Exhibit 99.6
LORAL SPACE & COMMUNICATIONS LTD.
and
THE BANK OF NEW YORK, as Warrant Agent
WARRANT AGREEMENT
Dated as of December 21, 2001
WARRANT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. Appointment of Warrant Agent.................................................................. 1
SECTION 2. Warrant Certificates.......................................................................... 1
SECTION 3. Execution of Warrant Certificates............................................................. 1
SECTION 4. Registration and Countersignature............................................................. 2
SECTION 5. Registration of Transfers and Exchanges....................................................... 2
SECTION 6. Terms and Release of Warrants................................................................. 3
SECTION 7. Registration Statement........................................................................ 4
SECTION 8. Payment of Taxes.............................................................................. 5
SECTION 9. Mutilated or Missing Warrant Certificates..................................................... 5
SECTION 10. Reservation of Warrant Shares................................................................. 5
SECTION 11. Obtaining Stock Exchange Listings............................................................. 6
SECTION 12. Adjustment of Exercise Price.................................................................. 6
SECTION 13. Fractional Interests.......................................................................... 13
SECTION 14. Notices to Warrant Holders.................................................................... 13
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent...................................... 15
SECTION 16. Warrant Agent................................................................................. 15
SECTION 17. Change of Warrant Agent....................................................................... 18
SECTION 18. Notices to Company and Warrant Agent.......................................................... 19
SECTION 19. Supplements and Amendments.................................................................... 19
SECTION 20. Successors.................................................................................... 20
SECTION 21. Termination................................................................................... 20
SECTION 22. Governing Law................................................................................. 20
SECTION 23. Benefits of This Agreement.................................................................... 20
SECTION 24. Counterparts.................................................................................. 20
Exhibit A Form of Warrant Certificate
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WARRANT AGREEMENT dated as of December 21, 2001 between Loral Space &
Communications Ltd., a Bermuda company (the "COMPANY"), and The Bank of New
York, a New York banking corporation, as Warrant Agent (the "WARRANT AGENT").
WHEREAS, the Company proposes to issue Common Stock Purchase Warrants,
as hereinafter described (the "WARRANTS"), which in the aggregate initially
entitle the holders thereof to purchase up to 6,042,986 shares of Common Stock
of the Company (the "COMMON STOCK") (the Common Stock issuable on exercise of
the Warrants being referred to herein as the "WARRANT SHARES") pursuant to an
exchange offer (the "Exchange Offer") made pursuant to a Lock-Up Agreement dated
as of October 15, 2001 between the Company, Loral CyberStar, Inc., and certain
holders of Loral CyberStar's Senior Notes and Senior Discount Notes.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and exercise of Warrants and other matters as
provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment. The Company may from time to time appoint such
Co-Warrant Agents as is may deem necessary or desirable upon ten (10) days'
prior written notice to the Warrant Agent. The Warrant Agent shall have no duty
to supervise, and shall in no event be liable for, the acts or omissions of any
such Co-Warrant Agent.
SECTION 2. Warrant Certificates. The certificates evidencing the
Warrants (the "WARRANT CERTIFICATES") to be delivered pursuant to this Agreement
shall be in registered form only and shall be substantially in the form set
forth in Exhibit A attached hereto.
SECTION 3. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board or its
President or a Vice President and by its Secretary or an Assistant Secretary.
Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the present or any future Chairman of the Board,
President, Vice President, Secretary or Assistant Secretary and may be imprinted
or otherwise reproduced on the Warrant Certificates and for that purpose the
Company may adopt and use the facsimile signature of any person who shall have
been Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of he or she shall have ceased
to hold such office.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, shall be a proper officer of the Company
to sign such Warrant Certificate, although at the date of the execution of this
Warrant Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by the
Warrant Agent.
SECTION 4. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall hold the Warrants unnumbered and unregistered.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board, the
President, a Vice President, the Treasurer, the Secretary or the Chief Financial
Officer of the Company, initially countersign, issue and deliver Warrants
collectively for all Warrants outstanding entitling the holders thereof to
purchase not more than the number of Warrant Shares referred to above in the
first recital hereof and shall countersign and deliver Warrants as otherwise
provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
SECTION 5. Registration of Transfers and Exchanges. The Warrant Agent
shall from time to time, subject to the limitations of Section 6 hereof,
register the transfer of any outstanding Warrant Certificates upon the records
to be maintained by it for that purpose, upon surrender thereof duly endorsed or
accompanied (if so required by the Warrant Agent) by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, duly executed
by the registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled by the
Warrant Agent. Cancelled Warrant Certificates shall thereafter be disposed of by
the Warrant Agent in its customary manner.
Subject to the terms of this Agreement, Warrant Certificates may be
exchanged at the option of the holder(s) thereof, when surrendered to the
Warrant Agent at its principal corporate trust office, which is currently
located at the address listed in Section 18 hereof, for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Any holder desiring to exchange a Warrant
Certificate shall deliver a written request to the Warrant Agent, and shall
surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by
a written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, the Warrant Certificate or Certificates to be so exchanged.
Warrant Certificates surrendered for exchange shall be cancelled by the Warrant
Agent. Such cancelled Warrant Certificates shall then be disposed of by such
Warrant Agent in its customary manner.
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The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Section 5 and of Section 4 hereof, the new Warrant
Certificates required pursuant to the provisions of this Section 5.
SECTION 6. Terms and Release of Warrants.
(a) Terms of Warrants.
The initial exercise price per share at which Warrant Shares shall be
purchasable upon the exercise of Warrants (the "EXERCISE PRICE") shall be $2.37
per share.
Subject to the terms of this Agreement, each Warrant holder shall have
the right, which may be exercised commencing at the opening of business on the
date that such Warrant may be issued pursuant to the Exchange Offer and until
5:00 p.m., New York City time on December 27, 2006, to receive from the Company
the number of fully paid and nonassessable Warrant Shares which the holder may
at the time be entitled to receive on exercise of such Warrants and payment of
the Exercise Price then in effect for such Warrant Shares. In the alternative,
each Warrant holder may exercise its right, during the exercise period, to
receive Warrant Shares on a net basis, such that, without the exchange of any
funds, the holder receives that number of Warrant Shares otherwise issuable (or
payable) upon exercise of its Warrants less that number of Warrant Shares having
an aggregate Market Price (as defined below) at the time of exercise equal to
the aggregate Exercise Price that would otherwise have been paid by the holder
of the Warrant Shares upon such exercise. Each Warrant not exercised prior to
5:00 p.m., New York City time, on December 27, 2006 shall become void and all
rights thereunder and all rights in respect thereof under this Agreement shall
cease as of such time. No adjustments as to dividends will be made upon exercise
of the Warrants.
A Warrant may be exercised upon surrender to the Company at the
principal corporate trust office of the Warrant Agent, which is currently
located at the address listed in Section 18 hereof, of the certificate or
certificates evidencing the Warrants to be exercised with the form of election
to purchase on the reverse thereof duly filled in and signed and such other
documentation as the Warrant Agent may reasonably request, and upon payment to
the Warrant Agent for the account of the Company of the Exercise Price which is
set forth in the form of Warrant Certificate attached hereto as Exhibit A as
adjusted as herein provided, for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made (i) in cash or by certified or official bank check payable to the
order of the Company in New York Clearing House Funds, or the equivalent thereof
or (ii) in the manner provided in this Section 6.
Subject to the provisions of Section 8 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to and in such name or names as the
Warrant holder may designate, a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of such Warrants, subject to
Section 13 hereof; provided, however, that if any Business Combination proposed
to be effected by the Company as defined in Section 12 hereof, or a tender offer
or an exchange offer for shares of Common Stock of the Company shall be made,
upon such surrender of Warrants and payment of the Exercise Price as aforesaid,
the Company shall, as soon as
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reasonably practicable, but in any event not later than three business days
thereafter, issue and cause to be delivered the full number of Warrant Shares
issuable upon the exercise of such Warrants in the manner described in this
sentence subject to Section 13 hereof. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Warrant Certificate or
Certificates pursuant to the provisions of this Section 6 and of Section 4
hereof, and the Company, whenever required by the Warrant Agent, shall supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purpose. The Warrant Agent may assume that any Warrant
presented for exercise is permitted to be so exercised under applicable law and
shall have no liability for acting in reliance on such assumption.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled by the Warrant Agent. Such canceled Warrant Certificates shall then be
disposed of by the Warrant Agent in its customary manner. The Warrant Agent
shall account promptly to the Company with respect to Warrants exercised and
concurrently pay to the Company all monies received by the Warrant Agent for the
purchase of the Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the holders with
reasonable prior written notice during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may request.
SECTION 7. Registration Statement. The Company shall use its
commercially reasonable efforts to file with the Securities and Exchange
Commission (the "SEC"), and cause to be declared effective, a registration
statement (the "Registration Statement") pursuant to Rule 415, or any successor
rule, under the Securities Act of 1933, as amended (the "Securities Act") on
Form S-1 or Form S-3, if the use of such form is then available and as
determined by the Company, or any successor forms, to cover the issuance of the
Warrant Shares. The Company shall use its commercially reasonable efforts to
maintain the effectiveness of the Registration Statement until the earlier of
(a) such time as all Warrants have been exercised and (b) the fifth anniversary
of the date of this Agreement. During any 365-day period in which the Warrants
are exercisable, the Company may suspend the availability of the Registration
Statement for up to two 30-consecutive-day periods (except during the 30 days
immediately prior to the expiration of the Warrants) if (a) the Board of
Directors of the Company determines in good faith that a valid business purpose
exists for the suspension of the use of the Registration Statement and (b)
notice of such determination is provided to the holders of Warrants at their
addresses appearing in the register of the Warrants maintained by the Warrant
Agent.
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SECTION 8. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
SECTION 9. Mutilated or Missing Warrant Certificates. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue and the Warrant Agent shall countersign, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity, also satisfactory to the Company and the
Warrant Agent. Applicants for such new Warrant Certificates must pay such
reasonable charges as the Company may prescribe.
SECTION 10. Reservation of Warrant Shares. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants. The Warrant Agent shall have no duty to
verify availability of such shares set aside by the Company.
The Company or, if appointed, the transfer agent for the Common Stock
(the "TRANSFER AGENT") and every subsequent transfer agent for any shares of the
Company's Common Stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's Common
Stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of this
Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 13 hereof. The Company will
furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto, transmitted to each holder pursuant to Section 14
hereof.
Before taking any action which would cause an adjustment pursuant to
Section 12 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any commercially reasonable
corporate action which may, in the opinion of its counsel (which may be counsel
employed by the Company), be necessary in order that the
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Company may validly and legally issue fully paid and nonassessable Warrant
Shares at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon payment of the Exercise Price therefor and
issue, be fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue thereof.
SECTION 11. Obtaining Stock Exchange Listings. The Company will from
time to time take all commercially reasonable actions which may be necessary so
that the Warrant Shares, immediately upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchanges and markets
within the United States of America, if any, on which other shares of Common
Stock are then listed.
SECTION 12. Adjustment of Exercise Price. The Exercise Price and the
number of Warrant Shares issuable on exercise of each Warrant are subject to
adjustment from time to time as described in this Section 12 and subject to
Section 13.
(a) Common Stock Issued at Less than Market Value. If the Company
issues or sells any Common Stock other than Excluded Stock without consideration
or for consideration per share less than the Market Price of the Common Stock
(provided, however, that no sale of securities pursuant to a bona fide
underwritten public offering or equity line or private placement to
non-affiliates of the Company (including without limitation the issuance of
equity as consideration of partial consideration for acquisitions from persons
that are not affiliates of the Company) will be deemed to be for less than
Market Price), as of the day of such issuance or sale, the Exercise Price in
effect immediately prior to each such issuance or sale will immediately (except
as provided below) be reduced to the price determined by multiplying the
Exercise Price, in effect immediately prior to such issuance or sale, by a
fraction, (x) the numerator of which shall be (A) the number of shares of Common
Stock outstanding immediately prior to such issuance or sale plus (B) the number
of shares of Common Stock which the aggregate consideration received by the
Company for the total number of such additional shares of Common Stock so issued
or sold would purchase at the Market Price on the last trading day immediately
preceding such issuance or sale and (y) the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such issue or
sale. In such event, the number of Warrant Shares issuable upon the exercise of
each Warrant shall be increased to the number obtained by dividing (x) the
product of (A) the number of Warrant Shares issuable upon the exercise of each
Warrant before such adjustment, and (B) the Exercise Price in effect immediately
prior to the issuance giving rise to this adjustment by (y) the new Exercise
Price determined in accordance with the immediately preceding sentence. For the
purposes of any adjustment of the Exercise Price and the number of Warrant
Shares issuable upon exercise of each Warrant pursuant to this Section 12(a),
the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the
amount of the consideration received by the Company shall be deemed to
be the amount of the cash proceeds received by the Company for such
Common Stock before deducting therefrom
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any discounts or commissions allowed, paid or incurred by the Company
for any underwriting or otherwise in connection with the issuance and
sale thereof.
(2) In the case of the issuance of Common Stock (otherwise than upon
the conversion of any shares of capital stock or other securities of the
Company) for a consideration in whole or in part other than cash, including
securities acquired in exchange therefor (other than securities by their terms
so exchangeable), the consideration other than cash shall be deemed to be the
fair value thereof as determined by the Board of Directors, provided, however,
that such fair value as determined by the Board of Directors shall not exceed
the aggregate Market Price of the shares of Common Stock being issued as of the
date the Board of Directors authorizes the issuance of such shares.
(3) In the case of the issuance of (A) options, warrants or other
rights to purchase or acquire Common Stock (whether or not at the time
exercisable) or (B) securities by their terms convertible into or exchangeable
for Common Stock (whether or not at the time so convertible or exchangeable) or
options, warrants or rights to purchase such convertible or exchangeable
securities (whether or not at the time exercisable):
(A) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options, warrants or other rights to purchase
or acquire Common Stock shall be deemed to have been issued at the time such
options, warrants or rights are issued and for a consideration equal to the
consideration (determined in the manner provided in Sections 12(a)(1) and (2)),
if any, received by the Company upon the issuance of such options, warrants or
rights plus the minimum purchase price provided in such options, warrants or
rights for the Common Stock covered thereby;
(B) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities, or upon the exercise of options, warrants or other
rights to purchase or acquire such convertible or exchangeable securities and
the subsequent conversion or exchange thereof, shall be deemed to have been
issued at the time such securities were issued or such options, warrants or
rights were issued and for a consideration equal to the consideration, if any,
received by the Company for any such securities and related options, warrants or
rights (excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration (determined in the manner provided
in Sections 12(a)(1) and (2)), if any, to be received by the Company upon the
conversion or exchange of such securities, or upon the exercise of any related
options, warrants or rights to purchase or acquire such convertible or
exchangeable securities and the subsequent conversion or exchange thereof;
(C) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options, warrants or rights or conversion
or exchange of such convertible or exchangeable securities or any change in the
consideration to be received by the Company upon such exercise, conversion or
exchange, but excluding changes resulting from the antidilution provisions
thereof (to the extent comparable to the antidilution provisions contained
herein), the Exercise Price and
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the number of Warrant Shares issuable upon exercise of this Warrant as then in
effect shall forthwith be readjusted to such Exercise Price and number of
Warrant Shares as would have been obtained had an adjustment been made upon the
issuance of such options, warrants or rights not exercised prior to such change,
or of such convertible or exchangeable securities not converted or exchanged
prior to such change, upon the basis of such change;
(D) on the expiration or cancellation of any such options, warrants
or rights (without exercise), or the termination of the right to convert or
exchange such convertible or exchangeable securities (without exercise), if the
Exercise Price and the number of Warrant Shares issuable upon exercise of this
Warrant shall have been adjusted upon the issuance thereof, the Exercise Price
and the number of Warrant Shares issuable upon exercise of this Warrant shall
forthwith be readjusted to such Exercise Price and number of Warrant Shares as
would have been obtained had an adjustment been made upon the issuance of such
options, warrants, rights or such convertible or exchangeable securities on the
basis of the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options, warrants or rights, or upon the
conversion or exchange of such convertible or exchangeable securities; and
(E) if the Exercise Price and the number of Warrant Shares issuable
upon exercise of this Warrant shall have been adjusted upon the issuance of any
such options, warrants, rights or convertible or exchangeable securities, no
further adjustment of the Exercise Price and the number of Warrant Shares
issuable upon exercise of this Warrant shall be made for the actual issuance of
Common Stock upon the exercise, conversion or exchange thereof; provided,
however, that no increase in the Exercise Price shall be made pursuant to
subclauses (A) and (B) of this Section 12(a)(3).
(b) Employee Stock Options and Restricted Stock Grants.
Notwithstanding anything to the contrary set forth in this Section 12,
no adjustment will be required in respect of issuances of Common Stock (or
options to purchase Common Stock) pursuant to stock options granted prior to the
date hereof or for stock options and restricted stock granted to employees after
the date hereof issued to the Company's employees, officers, directors,
consultants or advisors (whether or not still in such capacity on the date of
exercise) under bona fide employee benefit plans or stock option plans adopted
by the Board of Directors of the Company and approved by the holders of Common
Stock when required by law.
(c) Certain Repurchases of Common Stock. In case the Company effects a
Pro Rata Repurchase of Common Stock, then the Exercise Price shall be reduced to
the price determined by multiplying the Exercise Price in effect immediately
prior to the effective date of such Pro Rata Repurchase by a fraction of which
the numerator shall be (x) the product of (A) the number of shares of Common
Stock outstanding immediately before such Pro Rata Repurchase and (B) the Market
Price of a share of Common Stock on the trading day immediately preceding the
first public announcement by the Company or any of its Affiliates of the intent
to effect such Pro Rata Repurchase, minus (y) the aggregate purchase price of
the Pro Rata Repurchase, and of which the denominator shall be the product of
(x) the number of shares
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of Common Stock outstanding immediately prior to such Pro Rata Repurchase minus
the number of shares of Common Stock so repurchased and (y) the Market Price per
share of Common Stock on the trading day immediately preceding the first public
announcement of such Pro Rata Repurchase. In such event, the number of Warrant
Shares issuable upon the exercise of each Warrant shall be increased to the
number obtained by dividing (x) the product of (A) the number of Warrant Shares
issuable upon the exercise of each Warrant before such adjustment, and (B) the
Exercise Price in effect immediately prior to the Pro Rata Repurchase giving
rise to this adjustment by (y) the new Exercise Price determined in accordance
with the immediately preceding sentence.
(d) Business Combinations. In case of any Business Combination or
reclassification of Common Stock (other than a reclassification of Common Stock
referred to in Section 12(e)), any Warrant Shares issued or issuable upon
exercise of this Warrant after the date of such Business Combination or
reclassification will be exchangeable for the number of shares of stock or other
securities or property (including cash) to which the Warrant Shares issuable (at
the time of such consolidation, merger, sale, lease or conveyance) upon exercise
of this Warrant immediately prior to such Business Combination or
reclassification would have been entitled upon such Business Combination or
reclassification; and in any such case, if necessary, the provisions set forth
herein with respect to the rights and interests thereafter of the Holder shall
be appropriately adjusted so as to be applicable, as nearly as may reasonably
be, to any shares of stock or other securities or property thereafter
deliverable on the exercise of this Warrant. In determining the kind and amount
of stock, securities or the property receivable upon consummation of such
Business Combination, if the holders of Common Stock have the right to elect the
kind or amount of consideration receivable upon consummation of such Business
Combination, then the Holder shall have the right to make a similar election
upon exercise of this Warrant with respect to the number of shares of stock or
other securities or property which the Holder will receive upon exercise of this
Warrant.
(e) Stock Splits, Subdivisions, Reclassifications or Combinations. If
the Company shall (1) declare a dividend or make a distribution on its Common
Stock in shares of Common Stock, (2) subdivide or reclassify the outstanding
shares of Common Stock into a greater number of shares, or (3) combine or
reclassify the outstanding Common Stock into a smaller number of shares, the
number of Warrant Shares issuable upon exercise of this Warrant at the time of
the record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that the Holder after such date shall be entitled to purchase the number of
Warrant Shares which such holder would have owned or been entitled to receive
after such date had this Warrant been exercised immediately prior to such date.
Successive adjustments in the Exercise Price shall be made whenever any event
specified above shall occur. In such event the Exercise Price in effect at the
time of the record date for such dividend or distribution or the effective date
of such subdivision, combination or reclassification shall be adjusted to the
number obtained by dividing (x) the product of (A) the number of Warrant Shares
issuable upon the exercise of this Warrant before such adjustment and (B) the
Exercise Price in effect immediately prior to the issuance giving rise to this
adjustment by (y) the new number of shares issuable upon exercise of the Warrant
determined pursuant to the immediately preceding sentence.
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(f) Other Distributions. In case the Company shall fix a record date
for the making of a distribution to all holders of shares of its Common Stock
(1) of shares of any class other than its Common Stock or (2) of evidence of
indebtedness of the Company or any Subsidiary or (3) of assets, or (4) of rights
or warrants (in each case excluding (A) Ordinary Cash Dividends and (B) any
dividends or distribution referred to in Section 12(e)) in each such case the
Exercise Price in effect on the record date will be reduced by an amount equal,
in the case of a distribution in cash, to the amount thereof payable per share
of the Common Stock, or in the case of any other distribution, to the fair value
thereof per share of the Common Stock as determined by the Board of Directors.
Such reductions shall take effect on the record date for such distribution. In
such event, the number of Warrant Shares issuable upon the exercise of each
Warrant shall be increased to the number obtained by dividing (x) the product of
(A) the number of Warrant Shares issuable upon the exercise of this Warrant
before such adjustment, and (B) the Exercise Price in effect immediately prior
to the issuance giving rise to this adjustment by (y) the new Exercise Price
determined in accordance with the immediately preceding sentence. In the event
that such distribution is not so made, the Exercise Price and the number of
Warrant Shares issuable upon exercise of this Warrant then in effect shall be
readjusted, effective as of the date when the Board determines not to distribute
such shares, evidences of indebtedness, assets, rights or warrants, as the case
may be, to the Exercise Price that would then be in effect and the number of
Warrant Shares that would then be issuable upon exercise of this Warrant if such
record date and distribution had not been fixed.
(g) Rules for Adjustment. No adjustment in the Exercise Price or the
number of Warrant Shares issuable upon the exercise of each Warrant is required
if the amount of the adjustment is less than $0.01 or one-hundredth (1/100th) of
a share, as the case may be; provided, however, that any adjustments which by
reason of this Section 12(g) are not required to be made will be carried forward
and given effect in any subsequent adjustment.
(i) For the purposes of this Section 12, the term "shares of
Common Stock" means (1) the class of stock designated as the Common Stock of the
Company at the date hereof or (2) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
changes in par value, or from no par value to par value.
(ii) Notwithstanding the foregoing, in any case which this
Section 12 provides that an adjustment becomes effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event (1) issuing to the Holder of any Warrant exercised after such record date
and before the occurrence of such event the additional securities issuable upon
such conversion before giving effect to such adjustment and (2) paying to the
Holder any amount in cash in lieu of any fraction pursuant to Section 13.
(iii) If the Company takes any action affecting the Common Stock,
other than action described in this Section 12, which in the opinion of the
Board of Directors of the Company would materially adversely affect the
conversion rights of the Holder of the Warrants, the Exercise Price for the
Warrants and/or the number of Warrant Shares received upon exercise of the
Warrant may be adjusted, to the extent permitted by law, in such manner, if any,
and at such time, as such Board may determine in good faith to be equitable in
the circumstances. Failure of the Board of Directors of the Company to provide
for any such adjustment prior to the effective date of any such action by the
Company affecting the Common
10
Stock will be evidence that the Board of Directors of the Company has determined
that it is equitable to make no adjustments in the circumstances.
(h) Voluntary Adjustment by the Company. The Company may at its option,
at any time during the term of the Warrants, reduce the then current Exercise
Price or increase the number of Warrant Shares for which the Warrant may be
exercised to any amount deemed appropriate by the Board of Directors of the
Company; provided, however, that if the Company elects to make such adjustment,
such adjustment will remain in effect for at least a 15-day period, after which
time the Company may, at its option, reinstate the Exercise Price or number of
Warrant Shares in effect prior to such reduction, subject to any interim
adjustments pursuant to this Section 12.
(i) Notice of Adjustment. Whenever the Exercise Price or number of
Warrant Shares is adjusted, the Chief Financial Officer of the Company will
compute the adjustments in accordance with the foregoing provisions and will
prepare a certificate setting forth the adjustments and showing in reasonable
detail the facts upon which such adjustments are based. A copy of such
certificate will be filed promptly with the Transfer Agent. Promptly after
delivery of such certificate, the Company will prepare a notice setting forth
the adjustments and the date on which such adjustments become effective and will
mail such notice of such adjustments to the Holder at the last address of the
Holder as shown on the Warrants Register.
(j) Miscellaneous. Except as provided in this Section 12, no adjustment
in respect of any dividends or other payments or distributions made to Holders
of securities issuable upon exercise of Warrants will be made during the term of
a Warrant or upon the exercise of a Warrant. To the extent (but only to the
extent) that the Holder's rights hereunder have been protected by the Holder's
exercise (at Holder's election and reasonable allocation) of its preemptive
rights under the Investment Agreement, no adjustments will be made to the
Exercise Price or the number of Warrant Shares. In addition, notwithstanding any
of the foregoing, no such adjustment will be made for the issuance or conversion
of (a) any Securities (as defined in the Investment Agreement) or (b) any rights
under the Rights Agreement (as defined in the Investment Agreement) or any
successor agreement unless such rights become exercisable (in which case they
will be deemed for purposes of this Agreement to have been issued at the time
they become exercisable).
(k) No adjustment need be made for a transaction referred to in
subsections (a) or (f) of this Section 12 if Warrant holders are to participate,
without requiring the Warrants to be exercised, in the transaction on a basis
and with notice that the Board of Directors of the Company reasonably determines
to be fair and appropriate in light of the basis and notice on which holders of
Common Stock participate in the transaction. No adjustment need be made for a
change in the par value of the Common Stock. To the extent the Warrants become
convertible into cash, no adjustment need be made thereafter as to the amount of
such cash, and no interest will accrue thereon.
(l) Statement on Certificate. Irrespective of any adjustments in the
number or kind of securities purchasable upon the exercise of the Warrants or
the Exercise Price, the Certificates may continue to express the same price and
number and kind of shares as are stated in this Certificate.
11
(m) Definitions. For purposes of this Section 12, the following terms
shall have the following meanings:
"Business Combination" means (1) any consolidation, merger, share
exchange or similar business combination transaction involving the
Company with any person or (2) the sale, assignment, conveyance,
transfer, lease or other disposition by the Company of all or
substantially all of its assets.
"Excluded Stock" means shares of Common Stock issued by the Company
upon exercise of Warrants, as a stock dividend payable in shares of
Common Stock, or upon any subdivision or split-up of the outstanding
shares of capital stock in each case which is subject to Section 12
(e), or upon conversion or exchange of shares or other securities
convertible or exchangeable for capital stock or the exercise of rights
or warrants to issued to holders of common stock (but not the issuance
of such securities subject to the provisions of Section 12(a)(3)).
"Market Price" means, with respect to a particular security, on any
given day, the average of the daily closing prices for 10 consecutive
trading days commencing on the 5th trading day prior to the day in
question or, in case no such reported sale takes place on such day, the
average of the last closing bid and asked prices regular way, in either
case on the New York Stock Exchange or other principal national
securities exchange on which the applicable security is listed or
admitted to trading, or if not listed or admitted to trading on any
national securities exchange, (1) the average of the daily closing
prices for 10 consecutive trading days commencing on the 5th trading
day prior to the day in question reported by the NASDAQ Stock Market if
such security is traded over-the-counter and quoted in the NASDAQ Stock
Market, or (2) if such security is so traded, but not so quoted, the
average of the closing reported bid and asked prices of such security
as reported by the NASDAQ Stock Market or any comparable system, or (3)
if such security is not listed on the NASDAQ Stock Market or any
comparable system, the average of the closing bid and asked prices as
furnished by two members of the National Association of Securities
Dealers, Inc. selected from time to time by the Company for that
purpose. If such security is not listed and traded in a manner that the
quotations referred to above are available for the period required
hereunder, the Market Price per share of Common Stock shall be deemed
to be the fair value per share of such security as determined in good
faith by the Board of Directors of the Company.
"Ordinary Cash Dividends" means regular quarterly cash dividends not
exceeding the average amount of net income reported for such quarter.
"Pro Rata Repurchases" means any purchase of shares of Common Stock by
the Company or any Affiliate (as defined in the Investment Agreement)
thereof pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Exchange Act, or pursuant to any other offer
available to substantially all holders of Common Stock, whether for
cash, shares of capital stock of the Company, other securities of the
Company, evidences of indebtedness of the Company or
12
any other person or any other property (including, without limitation,
shares of capital stock, other securities or evidences of indebtedness
of a subsidiary of the Company), or any combination thereof, effected
while this Warrant is outstanding; provided, however, that "Pro Rata
Repurchase" shall not include any purchase of shares by the Company or
any Affiliate thereof made directly or indirectly in accordance with
the requirements of Rule 10b-18 as in effect under the Exchange Act or
any tender offer or exchange offer commenced in connection with the
transactions in which this Warrant is issued. The "effective date" of a
Pro Rata Repurchase shall mean the date of acceptance of shares for
purchase or exchange under any tender or exchange offer which is a Pro
Rata Repurchase or the date of purchase with respect to any Pro Rata
Repurchase that is not a tender or exchange offer.
(n) Warrant Agent's Disclaimer.
The Warrant Agent has no duty to determine when an adjustment under
this Section 12 should be made, how it should be made or what it should be. The
Warrant Agent has no duty to determine whether any provisions of a supplemental
Warrant Agreement under subsection (m) of this Section 12 are correct. The
Warrant Agent makes no representation as to the validity or value of any
securities or assets issued upon exercise of Warrants. The Warrant Agent shall
not be responsible for the Company's failure to comply with this Section.
(o) Form of Warrants.
Irrespective of any adjustments in the number or kind of shares
issuable upon the exercise of the Warrants or the Exercise Price, Warrants
theretofore or thereafter issued may continue to express the same number and
kind of shares and Exercise Price as are stated in the Warrants initially
issuable pursuant to this Agreement.
SECTION 13. Fractional Interests. Warrants may be issued in fractional
interests. Holders of fractional interests in Warrants will be entitled to
purchase a number of Warrant Shares equal to the product obtained by multiplying
the number of Warrant Shares issuable with respect to a full Warrant multiplied
by the fractional interest owned by such holder in the Warrant. The Company may,
but will not be required to, issue fractional Warrant Shares on the exercise of
Warrants. If more than one Warrant is presented for exercise in full at the same
time by a Holder, the exercise thereof will be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of a Warrant Share would be issuable on the exercise
of any Warrant (or specified portion thereof), the Company may, in its sole
discretion, issue such fraction of a Warrant Share or pay to the Holder of the
Warrant an amount in cash equal to the current Market Price per share of Common
Stock computed as of the trading day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction of a Warrant Share (but
in no event less than an amount equal to such fraction multiplied by the
Exercise Price in effect at such time).
SECTION 14. Notices to Warrant Holders. Upon any adjustment of the
Exercise Price pursuant to Section 12, the Company shall promptly thereafter,
and in any event within five days, (i) cause to be filed with the Warrant Agent
a certificate executed by the Chief Financial
13
Officer of the Company setting forth the number of shares of common stock
issuable upon exercise of each Warrant after such adjustment and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculations are based, and (ii) cause to be given to each of the registered
holders of the Warrant Certificates at his address appearing on the Warrant
register written notice of such adjustments by first-class mail, postage
prepaid. Where appropriate, such notice may be given in advance and included as
a part of the notice required to be mailed under the other provisions of this
Section 14. The Warrant Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
In case:
(1) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
(2) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than regular cash dividends or dividends payable in
shares of Common Stock or distributions referred to in subsection (b)
of Section 12 hereof); or
(3) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(4) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(5) the Company proposes to take any action (other than
actions of the character described in Section 12(a) hereof) which would
require an adjustment of the Exercise Price pursuant to Section 12
hereof;
(6) then the Company shall cause to be filed with the Warrant
Agent and shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant
register, at least 10 calendar days prior to the applicable record date
hereinafter specified, or as promptly as practicable under the
circumstances in the case of events for which there is no record date,
by first-class mail, postage prepaid, a written notice stating (i) the
date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution
are to be determined, or (ii) the initial expiration date set forth in
any tender offer or exchange offer for shares of Common Stock, or (iii)
the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is
14
expected to become effective or consummated, and the date as of which
it is expected that holders of record of shares of Common Stock shall
be entitled to exchange such shares for securities or other property,
if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up. The
failure to give the notice required by this Section 14 or any defect
therein shall not affect the legality or validity of any distribution,
right, option, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
all or substantially all the corporate trust or agency business of the Warrant
Agent, shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor warrant agent under the provisions of Section 17. In case at the
time such successor to the Warrant Agent shall succeed to the agency created by
this Agreement, and in case at that time any of the Warrant Certificates shall
have been countersigned but not delivered, any such successor to the Warrant
Agent may adopt the countersignature of the original Warrant Agent; and in case
at that time any of the Warrant Certificates shall not have been countersigned,
any successor to the Warrant Agent may countersign such Warrant Certificates
either in the name of the predecessor Warrant Agent or in the name of the
successor to the Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force and effect provided in the Warrant Certificates and in
this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 16. Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement (and no implied duties or obligations
shall be read into this Agreement against the Warrant Agent) upon the following
terms and conditions, by all of which the Company and the holders of Warrants,
by their acceptance thereof, shall be bound:
(1) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company and the
Warrant Agent assumes no responsibility for the correctness of any of
the same except such as describe the Warrant Agent or action
15
taken or to be taken by it. The Warrant Agent assumes no responsibility
with respect to the distribution of the Warrant Certificates except as
herein otherwise provided.
(2) The Warrant Agent shall not be responsible for any failure
of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the
Company.
(3) The Warrant Agent may consult at any time with counsel of
its own selection (who may be counsel for the Company) and the Warrant
Agent shall incur no liability or responsibility to the Company or to
any holder of any Warrant Certificate in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with the opinion or the advice of such counsel. The Warrant Agent may
execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the
Warrant Agent shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with due care by it
hereunder.
(4) In the absence of bad faith on its part, the Warrant Agent
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Warrant Agent and conforming to the
requirements of this Agreement. The Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any
Warrant Certificate for any action taken in reliance on any Warrant
Certificate, certificate of shares, notice, resolution, waiver,
consent, order, certificate, or other paper, document or instrument
(whether in its original or facsimile form) believed by it to be
genuine and to have been signed, sent or presented by the proper party
or parties.
(5) The Company agrees to pay to the Warrant Agent such
compensation for all services rendered by the Warrant Agent in the
administration and execution of this Agreement as the Company and the
Warrant Agent shall agree in writing to reimburse the Warrant Agent for
all expenses, taxes and governmental charges and other charges of any
kind and nature incurred by the Warrant Agent in the execution of this
Agreement (including fees and expenses of its counsel) and to indemnify
the Warrant Agent (and any predecessor Warrant Agent) and save it
harmless against any and all claims (whether asserted by the Company, a
holder or any other person), damages, losses, expenses (including taxes
other than taxes based on the income of the Warrant Agent),
liabilities, including judgments, costs and counsel fees and expenses,
for anything done or omitted by the Warrant Agent in the execution of
this Agreement except as a result of its gross negligence or willful
misconduct. The provisions of this Section 16(5) shall survive the
expiration of the Warrants and the termination of this Agreement.
(6) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other
action likely to involve expense unless the Company or one or more
registered holders of Warrant Certificates shall furnish the Warrant
Agent with security and indemnity satisfactory to it for any costs and
expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as it may consider
proper, whether with or without any such security
16
or indemnity. All rights of action under this Agreement or under any of
the Warrants may be enforced by the Warrant Agent without the
possession of any of the Warrant Certificates or the production thereof
at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in
its name as Warrant Agent and any recovery of judgment shall be for the
ratable benefit of the registered holders of the Warrants, as their
respective rights or interests may appear.
(7) The Warrant Agent, and any stockholder, director, officer
or employee of it, may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as
though it were not Warrant Agent under this Agreement. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.
(8) The Warrant Agent shall act hereunder solely as agent for
the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement
except for its own gross negligence or willful misconduct. The Warrant
Agent shall not be liable for any error of judgment made in good faith
by it, unless it shall be proved that the Warrant Agent was grossly
negligent in ascertaining the pertinent facts. Notwithstanding anything
in this Agreement to the contrary, in no event shall the Warrant Agent
be liable for special, indirect, punitive or consequential loss or
damage of any kind whatsoever (including but not limited to lost
profits), even if the Warrant Agent has been advised of the likelihood
of the loss or damage and regardless of the form of the action.
(9) The Warrant Agent shall not at any time be under any duty
or responsibility to any holder of any Warrant Certificate to make or
cause to be made any adjustment of the Exercise Price or number of the
Warrant Shares or other securities or property deliverable as provided
in this Agreement, or to determine whether any facts exist which may
require any of such adjustments, or with respect to the nature or
extent of any such adjustments, when made, or with respect to the
method employed in making the same. The Warrant Agent shall not be
accountable with respect to the validity or value or the kind or amount
of any Warrant Shares or of any securities or property which may at any
time be issued or delivered upon the exercise of any Warrant or with
respect to whether any such Warrant Shares or other securities will
when issued be validly issued and fully paid and nonassessable, and
makes no representation with respect thereto.
(10) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Warrant Agent shall have any
liability to any holder of a Warrant Certificate or other Person as a
result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or commission,
or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise
restraining performance of such obligation; provided that the Company
must
17
use its reasonable best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
(11) Any application by the Warrant Agent for written
instructions from the Company may, at the option of the Warrant Agent,
set forth in writing any action proposed to be taken or omitted by the
Warrant Agent under this Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The
Warrant Agent shall not be liable for any action taken by, or omission
of, the Warrant Agent in accordance with a proposal included in such
application on or after the date specified in such application (which
date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any
such officer shall have consented in writing to any earlier date)
unless prior to taking any such action (or the effective date in the
case of an omission), the Warrant Agent shall have received written
instructions in response to such application specifying the action to
be taken or omitted.
(12) No provision of this Agreement shall require the Warrant
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights.
(13) In addition to the foregoing, the Warrant Agent shall be
protected and shall incur no liability for, or in respect of, any
action taken or omitted by it in connection with its administration of
this Agreement if such acts or omissions are in reliance upon (i) the
proper execution of the certification concerning beneficial ownership
appended to the form of assignment and the form of the election
attached hereto unless the Warrant Agent shall have actual knowledge
that, as executed, such certification is untrue, or (ii) the
non-execution of such certification including, without limitation, any
refusal to honor any otherwise permissible assignment or election by
reason of such non-execution.
SECTION 17. Change of Warrant Agent. The Warrant Agent may at any time
resign as Warrant Agent upon written notice to the Company. If the Warrant Agent
shall become incapable of acting as Warrant Agent, the Company shall appoint a
successor to such Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in writing of
such resignation or of such incapacity by the Warrant Agent or by the registered
holder of a Warrant Certificate, then the registered holder of any Warrant
Certificate or the Warrant Agent may apply, at the expense of the Company, to
any court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Pending appointment of a successor to such Warrant Agent, either
by the Company or by such a court, the duties of the Warrant Agent shall be
carried out by the Company. The holders of a majority of the unexercised
Warrants shall be entitled at any time to remove the Warrant Agent and appoint a
successor to such Warrant Agent. If a Successor Warrant Agent shall not have
been appointed within 30 days of such removal, the Warrant Agent may apply, at
the expense of the Company, to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Such successor to the Warrant
Agent need not be approved by the Company or the former Warrant Agent. After
appointment the successor to the Warrant Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Warrant Agent without further act or deed; but the former Warrant Agent upon
payment of all
18
fees and expenses due it and its agents and counsel shall deliver and transfer
to the successor to the Warrant Agent any property at the time held by it
hereunder and execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Failure to give any notice provided for in this
Section 17, however, or any defect therein, shall not affect the legality or
validity of the appointment of a successor to the Warrant Agent.
SECTION 18. Notices to Company and Warrant Agent. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
Loral Space & Communications Ltd.
c/o Loral SpaceCom, Inc.
600 Third Avenue
New York, NY 1016
Attention: General Counsel
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal corporate trust office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or by
the registered holder(s) of any Warrant Certificate to the Warrant Agent shall
be sufficiently given when and if deposited in the mail, first-class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Company) to the Warrant Agent as follows:
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trust Administration
SECTION 19. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrant Certificates in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Warrant Agent may deem necessary or desirable and which shall not in any
way adversely affect the interests of the holders of Warrant Certificates. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 19, the Warrant Agent shall execute such supplement or
amendment. Notwithstanding anything in this Agreement to the contrary, the prior
written consent of the Warrant Agent must be obtained in connection with any
supplement or amendment which alters the rights or duties of the Warrant Agent.
The Company and the Warrant Agent may amend any provision herein with the
consent of the holders of
19
Warrants exercisable for a majority of the Warrant Shares issuable on exercise
of all outstanding Warrants.
SECTION 20. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 21. Termination. This Agreement will terminate on any earlier
date if all Warrants have been exercised or expired without exercise. The
provisions of Section 16 hereof shall survive such termination.
SECTION 22. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF SAID STATE.
SECTION 23. Benefits of This Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrant Certificates any legal
or equitable right, remedy or claim under this Agreement, and this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the registered holders of the Warrant Certificates.
SECTION 24. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Janet T. Yeung
----------------------------------
Title: Vice President and Assistant
Secretary
THE BANK OF NEW YORK, as
Warrant Agent
By: /s/ Michael C. Daly
----------------------------------
Title: Assistant Vice President
21
[WARRANT AGREEMENT]
EXHIBIT A
[Form of Warrant Certificate]
[Face]
EXERCISABLE ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME ,ON December __, 2006.
No. _____ _______ Warrants
CUSIP G56462 18 0
Warrant Certificate
LORAL SPACE & COMMUNICATIONS LTD.
This Warrant Certificate certifies that ________________________, or
registered assigns, is the registered holder of __________ Warrants expiring
December __, 2006 (the "WARRANTS") to purchase shares of Common Stock, $.01 par
value (the "COMMON STOCK"), of LORAL SPACE & COMMUNICATIONS LTD. (the
"COMPANY"). Each Warrant entitles the holder upon exercise to receive from the
Company on or before 5:00 p.m. New York City time, on December __, 2006, that
number of fully paid and nonassessable shares of Common Stock (each, a "WARRANT
SHARE") as set forth below at the exercise price (the "EXERCISE PRICE") as
determined pursuant to the Warrant Agreement referenced below payable in lawful
money of the United States of America upon surrender of this Warrant Certificate
and payment of the Exercise Price at the office or agency of the Warrant Agent,
but only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. Notwithstanding the foregoing, Warrants may
be exercised without the exchange of funds pursuant to the net exercise
provisions of Section 6 of the Warrant Agreement.
Each Warrant is initially exercisable for one share of Common Stock.
The number of Warrant Shares issuable upon exercise of the Warrants are subject
to adjustment upon the occurrence after the closing of the Exchange Offer of
certain events set forth in the Warrant Agreement.
The initial Exercise Price per share of Common Stock for any Warrant
shall be equal to $2.37 per share. The Exercise Price is subject to adjustment
upon the occurrence of certain events set forth in the Warrant Agreement.
No warrant may be exercised after 5:00 p.m., New York City time, on
December __, 2006 and to the extent not exercised by such time such warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
A-1
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.
LORAL SPACE & COMMUNICATIONS, LTD.
By
----------------------------------
Name: Richard P. Mastoloni
Title: Vice President and
Assistant Treasurer
By:
----------------------------------
Name: Janet T. Yeung
Title: Vice President and
Assistant Secretary
Countersigned:
Dated: , 20
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THE BANK OF NEW YORK,
as Warrant Agent
By:_______________________________
Authorized Signatory
A-2
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring December __, 2006 entitling the holder on
exercise to receive shares of Common Stock, par value $0.01 per share, of the
Company (the "COMMON STOCK"), and are issued or to be issued pursuant to a
Warrant Agreement dated as of December ___, 2006 (the "WARRANT AGREEMENT"), duly
executed and delivered by the Company to The Bank of New York, a New York
banking corporation, as warrant agent (the "WARRANT AGENT"), which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "HOLDERS" or "HOLDER" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or before 5:00 p.m., New York
City time, on December __, 2006. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price as specified in the
Warrant Agreement at the principal corporate trust office of the Warrant Agent.
In the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrant Shares set forth on the face hereof may, subject to
certain conditions, be adjusted. No fractions of a share of Common Stock will be
issued upon the exercise of any Warrant, but the Company will pay the cash value
thereof determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the principal corporate trust
office of the Warrant Agent by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may be exchanged,
in the manner and subject to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
A-3
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-4
Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of __________
Corporation in the amount of $______ in accordance with the terms hereof unless
the holder is exercising Warrants pursuant to the net exercise provisions of
Section 6 of the Warrant Agreement. The undersigned requests that a certificate
for such shares be registered in the name of ________________, whose address is
_______________________________ and that such shares be delivered to
________________ whose address is ___________ ______________________. If said
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________, whose address is _________________________, and that such
Warrant Certificate be delivered to _________________, whose address is
__________________.
Signature:
Date: , 20
--------------------- --
Signature Guaranteed: