opinion of counsel to the Company addressed to the
Warrant Agent 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 or
other jurisdictions in which such Holders reside.
(b) If any shares of Common Stock required to be reserved for
purposes of the exercise of Warrants require,
16
under any other Federal or state law or applicable governing rule or regulation
of any national securities exchange, registration with or approval of any
governmental authority, or listing on any such national securities exchange
before such shares may be issued upon exercise, the Company will cause such
shares to be duly registered or approved by such governmental authority or
listed on the relevant national securities exchange, as the case may be.
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at
any time and from time to time the Company shall (i) pay a dividend or make a
distribution on Common Stock in shares of Common Stock or other shares of
Capital Stock, (ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) increase or
decrease the number of shares of Common Stock outstanding by reclassification of
its Common Stock, then the number of shares of Common Stock issuable upon
exercise of each Warrant immediately after the happening of such event shall be
adjusted so that, after giving effect to such adjustment, the Holder of each
Warrant shall be entitled to receive the number of shares of Common Stock upon
exercise of such Warrant that such Holder would have owned or have been entitled
to receive had such Warrants been exercised immediately prior to the happening
of the events described above (or, in the case of a dividend or distribution of
Common Stock, immediately prior to the record date there for). An adjustment
made pursuant to this Section 4.01 shall become effective immediately after the
distribution date, retroactive to the record date therefor in the case of a
dividend or distribution in shares of Common Stock or other shares of Capital
Stock, and shall become effective immediately after the effective date in the
case of a sub division, combination or reclassification.
SECTION 4.02. Cash Dividends and Other Distribu tions. In the
event that at any time and from time to time the Company shall distribute to all
holders of Common Stock (i) any dividend or other distribution (including any
dividend or distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of cash, evidences of its
indebtedness, shares of its Capital Stock or any other properties or securities
or (ii) any options, warrants or
17
other rights to subscribe for or purchase any of the foregoing (other than, in
the case of clause (i) and (ii) above, (A) any dividend or distribution
described in Section 4.01, (B) any rights, options, warrants or securities
described in Section 4.03 or Section 4.04 and (C) any cash dividends or other
cash distributions from current or retained earnings other than Extraordinary
Cash Dividends), then the number of shares of Common Stock issuable upon the
exercise of each Warrant immediately prior to such record date for any such
dividend or distribution shall be increased to a number determined by
multiplying the number of shares of Common Stock issuable upon the exercise of
such Warrant immediately prior to such record date for any such dividend or
distribution by a fraction, the numerator of which shall be the Current Market
Value per share of Common Stock on the record date for such dividend or
distribution, and the denominator of which shall be such Current Market Value
per share of Common Stock less the sum of (x) the amount of cash, if any,
distributed per share of Common Stock and (y) the then fair value (as determined
in good faith by the Board of Directors, whose determination shall be evidenced
by a board resolution filed with the Warrant Agent, a copy of which will be sent
to Holders upon request) of the portion, if any, of the distribution applicable
to one share of Common Stock consisting of evidences of indebtedness, shares of
stock, securities, other property, warrants, options or subscription or purchase
rights; and subject to Section 4.08, the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such
record date by the above fraction. Such adjustments shall be made, and shall
only become effective, whenever any dividend or distribution is made; provided,
however, that the Company is not required to make an adjustment pursuant to this
Section 4.02 if at the time of such distribution the Company makes the same
distribution to Holders of Warrants as it makes to holders of Common Stock pro
rata based on the number of shares of Common Stock for which such Warrants are
exercisable (whether or not currently exercisable). No adjustment shall be made
pursuant to this Section 4.02 which shall have the effect of decreasing the
number of shares of Common Stock issuable upon exercise of each Warrant or
increasing the Exercise Price.
SECTION 4.03. Issuance of Common Stock or Rights or Options.
In the event that at any time or from time to time the Company shall issue
shares of Common Stock or rights, options or warrants or securities convertible
or exchangeable into Common Stock for a consideration per share that is less
than the Current Market Value per share of Common Stock as of the issuance date
of such shares, or
18
entitling the holders of such rights, options, warrants or securities to
subscribe for or purchase shares of Common Stock at a price that is less than
the Current Market Value per share of Common Stock as of the issuance date of
such rights, options, warrants or securities, the number of shares of Common
Stock issuable upon the exercise of each Warrant immediately after such issuance
date shall be determined by multiplying the number of shares of Common Stock
issuable upon exercise of each Warrant immediately prior to such issuance date
by a fraction, the numerator of which shall be the number of shares of Common
Stock out standing immediately preceding the issuance of such shares or rights,
options, warrants or securities plus the number of additional shares of Common
Stock to be issued in such transaction or offered for subscription or purchase
or into which such securities are convertible or exchangeable, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately preceding the date for the issuance of such shares or rights,
options, warrants or securities plus the total number of shares of Common Stock
which the aggregate consideration expected to be received by the Company upon
the issuance of such shares or the exercise, conversion or exchange of such
rights, options, warrants or securities (as determined in good faith by the
Board of Directors, whose determination shall be evidenced by a board resolution
filed with the Warrant Agent, a copy of which will be sent to Holders upon
request) would pur chase at the Current Market Value per share of Common Stock
as of the date of such issuance; and, subject to Section 4.08, in the event of
any such adjustment, the Exercise Price shall be adjusted to a number determined
by dividing the Exercise Price immediately prior to such date of issuance by the
aforementioned fraction; provided, however, that no adjustment to the number of
Warrant Shares issuable upon the exercise of the Warrants or to the Exercise
Price shall be made as a result of (i) the exercise of the Warrants, (ii) the
exercise, conversion or exchange of any right, option, warrant or security, the
issuance of which has previously required an adjustment to the number of Warrant
Shares issuable upon the exercise of the Warrants or to the Exercise Price
pursuant to this Section 4.03, (iii) the exercise, conversion or exchange of any
right, option, warrant or security outstanding on the Issue Date (to the extent
such exercise, conversion or exchange is made in accordance with the terms of
such right, option, warrant or security as in effect on the Issue Date), (iv)
the issuance of the Company's 9.2% Series B Junior Cumulative Convertible
Preferred Stock or the conversion thereof in accordance with the terms of such
Convertible Preferred Stock as in effect on the Issue Date or (v) the issuance,
exercise, conversion or exchange of options to acquire
19
Common Stock by officers, directors or employees of the Company; provided,
however, that the aggregate number of shares of Common Stock subject to this
clause (v) shall not exceed 1% of the number of shares of Common Stock
outstanding on a fully diluted basis on the Issue Date. Such adjustment shall be
made, and shall only become effective, whenever such shares or such rights,
options, warrants or securities are issued. No adjustment shall be made pursuant
to this Section 4.03 which shall have the effect of decreasing the number of
shares of Common Stock issuable upon exercise of each Warrant or increasing the
Exercise Price.
SECTION 4.04. Fundamental Transaction; Liquidation. (a) Except
as provided in Section 4.04(b), in the event of a Fundamental Transaction, each
Holder shall have the right to receive upon exercise of the Warrants the kind
and amount of shares of Capital Stock or other securities or property which such
Holder would have been entitled to receive upon completion of or as a result of
such Fundamental Transaction had such Warrant been exercised immediately prior
to such event or to the relevant record date for any such entitlement
(regardless of whether the Warrants are then exercisable and without giving
effect to the Cashless Exercise Option), assuming (to the extent applicable)
that such Holder (i) was not a constituent Person or an affiliate to a
constituent Person to such Fundamental Transaction, (ii) made no election with
respect thereto, and (iii) was treated alike with the plurality of non-electing
Holders. Unless paragraph (b) is applicable to a Fundamental Transaction, the
Company shall provide that the surviving or acquiring Person (the "Successor
Company") in such Fundamental Transaction will enter into an agreement (a
"Supplemental Warrant Agreement") with the Warrant Agent confirming the Holders'
rights pursuant to this Section 4.04(a) and providing for adjustments, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article IV. Any such Supplemental Warrant Agreement shall further
provide that such Successor Company will succeed to and be substituted for every
right and obligation of the Company in respect of this Agreement and the
Warrants. The provisions of this Section 4.04(a) shall similarly apply to
successive Fundamental Transactions involving any Successor Company.
(b) In the event of (i) a Fundamental Transaction with another
Person (other than a subsidiary of the Company) where consideration to the
holders of Common Stock in exchange for their shares is payable solely in cash
or (ii) the dissolution, liquidation or winding-up of the Company, the Holders
of the Warrants shall be entitled to
20
receive, upon surrender of their Warrant Certificates, such cash distributions
on an equal basis with the holders of Common Stock or other securities issuable
upon exercise of the Warrants, as if the Warrants had been exercised immediately
prior to such event, less the Exercise Price.
In the event of any Fundamental Transaction described in this
Section 4.04(b), the Successor Company and, in the event of any dissolution,
liquidation or winding-up of the Company, the Company, shall deposit promptly
with the Warrant Agent the funds, if any, necessary to pay the Holders of the
Warrants the amounts to which they are entitled as described above. After such
funds and the surrendered Warrant Certificates are received, the Warrant Agent
shall make payment to the Holders by delivering a check in such amount as is
appropriate (or, in the case of consideration other than cash, such other
consideration as is appropriate) to such Person or Persons as it may be directed
in writing by the Holders surrendering such Warrant Certificates.
SECTION 4.05. Other Events. If any event occurs as to which
the foregoing provisions of this Article IV are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors, fairly and adequately protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then the
Board of Directors shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary, in the good faith opinion of the Board of Directors, to
protect such purchase rights as aforesaid, but in no event shall any such
adjustment have the effect of increasing the Exercise Price or decreasing the
number of shares of Common Stock issuable upon exercise of the Warrants.
SECTION 4.06. Superseding Adjustment. Upon the expiration of
any rights, options, warrants or conversion or exchange privileges which
resulted in adjustments pursuant to this Article IV, if any thereof shall not
have been exercised, the number of Warrant Shares issuable upon the exercise of
each Warrant shall be readjusted pursuant to the applicable section of Article
IV as if (i) the only shares of Common Stock issuable upon exercise of such
rights, options, warrants, conversion or exchange privileges were the shares of
Common Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (ii) shares of Common Stock
actually issued, if any, were issuable for the consideration actually received
by the Company upon such exercise plus the
21
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange privileges whether or not exercised and the Exercise Price shall be
readjusted inversely; provided, however, that no such readjustment (except by
reason of an intervening adjustment under Section 4.01) shall have the effect of
decreasing the number of Warrant Shares issuable upon the exercise of each
Warrant, or increasing the Exercise Price, by an amount in excess of the amount
of the adjustment initially made in respect of the issuance, sale or grant of
such rights, options, warrants or conversion or exchange privileges.
SECTION 4.07. Minimum Adjustment. The adjust ments required by
the preceding sections of this Article IV shall be made whenever and as often as
any specified event requiring an adjustment shall occur, except that no adjust
ment of the Exercise Price or the number of shares of Common Stock issuable upon
exercise of the Warrants that would otherwise be required shall be made unless
and until such adjustment either by itself or with other adjustments not
previously made increases or decreases by at least 1% of the Exercise Price or
the number of shares of Common Stock issuable upon exercise of the Warrants
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount shall be carried forward and made as
soon as such adjustment, together with other adjustments required by this
Article IV and not previously made, would result in a minimum adjustment. For
the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence. In computing
adjustments under this Article IV, fractional interests in Common Stock shall be
taken into account to the nearest one-hundredth of a share.
SECTION 4.08. Notice of Adjustment. Whenever the Exercise
Price or the number of shares of Common Stock and other property, if any,
issuable upon exercise of the Warrants is adjusted, as herein provided, the
Company shall deliver to the Warrant Agent a certificate of a firm of
independent accountants selected by the Board of Directors (who may be the
regular accountants employed by the Company) setting forth, in reasonable
detail, the event requiring the adjustment and the method by which such
adjustment was calculated (including a description of the basis on which (i) the
Board determined the then fair value of any evidences of indebtedness, other
securities or property or warrants, options or other subscription or purchase
rights and (ii) the Current Market Value of the Common Stock was determined, if
either of such determinations were required), and specifying the Exercise Price
and the number of shares
22
of Common Stock issuable upon exercise of the Warrants after giving effect to
such adjustment. The Company shall promptly cause the Warrant Agent, at the
Company's expense, to mail a copy of such certificate to each Holder in
accordance with Section 9.03. The Warrant Agent shall be entitled to rely on
such certificate and shall be under no duty or responsibility with respect to
any such certificate, except to exhibit the same from time to time, to any
Holder desiring an inspection thereof during reasonable business hours. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist which may require any adjustment of
the Exercise Price or the number of shares of Common Stock or other stock or
property issuable on exercise of the War rants, or with respect to the nature or
extent of any such adjustment when made, or with respect to the method employed
in making such adjustment or the validity or value of any shares of Common
Stock, evidences of indebtedness, warrants, options, or other securities or
property.
SECTION 4.09. Notice of Certain Transactions. In the event
that the Company shall propose to (a) pay any dividend payable in securities of
any class to the holders of its Common Stock or to make any other non-cash
dividend or distribution to the holders of its Common Stock, (b) offer the
holders of its Common Stock rights to subscribe for or to purchase any
securities convertible into shares of Common Stock or shares of stock of any
class or any other securities, rights or options, (c) issue any (i) shares of
Common Stock, (ii) rights, options or warrants entitling the holders thereof to
subscribe for shares of Common Stock or (iii) securities convertible into or
exchangeable or exercisable for Common Stock (in the case of (i), (ii) and
(iii), if such issuance or adjustment would result in an adjustment hereunder),
(d) effect any capital reorganization, reclassification, consolidation or
merger, (e) effect the voluntary or involuntary dissolution, liquidation or
winding-up of the Company or (f) make a tender offer or exchange offer with
respect to the Common Stock, the Company shall within five days after deciding
to take any such action or make any such offer send to the Warrant Agent a
notice and the Warrant Agent shall within five days after receipt thereof, at
the expense of the Company, send the Holders a notice (in such form as shall be
furnished to the Warrant Agent by the Company) of such proposed action or offer.
Such notice shall be mailed by the Warrant Agent to the Holders at their
addresses as they appear in the Certificate Register, which shall specify the
record date for the purposes of such dividend, distribution or rights, or the
date such issuance or event is to take place and the date of participation
therein by the holders
23
of Common Stock, if any such date is to be fixed, and shall briefly indicate the
effect, if any, of such action on the Common Stock and on the number and kind of
any other shares of stock and on other property, if any, and the number of
shares of Common Stock and other property, if any, issuable upon exercise of
each Warrant and the Exercise Price after giving effect to any adjustment
pursuant to Article IV which will be required as a result of such action. Such
notice shall be given as promptly as possible and (x) in the case of any action
covered by clause (a) or (b) above, at least 10 days prior to the record date
for determining holders of the Common Stock for purposes of such action or (y)
in the case of any other such action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier.
SECTION 4.10. Adjustment to Warrant Certificate. The form of
Warrant Certificate need not be changed because of any adjustment made pursuant
to this Article IV, and Warrant Certificates issued after such adjustment may
state the same Exercise Price and the same number of shares of Common Stock
issuable upon exercise of the Warrants as are stated in the Warrant Certificates
initially issued pursuant to this Agreement. The Company, however, may at any
time in its sole discretion make any change in the form of Warrant Certificate
that it may deem appropriate to give effect to such adjustments and that does
not affect the substance of the Warrant Certificate, and any Warrant Certificate
thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant Certificate or otherwise, may be in the form as so changed.
ARTICLE V
Warrant Transfer Books; Restrictions On Transfer
SECTION 5.01. Transfer and Exchange. The Warrant Certificates
shall be issued in registered form only. The Company shall cause to be kept at
the office of the Warrant Agent a register (the "Warrant Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Warrant Certificates and transfers or exchanges
of Warrant Certificates as herein provided. All Warrant Certificates issued upon
any registration of transfer or exchange of Warrant Certificates shall be the
valid obligations of the Company, evidencing the same obligations, and entitled
to the same benefit under this Agreement, as the Warrant
24
Certificates surrendered for such registration of transfer or exchange.
A Holder may transfer its Warrants only by complying with the
terms of this Agreement. No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Holder only upon, final acceptance
and registration of the transfer by the Warrant Agent in the Warrant Register.
Prior to the registration of any transfer of Warrants by a Holder as provided
herein, the Company, the Warrant Agent, any agent of the Company or the Warrant
Agent may treat the Person in whose name the Warrants are registered as the
owner thereof for all purposes and as the Person entitled to exercise the rights
represented thereby, any notice to the contrary notwithstanding. Furthermore,
any Holder of a Global Warrant, shall, by acceptance of such Global Warrant,
agree that transfers of beneficial interests in such Global Warrant may be
effected only through a book-entry system maintained by the Holder of such
Global Warrant (or its agent), and that ownership of a beneficial interest in
the Warrants represented thereby shall be required to be reflected in a book
entry. When Warrants are presented to the Warrant Agent with a request to
register the transfer or to exchange them for an equal amount of Warrants of
other authorized denominations, the Warrant Agent shall register the transfer or
make the exchange in accordance with the provisions hereof.
SECTION 5.02. Registration; Registration of Transfer and
Exchange. Each Warrant shall initially be issued as part of a Unit consisting of
$1,000 principal amount of Notes and one Warrant. Prior to the Separability
Date, the Warrants may not be transferred or exchanged separately from, but may
be transferred or exchanged only together with, the Notes attached to such
Warrants. Prior to the Separability Date, the Trustee under the Indenture shall
act as transfer agent ("Transfer Agent") for both the Warrants and the Notes.
Any request for transfer of a Warrant prior to the Separability Date to the
Transfer Agent shall be accompanied by the Note attached thereto and the
Transfer Agent will not execute any such transfer without such Note attached
thereto. Such Note will be duly endorsed and accompanied by a written instrument
of transfer in form satisfactory to the Company, duly executed by the holder
thereof or the holder's attorneys duly authorized in writing. The Company shall
provide notice to the Transfer Agent and the Warrant Agent of the Separability
Date five Business Days prior to such date and the Transfer Agent will notify
DTC of such date. In the event of a determination by Merrill Lynch to separate
the Warrants and the Notes, the
25
Company shall promptly, but in no event later than the next following Business
Day after receiving notice of such determination, provide notice to the Transfer
Agent and the Warrant Agent and the Transfer Agent will notify DTC of such date.
When Certificated Warrants are presented to the Warrant Agent
with a request from the Holder of such Warrants to register the transfer or to
exchange them for an equal number of Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested;
provided, however, that (i) every Warrant Certificate presented and surrendered
for registration of transfer or exchange shall be duly endorsed and be
accompanied by a written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder thereof or the Holder's attorneys duly
authorized in writing and (ii) if being transferred or exchanged pursuant to an
effective registration statement under the Securities Act, pursuant to Section
2.04(b) or pursuant to clause (A), (B) or (C) below, shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Certificated Warrants are being delivered
to the Warrant Agent by a Holder for registration in the name
of such Holder, without transfer, a certification from such
Holder to that effect (in the form set forth on the reverse of
the Warrant); or
(B) if such Certificated Warrants are being
transferred to the Company, a certification to that effect (in
the form set forth on the reverse of the Warrant); or
(C) if such Certificated Warrants are being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144A, or Rule 144 under the Securities
Act; or (x) in reliance on another exemption from the
registration requirements of the Securities Act: (1) a
certification to that effect (in the form set forth on the
reverse of the Warrant) and (2) if the Company or Warrant
Agent so requests, an opinion of counsel or other evidence
reasonably satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in Exhibit D.
To permit registrations of transfers and exchanges, the
Company shall make available to the Warrant
26
Agent a sufficient number of executed Warrant Certificates to effect such
registrations of transfers and exchanges. No service charge shall be made to the
Holder for any registration of transfer or exchange of Warrants, but the Company
may require from the transferring or exchanging Holder payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable upon
exchanges pursuant to Section 2.04 and exchanges in respect of portions of
Warrants not exercised and the Company may deduct such taxes from any payment of
money to be made and such transfer or exchange shall not be consummated (if such
taxes are not deducted in full) unless or until the Holder shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company and the Warrant Agent that such tax has been paid.
SECTION 5.03. Book-Entry Provisions for the Global Warrants.
(a) The Global Warrant initially shall (i) be registered in the name of DTC or
the nominee of DTC, (ii) be delivered to the Warrant Agent or, prior to the
Separability Date, the Transfer Agent, as custodian for DTC and (iii) bear
legends as set forth in Section 2.02 hereof. Members of, or participants in, DTC
("Agent Members") shall have no rights under this Agreement with respect to the
Global Warrant held on their behalf by DTC or the Warrant Agent as its
custodian, and DTC may be treated by the Company, the Warrant Agent and any
agent of the Company or the Warrant Agent as the absolute owner of such Global
Warrant for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Warrant Agent or any agent of the Company
or the Warrant Agent from giving effect to any written certification, proxy or
other authorization furnished by DTC or impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a beneficial owner of any Warrants.
(b) Transfers of the Global Warrant shall be limited to
transfers of such Global Warrant in whole, but not in part, to DTC, its
successors or their respective nominees. Interests of beneficial owners in the
Global Warrant may be transferred in accordance with the rules and procedures of
DTC. Certificated Warrants shall be transferred to all beneficial owners in
exchange for their beneficial interests in the Global Warrant if (i) DTC
notifies the Company that it is unwilling or unable to continue as depositary
for the Global Warrant or (ii) DTC ceases to be a "Clearing Agency" registered
under the Exchange Act and a successor depositary is not appointed by the
Company within 90 days.
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(c) In connection with the transfer of the entire Global
Warrant to beneficial owners pursuant to paragraph (b) of this Section 5.03, the
Global Warrant shall be deemed to be surrendered to the Warrant Agent for
cancelation, and the Company shall execute, and the Warrant Agent shall
countersign and deliver, to each beneficial owner identified by DTC in exchange
for its beneficial interest in the Global Warrant, Certificated Warrants of
authorized denominations representing, in the aggregate, the number of Warrants
theretofore represented by the Global Warrant.
(d) Any Certificated Warrant delivered in exchange for an
interest in a Global Warrant pursuant to paragraph (b) or (c) of this Section
5.03 shall bear applicable legends as set forth in Section 2.02 hereof.
(e) The registered holder of the Global Warrant may grant
proxies and otherwise authorize any Person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Agreement or the Warrants.
(f) Beneficial owners of interests in the Global Warrant may
receive Certificated Warrants (which shall bear the legend set forth in Exhibit
C or Exhibit D if required by Section 2.02) in accordance with the procedures of
DTC. In connection with the execution, countersigning and delivery of such
Certificated Warrants, the Warrant Agent shall reflect on its books and records
a decrease in the number of Warrants represented by the Global Warrant equal to
the number of Warrants represented by such Certificated Warrants and the Company
shall execute and the Warrant Agent shall countersign and deliver one or more
Certificated Warrants representing, in the aggregate, the number of Warrants
theretofore represented by the Global Warrant.
SECTION 5.04. Surrender of Warrant Certificates. Any Warrant
Certificate surrendered for registration of transfer, exchange or exercise of
the Warrants represented thereby shall, if surrendered to the Company, be
delivered to the Warrant Agent, and all Warrant Certificates surrendered or so
delivered to the Warrant Agent shall be promptly canceled by the Warrant Agent
and shall not be reissued by the Company and, except as provided in this Article
V in case of an exchange or in Article III hereof in case of the exercise of
less than all the Warrants represented thereby or in case of a mutilated Warrant
Certificate, no Warrant Certificate shall be issued hereunder in lieu thereof.
The Warrant Agent shall deliver to the Company from time to time or otherwise
dispose of
28
such canceled Warrant Certificates as the Company may direct in writing.
ARTICLE VI
Registration Rights; Indemnification
SECTION 6.01. Effectiveness of Registration Statements.
Subject to Section 6.02, the Company shall cause to be filed pursuant to Rule
415 (or any successor provision) of the Securities Act (a) a shelf registration
statement relating to the offer and sale of the Warrants by the Holders from
time to time in accordance with the methods of distribution elected by such
holders and set forth in such registration statement (the "Warrant Shelf
Registration Statement"), and shall use its reasonable best efforts to cause the
Warrant Shelf Registration Statement to be declared effective under the
Securities Act on or before 150 days after the Issue Date and (b) a shelf
registration statement covering the issuance of Warrant Shares to the Holders
upon exercise of the Warrants by the Holders thereof (the "Warrant Share Shelf
Registration Statement") and shall use its reasonable best efforts to cause the
Warrant Share Shelf Registration Statement to be declared effective on or before
the Exercisability Date. The Company shall use its reasonable best efforts to
cause (x) the Warrant Shelf Registration Statement to remain effective until the
earliest of (i) such time as all Warrants have been sold thereunder, (ii) two
years after its effective date and (iii) until all Warrants can be sold without
restriction under the Securities Act and (y) the Warrant Share Shelf
Registration Statement to remain effective until the earlier of (i) such time as
all Warrants have been exercised and (ii) the Expiration Date. In connection
with either the Warrant Shelf Registration Statement or the Warrant Share Shelf
Registration Statement,
(i) the Company shall furnish to the Warrant Agent, prior to
the filing with the Commission, a copy of any registration statement,
and each amendment thereof and each amendment or supplement, if any, to
the prospectus included therein and shall use its reasonable best
efforts to reflect in each such document, when filed with the
Commission, such comments as the Warrant Agent may reasonably propose,
(ii) the Company shall furnish to each Holder, without charge,
at least one copy of any registration statement and any post-effective
amendment thereto, including financial statements and schedules, and,
if
29
the Holder so requests in writing, all exhibits thereto (including
those incorporated by reference),
(iii) the Company shall, for so long as any such registration
statement is effective, deliver to each Holder, without charge, as many
copies of the prospectus (including each preliminary prospectus)
included in such registration statement and any amendment or supplement
thereto as such Holder may reasonably request, and the Company consents
to the proper use of the prospectus therein and any amendment or
supplement thereto by each of the selling Holders in connection with
the offering and sale of the Warrants or the Warrant Shares, as the
case may be, covered by such prospectus and any amendment or supplement
thereto,
(iv) the Company may require each Holder of Warrants to be
sold pursuant to the Warrant Shelf Registration Statement or to be
exercised in connection with the Warrant Share Shelf Registration
Statement to furnish to the Company such information regarding the
Holder and the distribution of such Warrants or Warrant Shares as the
Company may from time to time reasonably request for inclusion in such
registration statement,
(v) the Company shall, if requested, promptly incorporate in a
prospectus supplement or post-effective amendment to such registration
statement such information as a majority in interest of the Holders
reasonably agree should be included therein and shall make all required
filings of such prospectus supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment,
(vi) the Company shall enter into such agreements (including
underwriting agreements) as are appropriate, customary and reasonably
necessary in connection with any such registration statement and
(vii) the Company shall (A) make available to the
underwriters, if any, all material customary for reasonable due
diligence examinations in connection with such registration statements,
(B) make such representations and warranties to the Holders of Warrants
and the underwriters, if any, as are customary and reasonable in
connection with such registration statements, (C) obtain such opinions
of counsel to the Company addressed to and reasonably satisfactory to
the Holders as are customary and reasonable in connection
30
with such registration statements and (D) obtain such "comfort" letters
and updates thereof from the independent certified public accountants
of the Company addressed to the Holders as are customary and reasonable
in connection with such registration statements. The Company will
furnish the Warrant Agent with current prospectuses meeting the
requirements of the Securities Act in sufficient quantity to permit the
Warrant Agent to deliver, at the Company's expense, a prospectus to
each holder of a Warrant upon the exercise thereof. The Company shall
promptly inform the Warrant Agent of any change in the status of the
effectiveness or availability of any registration statement.
SECTION 6.02. Suspension. During any consecutive 365-day
period, the Company shall be entitled to suspend the availability of each of the
Warrant Shelf Registration Statement and the Warrant Share Shelf Registration
Statement for up to three 30 consecutive-day periods (except for the 45
consecutive-day period immediately prior to the Expiration Date) but for no more
than an aggregate of 60 days during any 365-day period if the Company's Board of
Directors determines in the exercise of its good faith judgment that it is
necessary to amend such registration statement or amend or supplement any
prospectus or prospectus Supplement thereunder in order that each such document
not include any untrue statement of fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
SECTION 6.03. Liquidated Damages. If either the Warrant Shelf
Registration Statement has not been declared effective within 150 days after the
Issue Date or the Warrant Share Shelf Registration Statement has not been
declared effective on or prior to the Exercisability Date (each a "Registration
Default"), then the Company will pay liquidated damages in cash to each Holder
of Warrants in an amount equal to $0.03 per week per Warrant while such
Registration Default continues for the first 90-day period immediately following
such Registration Default. The amount of liquidated damages payable in cash by
the Company to each Holder of Warrants will increase by an amount equal to $0.02
per week per Warrant with respect to each subsequent 90-day period during which
such Registration Default continues and until such Registration Default is
cured, up to a maximum of $0.07 per week per Warrant. All liquidated damages
accrued, but not paid, on or prior to any interest payment date for the Notes,
will be paid to Holders of Warrants on such interest payment date at their
registered addresses.
31
SECTION 6.04. Piggy-Back Registration Rights. (a) If the
Company proposes to sell Common Stock pursuant to an effective registration
statement under the Securities Act (other than a registration statement on Form
S-4 or S-8 or a registration statement filed in connection with an offer of
securities solely to existing security holders), or the Company files a
registration statement to cover the sale of Common Stock for the account of any
of its security holders, then the Company shall in each case give written
notice, not later than the date of the initial filing of such registration
statement related to such offering, of such proposed offering to the Holders of
Warrants and Warrant Shares and such notice shall offer to such Holders the
opportunity to include in such offering such number of Warrants as such Holders
may request. From and after the Exercisability Date, Holders of Warrants may
also request to include Warrant Shares in such offering. Within 20 days after
receipt of such notice, the Holders of Warrants and Warrant Shares (the
"Requesting Holders") shall, subject to the following sentence, have the right
by notifying the Company in writing to require the Company to include in the
registration statement relating to such offering such number of Warrants or
Warrant Shares as such Holder may request. Notwithstanding the foregoing, if at
any time the managing underwriter or underwriters of such offering (the
"Managing Underwriter") shall advise the Company in writing (and shall deliver a
copy thereof to the Warrant Agent) that, in its opinion, the total number or
type of Warrants, Warrant Shares or other securities, as the case may be,
proposed to be sold exceeds the maximum number or type of Warrants, Warrant
Shares or other securities, as the case may be, which the Managing Underwriter
believes may be sold without materially adversely affecting the price, timing or
distribution of the offering, then the Company will be required to include, for
each Requesting Holder, only that pro rata number (based on the number of
Warrants or Warrant Shares requested to be included therein by all Requesting
Holders) of Warrants or Warrant Shares which the Managing Underwriter believes
may be sold without causing such adverse effect. The Company will have the right
to postpone or withdraw any registration statement relating to any Offering
described under this Section 6.04 prior to the effective date without obligation
to any Requesting Holder.
(b) If the Company has complied with all the obligations under
Section 6.04(a), to the extent applicable, all Holders of Warrants and Warrant
Shares upon request of the Managing Underwriter will be required to not sell or
otherwise dispose of any Warrants or Warrant Shares owned by them for a period
not to exceed 30 days prior to, or 90 days after, the consummation of any
underwritten public offering.
32
(c) The provisions of Section 6.02 and the third, fourth and
fifth sentences of Section 6.01 shall apply to any registration statement
governed by Section 6.04(a).
SECTION 6.05. Blue Sky. The Company shall use its best efforts
to register or qualify the Warrants and the Warrant Shares under all applicable
securities laws, blue sky laws or similar laws of all jurisdictions in the
United States in which any holder of Warrants may or may be deemed to purchase
Warrants or Warrant Shares upon the exercise of Warrants and shall use its best
efforts to maintain such registration or qualification for so long as it is
required to cause the Warrant Shelf Registration Statement (in the case of the
Warrants), the Warrant Share Shelf Registration Statement (in the case of the
Warrant Shares) and any registration statement governed by Section 6.04 to
remain effective under the Securities Act pursuant to Section 6.01 or until the
offering pursuant to Section 6.04 is complete; provided, however, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 6.05 or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
SECTION 6.06. Accuracy of Disclosure. The Company represents
and warrants to each Holder and agrees for the benefit of each Holder that (i)
each of the Warrant Shelf Registration Statement, the Warrant Share Shelf
Registration Statement and any registration statement governed by Section 6.04
and any amendment thereto will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading and (ii) each of the
prospectus furnished to such Holder for delivery in connection with the sale of
Warrants and the prospectus delivered to such Holder upon the exercise of
Warrants and the documents incorporated by reference therein will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company shall have no liability under
clauses (i) or (ii) of this Section 6.06 with respect to any such untrue
statement or omission made in any registration statement or prospectus in
reliance upon and in conformity with information furnished to the Company by or
on behalf of the Holders specifically for inclusion therein.
33
SECTION 6.07. Indemnification. (a) In connection with any
registration statement governed by this Article VI, the Company agrees to
indemnify and hold harmless each Holder of the Securities, and each person, if
any, who controls such Holder within the meaning of the Securities Act or the
Exchange Act (each Holder and such controlling persons being referred to
collectively as the "Indemnified Parties") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a registration statement governed by this
Article VI or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a registration statement governed by this
Article VI, or arise out of, or are based upon, the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and shall reimburse, as incurred, the Indemnified
Parties for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action in respect thereof; provided, however, that (i) the Company
shall not be liable in any such case to the extent that such loss, claim, damage
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in a registration
statement governed by this Article VI or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a registration
statement governed by this Article VI in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein and (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to a Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned, to
the extent that a prospectus relating to such Securities was required to be
delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results
from the fact
34
that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Securities to such person, a copy of the final
prospectus (as amended or supplemented if the Company shall have furnished any
such amendments or supplements to such Holder) if the Company had previously
furnished copies thereof to such Holder; provided further, however, that this
indemnity agreement will be in addition to any liability which the Company may
otherwise have to such Indemnified Party. The Company shall also indemnify
underwriters, selling brokers, dealer-managers and similar securities industry
professionals participating in the distribution (in each case as described in
the registration statement governed by this Article VI), their officers and
directors and each person who controls such persons within the meaning of the
Securities Act or the Exchange Act to the same extent as provided above with
respect to the indemnification of the Holders of the Securities if requested by
such Holders.
(b) In connection with any registration statement governed by
this Article VI, each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act (and
the directors, officers, agents and employees of the Company and any such
controlling person) from and against any losses, claims, damages or liabilities
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Securities) to which the Company or any such controlling person (or the
directors, officers, agents and employees of the Company and any such
controlling person) may become subject under the Securities Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement governed by
this Article VI or prospectus or in any amendment or supplement thereto or in
any preliminary prospectus relating to a registration statement governed by
this Article VI, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
pertaining to such Holder and furnished to the Company by or on behalf of such
Holder specifically for inclusion therein; and, subject to the limitation set
35
forth immediately preceding this clause, shall reimburse, as incurred, the
Company for any legal or other expenses reasonably incurred by the Company or
any such controlling person (or the directors, officers, agents and employees of
the Company and any such controlling person) in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 6.07 of notice of the commencement of any action or proceeding
(including a governmental investigation), such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6.07, notify the indemnifying party of the commencement thereof; but the
failure to so notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party (except to the
extent that it is prejudiced or harmed in any material respect by failure to
give such prompt notice). In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, act as both counsel to the indemnified and indemnifying
parties in such action if, in the reasonable opinion of both counsel to the
indemnified party and the indemnifying party, a conflict exists which makes such
joint representation not advisable), and after notice from the indemnifying
party to such indemnified party of its election to so assume the defense thereof
the indemnifying party will not be liable to such indemnified party under this
Section 6.07 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, not to be unreasonably withheld, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action. No indemnifying party shall be
liable for any amounts paid in settlement of any
36
action or claim without its written consent, which consent shall not be
unreasonably withheld.
(d) If the indemnification provided for in this Section 6.07
is unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the registration statement
governed by this Article VI, or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the indemnifying party or parties on the
one hand and the indemnified party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or such other indemnified person, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwith standing any other provision of this
Section 6.07(d), the Holders of the Securities shall not be required to
contribute any amount in excess of the amount by which the net proceeds received
by such Holders from the sale of the Warrants pursuant to the Warrant Shelf
Registration Statement or the Warrant Shares pursuant to the Warrant Share Shelf
Registration Statement or the Warrants or Warrant Shares pursuant to any
registration statement governed by Section 6.04 exceeds the amount of damages
which such Holders have otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
37
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), each person, if any, who controls such indemnified party within the meaning
of the Securities Act or the Exchange Act shall have the same rights to
contribution as such indemnified party and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as the Company.
(e) The agreements contained in this Section 6.07 shall
survive the sale of the Securities pursuant to the registration statements
governed by this Article VI and shall remain in full force and effect,
regardless of any termination or cancelation of this Agreement or any
investigation made by or on behalf of any indemnified party.
SECTION 6.08. Additional Acts. If the sale of Warrants or the
issuance or sale of any Common Stock or other securities issuable upon the
exercise of the Warrants requires registration or approval of any governmental
authority (other than the registration requirements under the Securities Act),
or the taking of any other action under the laws of the United States or any
political subdivision thereof before such securities may be validly offered or
sold in compliance with such laws, then the Company covenants that it will, in
good faith and as expeditiously as reasonably possible, use its reasonable best
efforts to secure and maintain such registration or approval or to take such
other action, as the case may be. The Company shall promptly notify the Warrant
Agent in writing when (i) the Company has obtained all such governmental
approvals and authorizations and (ii) such approvals and authorizations
thereafter cease to be in effect.
SECTION 6.09. Expenses. All expenses incident to the Company's
performance of or compliance with its obliga tions under this Article VI will be
borne by the Company, including: (i) all Commission, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
reasonable fees and expenses incurred in connection with the compliance with
state securities or blue sky laws, (iii) all expenses of any Persons incurred by
or on behalf of the Company in preparing or assisting in preparing, printing and
distributing the Warrant Shelf Registration Statement, the Warrant Share Shelf
Registration Statement or any registration statement governed by Section 6.04,
prospectus, any amendments or supplements thereto and other documents relating
to the performance of and compliance with this Article VI, (iv) the fees and
disbursements of the Warrant Agent as agreed, (v) the fees
38
and disbursements of counsel for the Company and the Warrant Agent as agreed and
(vi) the fees and disbursements of the independent public accountants of the
Company, including the expenses of any special audits or comfort letters
required by or incident to such performance and compliance.
ARTICLE VII
The Warrant Agent
SECTION 7.01. Duties and Liabilities. The Company hereby
appoints the Warrant Agent to act as agent of the Company as set forth in this
Agreement. The Warrant Agent hereby accepts the agency established by this
Agreement and agrees to perform the same upon the terms and conditions herein
set forth, by all of which the Company and the Holders of Warrants, by their
acceptance thereof, shall be bound. The Warrant Agent shall not have any
obligation towards or relationship of agency or trust for the Holders. The
Warrant Agent shall not, by countersigning Warrant Certificates or by any other
act hereunder, be deemed to make any representations as to the validity or
authorization of the Warrants or the Warrant Certificates (except as to its
countersignature thereon) or of any securities or other property delivered upon
exercise of any Warrant, or as to the accuracy of the calculation of the
Exercise Price, or the number or kind or amount of Common Stock or other
securities or other property deliverable upon exercise of any Warrant, or as to
the correctness of the representations of the Company made in the certificates
that the Warrant Agent receives or the validity, sufficiency or adequacy of any
offering materials. The Warrant Agent shall not have any obligation to calculate
or determine any adjustments with respect to either (i) the Exercise Price, or
(ii) the type or quantity of securities receivable by a Holder upon exercise or
repurchase of such Holder's Warrants, nor shall the Warrant Agent have a duty to
independently verify any such adjustments that may be supplied to it by the
Company. The Warrant Agent shall not (a) be liable for any recital or statement
of fact contained herein or in the Warrant Certificates or for any action taken,
suffered or omitted by it in good faith in the belief that any Warrant
Certificate or any other documents or any signatures are genuine or properly
authorized, (b) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in the Warrant Certificates or (c) be liable for any act or omission in
connection with this Agreement except for its own gross negligence or wilful
misconduct. The Warrant Agent is hereby authorized to accept instructions with
39
respect to the performance of its duties hereunder from the Chief Executive
Officer, President, any Vice President or the Secretary or Treasurer of the
Company and to apply to any such officer for instructions (which instructions
will be promptly given in writing when requested) and the Warrant Agent shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with the instructions of any such officer; however, in its
discretion, the Warrant Agent may in lieu thereof accept other evidence of such
or may require such further or additional evidence as it may deem reasonable.
The Warrant Agent shall not be liable for any action taken, or for any failure
to take any action, with respect to any matter in the event it requests
instructions from the Company as to that matter and does not receive such
instructions within a reasonable period of time after the request therefor.
The Warrant Agent may execute and exercise any of the rights
and powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys, agents or employees, and the Warrant Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees; provided, however, reasonable care has been
exercised in the selection and in the continued employment of any such attorney,
agent or employee. The Warrant Agent shall not be under any obligation or duty
to institute, appear in or defend any action, suit or legal proceeding in
respect hereof, unless first indemnified to its satisfaction, but this provision
shall not affect the power of the Warrant Agent to take such action as the
Warrant Agent may consider proper, whether with or without such indemnity. The
Warrant Agent shall promptly notify the Company in writing of any claim made or
action, suit or proceeding instituted against it arising out of or in connection
with this Agreement.
The Warrant Agent may rely and shall be fully protected in
acting or refraining from acting upon any certificate, notice, instruction,
Warrant, document or other writing believed by it to be genuine and to have been
signed or presented by the proper Person. The Warrant Agent need not investigate
any fact or matter stated in any such certificate, notice, instruction, Warrant,
document or other writing. The Warrant Agent shall not be liable for any action
that it takes or omits to take in good faith which it believes to be authorized
or within its rights or powers.
The Company will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as are consistent with this Agreement and as
may reasonably
40
be required by the Warrant Agent in order to enable it to carry out or perform
its duties under this Agreement.
The Warrant Agent shall act solely as agent of the Company
hereunder. The Warrant Agent shall not be liable except for the failure to
perform such duties as are specifically set forth herein, and no implied
covenants or obligations shall be read into this Agreement against the Warrant
Agent, whose duties and obligations shall be determined solely by the express
provisions hereof.
With respect to the identity of beneficial owners of interests
in the Global Warrant and the number of Warrants beneficially owned by any
beneficial owner, the Warrant Agent shall be entitled to conclusively rely on
the records of DTC and shall be fully protected in so relying.
SECTION 7.02. Right To Consult Counsel. The Warrant Agent may
at any time consult with legal counsel acceptable to it (who may be legal
counsel for the Company), and the opinion or advice of such counsel shall be
full and complete authorization and protection to the Warrant Agent and the
Warrant Agent shall incur no liability or responsibility to the Company or to
any Holder for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
SECTION 7.03. Compensation; Indemnification. The Company
agrees to pay to the Warrant Agent from time to time compensation for all
services rendered by it hereunder as the Company and the Warrant Agent may agree
in writing from time to time, and to reimburse the Warrant Agent for reasonable
expenses and disbursements incurred in connection with the execution and
administration of this Agreement (including the reasonable fees and the expenses
of its counsel), and further agrees to indemnify the Warrant Agent for, and to
hold it harmless against, any claim, loss, liability or expense arising out of
or in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending itself against any such claim or
liability, except that the Company shall have no liability hereunder to the
extent that any such loss, liability or expense results from the Warrant Agent's
own gross negligence or wilful misconduct. The obligations of the Company under
this Section 7.03 shall survive the exercise and the expiration of the Warrants
and the resignation or removal of the Warrant Agent. No provision of this
Agreement shall require the Warrant Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it
41
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
SECTION 7.04. No Restrictions on Actions. The Warrant Agent
and any stockholder, director, officer or employee of the Warrant Agent may buy,
sell or deal in any of the Warrants or other securities of the Company or become
pecuniarily interested in transactions 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 the Warrant Agent under this Agreement. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.
SECTION 7.05. Discharge or Removal; Replacement Warrant Agent.
Except as otherwise provided in this Section 7.05, and except after the exercise
of all of the outstanding Warrants and the delivery of Warrant Shares with
respect thereto, no resignation or removal of the Warrant Agent and no
appointment of a successor warrant agent shall become effective until the
acceptance of appointment by the successor warrant agent provided herein. The
Warrant Agent may resign from its position as such and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own gross negligence or wilful misconduct), after giving
one month's prior written notice to the Company. The Company may remove the
Warrant Agent upon one month's prior written notice specifying the date when
such discharge shall take effect, and the Warrant Agent shall thereupon in like
manner be discharged from all further duties and liabilities hereunder, except
as aforesaid. The Warrant Agent or the Company shall cause to be mailed (by
first-class mail, postage prepaid) to each Holder of a Warrant a copy of said
notice of resignation or notice of removal, as the case may be. Upon such
resignation or removal the Company shall appoint in writing a new warrant agent.
If the Company shall fail to make such appointment within a period of 30
calendar days after it has been notified in writing of such resignation by the
resigning Warrant Agent or after such removal, then the resigning Warrant Agent
or the Holder of any Warrant may apply to any court of competent jurisdiction
for the appointment of a new warrant agent. Any new warrant agent, whether
appointed by the Company or by such a court, shall be a bank or trust company
doing business under the laws of the United States or any state thereof, in good
standing and having a combined capital and surplus of not less than $50,000,000.
The combined capital and surplus of any such new warrant agent shall be deemed
to
42
be the combined capital and surplus as set forth in the most recent annual
report of its condition published by such warrant agent prior to its
appointment; provided, however, that such reports are published at least
annually pursuant to law or to the requirements of a federal or state
supervising or examining authority. After acceptance in writing of such
appointment by the new warrant agent, it shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein as
the Warrant Agent, without any further assurance, conveyance, act or deed;
however, the original Warrant Agent, upon payment of its fees and expenses,
shall in all events deliver and transfer to the successor Warrant Agent all
property, if any, at the time held hereunder by the original Warrant Agent and
if for any reason it shall be necessary or expedient to execute and deliver any
further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and delivered
by the resigning or removed Warrant Agent. Not later than the effective date of
any such appointment, the Company shall file a notice thereof with the resigning
or removed Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to each Holder of a Warrant. Failure to give any notice provided for in
this Section 7.05, however, or any defect therein, shall not affect the legality
or validity of the resignation of the Warrant Agent or the appointment of a new
warrant agent, as the case may be.
SECTION 7.06. Successor Warrant Agent. Any corporation into
which the Warrant Agent or any successor warrant agent may be merged or
converted, or any corporation resulting from any consolidation to which the
Warrant Agent or any successor warrant agent shall be a party, and any
corporation that acquires substantially all of the corporate trust business of
the Warrant Agent, shall be a successor Warrant Agent under this Agreement
without any further act; provided, however, that such corporation would be
eligible for appointment as successor to the Warrant Agent under the provisions
of Section 7.05 hereof. Any such successor Warrant Agent shall promptly cause
notice of its succession as Warrant Agent to be mailed (by first-class mail,
postage prepaid) to each Holder of a Warrant.
ARTICLE VIII
Warrant Holders
SECTION 8.01. Warrant Holder Not Deemed a Holder of Common
Stock. Prior to the exercise of the Warrants, no
43
Holder of a Warrant Certificate, as such, shall be entitled to any rights of a
holder of Common Stock.
SECTION 8.02. Right of Action. All rights of action with
respect to this Agreement are vested in the Holders of the Warrants, and any
Holder of any Warrant, without the consent of the Warrant Agent or the Holder of
any other Warrant, may, on such Holder's own behalf and for such Holder's own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company suitable to enforce, or otherwise in respect of, such
Holder's right to exercise, exchange or tender for purchase such Holder's
Warrants in the manner provided in the Warrant Certificate representing his
Warrants and in this Agreement.
ARTICLE IX
Miscellaneous
SECTION 9.01. Payment of Taxes. The Company shall pay any
stamp, registration, and other similar taxes and other governmental charges that
may be imposed under the laws of the United States of America or any political
subdivision or taxing authority thereof or therein in respect of the issue or
delivery thereof or of other securities deliverable upon exercise of Warrants
(other than income taxes imposed on the Holders). The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any Warrant Shares to any Person other than
the Holder of a Warrant Certificate surrendered upon the exercise of a Warrant,
and in case of such transfer or payment, the Warrant Agent and the Company shall
not be required to issue any Warrant Shares or pay any cash until such tax or
charge has been paid or it has been established to the Warrant Agent's and the
Company's satisfaction that no such tax or other charge is due.
SECTION 9.02. Reports to Holders. The Company shall:
(a) file the reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and regulations
prescribe) required to be filed by it under the Securities Act and the Exchange
Act, and the rules, regulations and policies adopted by the Commission
thereunder in a timely manner in accordance with the requirements of the
Securities Act and the Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections,
44
then the Company shall, upon the request of any Holder or beneficial owner of
Warrants, make available such information as necessary to permit sales pursuant
to Rule 144A under the Securities Act; and
(b) file with the Warrant Agent and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this Agreement as
may be required from time to time by such rules and regulations.
SECTION 9.03. Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or any air courier (a) if to a
Holder of the Warrants, at the address of such Holder maintained by the Warrant
Agent, (b) if to the Company, to CD Radio Inc., 1221 Avenue of the Americas, New
York, New York 10020, Attention: Patrick L. Donnelly and (c) if to the Warrant
Agent, to United States Trust Company of New York, 114 West 47th Street, New
York, NY 10036, Attention: Corporate Trust Administration.
All such notices and communications shall be deemed to have
been duly given; at the time delivered by hand, if personally delivered; at the
time received, if mailed or sent by air courier; when answered back, if telexed;
and when receipt is acknowledged, by recipient's telecopy operator, if
telecopied.
SECTION 9.04. Severability. If any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 9.05. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the Company and the Warrant Agent and their
respective successors and assigns, and the Holders from time to time of the
Warrants. Nothing in this Agreement is intended or shall be construed to confer
upon any Person, other than the Company, the Warrant Agent and the Holders of
the Warrants, any right, remedy or claim under or by reason of this Agreement or
any part hereof.
45
SECTION 9.06. Third-Party Beneficiaries. The Holders and
holders of Warrant Shares shall be third-party beneficiaries to the agreements
made hereunder between the Company, on the one hand, and the Warrant Agent, on
the other hand, and each Holder and holder of Warrant Shares shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders or holders of Warrant Shares hereunder.
SECTION 9.07. Amendments. The Company may, without the consent
of the Holders of the Warrants, by supplemental agreement or otherwise, make any
changes or corrections in this Agreement that it shall have been advised by
counsel (a) are required to cure any ambiguity or to correct or supplement any
provision herein which may be defective or inconsistent with any other provision
herein or (b) add to the covenants and agreements of the Company for the benefit
of the Holders, or surrender any rights or power reserved to or conferred upon
the Company in this Agreement; provided, however, that, in each case, such
changes or corrections shall not adversely affect the interests of the Holders
or holders of Warrant Shares in any material respect. Amendments or supplements
which do not meet the requirements of the preceding sentence shall require the
written consent of the Holders of a majority of the then outstanding Warrants
and, to the extent such amendment or supplement affects the rights of holders of
Warrant Shares under Article VI hereof, the written consent of the holders of a
majority of the then outstanding Warrant Shares; provided, however, that the
consent of each Holder is required for any amendment or supplement pursuant to
which the Exercise Price would be increased or the Exercise Rate would be
decreased (other than pursuant to adjustments as provided in Article IV of this
Agreement). The Warrant Agent shall join with the Company in the execution and
delivery of any such supplemental agreements unless it affects the Warrant
Agent's own rights, duties of immunities hereunder, in which case the Warrant
Agent may, but shall not be required to, join in such execution and delivery.
SECTION 9.08. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of any provision hereof.
SECTION 9.09. GOVERNING LAW. THIS AGREEMENT AND THE WARRANTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
46
SECTION 9.10. Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, and their respective corporate seals to be hereto
affixed and attested, all as of the day and year first above written.
CD RADIO INC.
by /s/Patrick L. Donnelly
----------------------------------------
Name: Patrick L. Donnelly
Title: Executive Vice President
and General Counsel
UNITED STATES TRUST COMPANY OF NEW
YORK, Warrant Agent
by /s/Patricia Gallagher
----------------------------------------
Name: Patricia Gallagher
Title: Assistant Vice President
EXHIBIT A TO
WARRANT AGREEMENT
CUSIP No.
No. [ ] Certificate for [ ] Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
CD RADIO INC.
THIS CERTIFIES THAT [ ], or its
registered assigns, is the registered holder of the number of Warrants set forth
above (the "Warrants"). Each Warrant entitles the holder thereof (the "Holder"),
at its option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from CD RADIO INC., a Delaware
corporation ("the Company"), 3.65 shares of Common Stock, par value of $0.001
per share, of the Company (the "Common Stock") at the per share exercise price
of $28.60 (the "Exercise Price"), or by Cashless Exercise referred to below.
Each Warrant shall terminate and become void as 5:00, New York City time, on May
15, 2009 (the "Expiration Date") if not previously exercised. The number of
shares issuable upon exercise of the Warrants and the Exercise Price per share
shall be subject to adjustment from time to time as set forth in the Warrant
Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement dated as of May 15, 1999 (the "Warrant Agreement"),
between the Company and United States Trust Company of New York (the "Warrant
Agent", which term includes any successor Warrant Agent under the Warrant
Agreement), and is subject to the terms and provisions contained in the Warrant
Agreement, to all of which terms and provisions the Holder of the Warrants
evidenced by this Warrant Certificate consents by acceptance hereof. The Warrant
Agreement is hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties and obligations of the Company,
the Warrant Agent and the Holders of the Warrants. Capitalized terms used but
not defined herein shall have the meanings ascribed thereto in the Warrant
Agreement. A copy of the Warrant Agreement may be obtained for inspection by the
Holder hereof upon written request to the Warrant Agent at 114 West 47th Street,
New York, New York, 10036, Attention: Corporate Trust Department.
Subject to the terms of the Warrant Agreement, the Warrants
may be exercised in whole (i) by presentation of this Warrant Certificate with
the Election to Purchase attached hereto duly executed and with the simultaneous
payment of the Exercise Price in cash (subject to adjustment) to the Warrant
Agent for the account of the Company at the office of the Warrant Agent or (ii)
by Cashless Exercise. Payment of the Exercise Price in cash shall be made by
certified or official bank check payable to the order of the Company or by wire
transfer of funds to an account designated by the Company for such purpose.
Payment by Cashless Exercise shall be made without the payment of cash by
reducing the amount of Common Stock that would be obtainable upon the exercise
of a Warrant and payment of the Exercise Price in cash so as to yield a number
of shares of Common Stock upon the exercise of such Warrant equal to the product
of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Current
Market Value per share of Common Stock on the Exercise Date over the Exercise
Price per share as of the Exercise Date and the denominator of which is the
Current Market Value per share of the Common Stock on the Exercise Date.
As provided in the Warrant Agreement and subject to the terms
and conditions therein set forth, the Warrants shall be exercisable at any
2
time and from time to time on any Business Day on or after the Exercisability
Date; provided, however, that Holders of Warrants will be able to exercise their
Warrants only if the Warrant Share Shelf Registration Statement relating to the
Common Stock underlying the Warrants is effective or the exercise of such
Warrants is exempt from the registration requirements of the Securities Act of
1933 and such securities are qualified for sale or exempt from qualification
under the applicable securities laws of the states or other jurisdictions in
which such Holders reside; provided further, however, that no Warrant shall be
exercisable after May 15, 2009.
In the event of a Fundamental Transaction, the Holder hereof
will be entitled to receive upon exercise of the Warrants the kind and amount of
shares of capital stock or other securities or other property as the Holder
would have received had the Holder exercised its Warrants immediately prior to
such Fundamental Transaction; provided, however, that in the event that, in
connection with such Fundamental Transaction (other than with a subsidiary of
the Company), consideration to holders of Common Stock in exchange for their
shares is payable solely in cash or in the event of the dissolution, liquidation
or winding-up of the Company, the Holder hereof will be entitled to receive such
cash distributions on an equal basis with the holders of Common Stock or other
securities issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such Fundamental Transaction, less the Exercise
Price.
As provided in the Warrant Agreement, the number of shares of
Common Stock issuable upon the exercise of the Warrants and the Exercise Price
are subject to adjustment upon the happening of certain events.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with the transfer
or exchange of the Warrant Certificates pursuant to Section 5.02 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any exercise of the Warrants for less than all of the
Warrants represented by this Warrant Certificate, there shall be countersigned
and issued to the Holder hereof a new Warrant Certificate representing those
Warrants which were not exercised. This Warrant Certificate may be exchanged at
the office of the Warrant Agent by presenting this Warrant Certificate properly
endorsed with a request to exchange this Warrant Certificate for other Warrant
Certificates evidencing an equal number of Warrants. No fractional Warrant
Shares will be issued upon the exercise of the Warrants, but the Company shall
pay an amount in cash equal to the Current Market Value per Warrant Share on the
day immediately preceding the date the Warrant is exercised, multiplied by the
fraction of a Warrant Share that would be issuable on the exercise of any
Warrant.
All shares of Common Stock issuable by the Company upon the
exercise of the Warrants shall, upon such issue, be duly and validly issued and
fully paid and non-assessable.
The holder in whose name this Warrant Certificate is
registered may be deemed and treated by the Company and the Warrant Agent as the
absolute owner of the Warrants evidenced by this Warrant Certificate for all
purposes whatsoever and neither the Company nor the Warrant Agent shall be
affected by notice to the contrary.
3
The Warrants do not entitle any Holder hereof to any of the
rights of a stockholder of the Company.
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
CD RADIO INC.
by
_______________________________________
Name:
Title:
Countersigned:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Warrant Agent,
by
___________________________________
Authorized Signatory
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
CD RADIO INC.
The undersigned hereby irrevocably elects to exercise
__________________ Warrants to acquire shares of Common Stock, par value $.001
per share, of CD Radio Inc., at an exercise price per share of Common Stock of
$28.60, and otherwise on the terms and conditions specified in the within
Warrant Certificate and the Warrant Agreement therein referred to, surrenders
this Warrant Certificate and all right, title and interest therein to CD Radio
Inc. and directs that the shares of Common Stock deliverable upon the exercise
of such Warrants be registered or placed in the name and at the address
specified below and delivered thereto.
Date:
(1)
____________________________________
(Signature of Owner)
____________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
____________________________________
- ----------
(1) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a national bank or
trust company or by a member firm of any national securities exchange.
2
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
A new Warrant Certificate evidencing any unexercised Warrants evidenced by the
within Warrant Certificate is to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
3
In connection with any transfer of any of the Warrants
evidenced by this certificate occurring prior to the expiration of the period
referred to in Rule 144(k) under the Securities Act after the later of the date
of original issuance of such Warrants and the last date, if any, on which such
Warrants were owned by the Company or any Affiliate of the Company, the
undersigned certifies that such Warrants are being transferred in accordance
with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under
the Securities Act of 1933; or
(3) [ ] pursuant to Rule 144A under the Securities Act of
1933; or
(4) [ ] pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
Unless one of the boxes is checked, the Warrant Agent will
refuse to register any of the Warrants evidenced by this certificate in the name
of any person other than the registered holder thereof; provided, however, that
if box (4) is checked, the Warrant Agent may require, prior to registering any
such transfer of the Warrants, such legal opinions, additional certifications
and other information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act of 1933,
such as the exemption provided by Rule 144 under such Act.
----------------------------
Signature
Signature Guarantee:
- ---------------------------- ----------------------------
Signature must be guaranteed Signature
- --------------------------------------------------------------------------------
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(2)
The following exchanges of a part of this Global Warrant Certificate for
definitive Warrants have been made:
Number of
Amount of change Warrants in
in Number of this Global
Warrants in Warrant Signature of
this Global Certificate authorized
Date of Warrant following officer of
Exchange Certificate such change Warrant Agent
- ----------
(2) To be included only if the Warrant is in global form.
EXHIBIT B TO
WARRANT AGREEMENT
FORM OF LEGEND FOR GLOBAL WARRANTS
Any Global Warrant authenticated and delivered hereunder shall bear a legend in
substantially the following form:
THIS WARRANT IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT AGREEMENT
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS WARRANT IS NOT
EXCHANGEABLE FOR WARRANTS REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
WARRANT AGREEMENT, AND NO TRANSFER OF THIS WARRANT (OTHER THAN A TRANSFER OF
THIS WARRANT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE WARRANT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR 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 REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
EXHIBIT C TO
WARRANT AGREEMENT
FORM OF LEGEND FOR WARRANTS ISSUED AS PART OF A UNIT
THE WARRANT EVIDENCED BY THIS CERTIFICATE IS INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF 14-1/2%
SENIOR SECURED NOTES DUE 2009 OF CD RADIO INC. (THE "NOTES") AND THREE WARRANTS.
PRIOR TO THE CLOSE OF BUSINESS UPON THE EARLIEST TO OCCUR OF (I) AUGUST 16,
1999, (II) THE COMMENCEMENT OF A REGISTERED EXCHANGE OFFER FOR THE NOTES OR THE
EFFECTIVE DATE OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO THE NOTES,
(III) THE OCCURRENCE OF AN EXERCISE EVENT, (IV) THE OCCURRENCE OF AN EVENT OF
DEFAULT, (V) THE REDEMPTION OF ALL OR PART OF THE NOTES IN ACCORDANCE WITH THE
INDENTURE OR (VI) SUCH EARLIER DATE AS DETERMINED BY MERRILL LYNCH IN ITS SOLE
DISCRETION (AS SUCH TERMS ARE DEFINED IN THE WARRANT AGREEMENT REFERRED TO
HEREIN), THE WARRANT EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE NOTES.
EXHIBIT D
TO THE WARRANT AGREEMENT
FORM OF TRANSFER RESTRICTION LEGEND
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION AS SET FORTH BELOW. EACH PURCHASER OF THIS SECURITY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
("RULE 144A"). BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) OR AN INSTITUTIONAL
"ACCREDITED INVESTOR" AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A INSIDE THE UNITED STATES, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT.