CONFORMED COPY
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
between
SIRIUS SATELLITE RADIO INC.
and
UNITED STATES TRUST COMPANY OF NEW YORK
Warrant Agent and Escrow Agent
Dated as of June 1, 2000
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
-----
ARTICLE I Certain Definitions................................................................1
SECTION 1.01. Definitions......................................................................1
ARTICLE II Original Issue of Warrants.........................................................7
SECTION 2.01. Form of Warrant Certificates.....................................................7
SECTION 2.02. Restrictive Legends..............................................................8
SECTION 2.03. Execution and Delivery of Warrant Certificates...................................8
SECTION 2.04. Loss or Mutilation...............................................................9
SECTION 2.05. CUSIP Number; Portal.............................................................9
SECTION 2.06. Certificated Warrants...........................................................10
ARTICLE III Exercise Price; Exercise of Warrants..............................................10
SECTION 3.01. Exercise Price..................................................................10
SECTION 3.02. Exercise; Restrictions on Exercise..............................................12
SECTION 3.03. Method of Exercise..............................................................12
SECTION 3.04. Issuance of Warrant Shares......................................................13
SECTION 3.05. Fractional Warrant Shares.......................................................14
SECTION 3.06. Reservation of Warrant Shares...................................................14
SECTION 3.07. Escrow of Warrants..............................................................14
SECTION 3.08. Vesting of Warrants.............................................................15
SECTION 3.09. Compliance with Law.............................................................16
ARTICLE IV Antidilution Provisions...........................................................16
SECTION 4.01. Changes in Common Stock.........................................................16
SECTION 4.02. Cash Dividends and Other Distributions..........................................17
SECTION 4.03. Issuance of Common Stock or Rights or Options...................................18
SECTION 4.04. Fundamental Transaction; Liquidation............................................19
SECTION 4.05. Other Events....................................................................20
SECTION 4.06. Superseding Adjustment..........................................................21
SECTION 4.07. Minimum Adjustment..............................................................21
SECTION 4.08. Notice of Adjustment............................................................22
SECTION 4.09. Notice of Certain Transactions..................................................22
SECTION 4.10. Adjustment to Warrant Certificate...............................................23
ARTICLE V Warrant Transfer Books; Restrictions On Transfer..................................24
SECTION 5.01. Transfer and Exchange...........................................................24
SECTION 5.02. Registration; Registration of Transfer and Exchange.............................25
SECTION 5.03. Initial Certificated Warrants; Book-Entry Provisions
for the Global Warrants.........................................................26
i
SECTION 5.04. Surrender of Warrant Certificates...............................................27
ARTICLE VI Registration Rights; Indemnification..............................................28
SECTION 6.01. Effectiveness of Registration Statements........................................28
SECTION 6.02. Suspension......................................................................31
SECTION 6.03. Liquidated Damages..............................................................31
SECTION 6.04. Piggy-Back Registration Rights..................................................31
SECTION 6.05. Blue Sky........................................................................32
SECTION 6.06. Accuracy of Disclosure..........................................................33
SECTION 6.07. Indemnification.................................................................33
SECTION 6.08. Additional Acts.................................................................37
SECTION 6.09. Expenses........................................................................37
ARTICLE VII The Warrant and Escrow Agent......................................................38
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...................................................................42
SECTION 8.01. Warrant Holder Not Deemed a Holder
of Common Stock.................................................................43
SECTION 8.02. Right of Action.................................................................43
ARTICLE IX Miscellaneous.....................................................................43
SECTION 9.01. Payment of Taxes................................................................43
SECTION 9.02. Reports to Holders..............................................................44
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
ii
EXHIBIT A FORM OF WARRANT CERTIFICATE
EXHIBIT B FORM OF LEGEND FOR GLOBAL WARRANTS
EXHIBIT C FORM OF TRANSFER RESTRICTION LEGEND
EXHIBIT D FORM OF ACCREDITED INVESTOR CERTIFICATE TRANSFEREE
LETTER OF REPRESENTATION
iii
WARRANT AGREEMENT (this "Agreement") dated as of June 1, 2000,
between SIRIUS SATELLITE RADIO INC. (the "Company"), a Delaware corporation, and
UNITED STATES TRUST COMPANY OF NEW YORK, as Warrant Agent and Escrow Agent (the
"Warrant Agent").
Pursuant to the terms of a Senior Secured Credit Facility Fee
Letter, dated May 4, 2000 (the "Letter Agreement"), among the Company and Lehman
Brothers Inc. ("LBI") and Lehman Commercial Paper Inc. ("LCPI") (together with
LBI, "Lehman Brothers"), the Company has agreed to issue and deposit into escrow
warrants (each, a "Warrant," which term shall include warrants issued upon
transfer, division or combination of, or in substitution for, any Warrant),
entitling the holders thereof to purchase shares of Common Stock, par value
$.001 per share, of the Company ("Common Stock"). One half of the Warrants shall
be designated First Tranche Warrants (as defined herein) and one half shall be
designated Second Tranche Warrants (as defined herein). First Tranche Warrants
and Second Tranche Warrants shall be identical in all respects other than
exercise price and vesting dates.
The Company desires to establish an escrow account with the
Warrant Agent into which the Company shall deposit the Warrants and the Warrant
Agent is willing to accept the Warrants in accordance with the terms of this
Agreement and to hold them in escrow until such time as the Warrants are
released in accordance with Sections 3.07 and 3.08 hereof.
In consideration of the foregoing 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 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, 25% 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
1
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 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.
"Commitment" has the meaning ascribed to such term in the Term
Loan Agreement.
"Commitment Period" has the meaning ascribed to such term in
the Term Loan Agreement.
"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
2
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 the 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 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.
3
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended.
"Exercisability Date" of any Warrant means the date which is
the applicable Vesting Date.
"Exercise Price" means the First Tranche Exercise Price in the
case of the First Tranche Warrants and the Second Tranche Exercise Price in the
case of the Second Tranche Warrants, in each case subject to adjustment pursuant
to the terms of this Agreement.
"Expiration Date" of any Warrant means the tenth anniversary
of the Vesting Date for such Warrant.
"Extended Commitment Termination Date" has the meaning
ascribed to such term in the Term Loan Agreement.
"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.
"First Tranche Warrants" means the five hundred and twenty
five thousand (525,000) Warrants which have an exercise price equal to the First
Tranche Exercise Price (as defined herein).
"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; provided,
however, that the Company may effect any of such transactions with a
wholly-owned subsidiary where after such transaction the Company or, in the
event the Company is not the surviving entity, the surviving entity has a
consolidated net worth which is no less than the consolidated net worth of the
Company prior to such transaction.
"Initial Commitment Termination Date" has the meaning ascribed
to such term in the Term Loan Agreement.
"Issue Date" means the date on which the Warrants are
originally issued.
"Loans" has the meaning ascribed to such term in the Term Loan
Agreement.
4
"Optional Term Loan Commitment" has the meaning ascribed to
such term in the Term Loan Agreement.
"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.
"Registration Statements" means the collective reference to
the Warrant Shelf Registration Statement, the Warrant Share Shelf Registration
Statement and the Resale Shelf Registration Statement and any amendments or
supplements thereto.
"Rule 144A" means Rule 144A under the Securities Act.
"Second Tranche Warrants" means the five hundred and twenty
five thousand (525,000) Warrants which have an exercise price equal to the
Second Tranche Exercise Price (as defined herein).
"Securities" means the Warrants and the Warrant Shares.
"Securities Act" means the United States Securities Act of
1933.
"Term Loan Agreement" means the Term Loan Agreement, dated as
of the date of this Agreement, among the Company, as borrower, the several
lenders from time to time parties thereto, LBI, as arranger, and LCPI, as
syndication agent and administrative agent, as amended, supplemented or
otherwise modified from time to time.
"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
5
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 classes shall have, or might
have, voting power by reason of the happening of any contingency).
"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:
Term Section
- ---- --------
Agent Members 5.03(a)
Agreement Preamble
Cashless Exercise 3.03
Certificated Warrants 2.03
Common Stock Recitals
Company Preamble
Escrow Account 3.07
First Tranche Exercise Price 3.01
Global Warrant 2.03
Holders Recitals
Indemnified Parties 6.07(a)
LBI Recitals
LCPI Recitals
Letter Agreement Recitals
Lehman Brothers Recitals
Managing Underwriter 6.02(a)
Portal 2.05
Registration Default 6.03
Requesting Holders 6.02(a)
Resale Shelf Registration Statement 6.01
Second Tranche Exercise Price 3.01
Stock Transfer Agent 3.04
Successor Company 4.04(a)
6
Supplemental Warrant Agreement 4.04(a)
Vesting Date 3.08
Warrant Recitals
Warrant Agent Preamble
Warrant Certificates 2.01
Warrant Register 5.01
Warrant Share Shelf Registration Statement 6.01
Warrant Shelf Registration Statement 6.01
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.
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.
7
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) 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 shall bear the restricted securities
legend set forth in Exhibit C on the face thereof.
(c) 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 C and
rescind any restriction on the transfer of such Transfer Restricted Security.
(d) 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 C 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 one million
and fifty thousand (1,050,000) shares of Common Stock shall be executed, on the
Issue Date, by the Company and delivered to the Warrant Agent for
countersignature, and the Warrant Agent shall thereupon countersign such Warrant
Certificates and deposit such Warrant Certificates in the Escrow Account in
accordance with Section 3.07 of this Agreement. 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 of this Agreement.
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
8
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.
To the extent provided in Section 5.03(a), each tranche of
Warrants shall be issued 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 (each a "Global Warrant"), deposited with the Warrant Agent
(subject to the provisions of Section 5.02 herein), which shall act 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
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; Portal. 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,
9
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. In addition, the Company shall arrange for the
Warrants to be designated Private Offerings, Resales and Trading through
Automatic Linkages ("Portal") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers Inc.
relating to trading in the Portal Market and for the Warrants to be eligible for
clearance and settlement through DTC.
SECTION 2.06. Certificated Warrants. If DTC is at any time
unwilling or unable to continue as a depository for a Global Warrant and a
successor depository is not appointed by the Company within 90 days or if so
requested by any Holder of at least 10,000 Warrants, the Company will issue
Certificated Warrants in exchange for such Global Warrant (to the extent so
requested in the case of a request by such a Holder). 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. (a) On or after the Vesting Date
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 one (1) share of Common Stock,
subject to adjustment pursuant to the terms of this Agreement.
(b) The exercise price (the "First Tranche Exercise Price") of
each of the First Tranche Warrants is $44.46 per share of Common Stock, subject
to adjustments pursuant to the terms of this Agreement.
(c) The exercise price (the "Second Tranche Exercise Price")
of each of the Second Tranche Warrants shall be determined on and as of the
earliest to occur of:
10
(i) the date that is 20 trading days after
the date on which the Company takes title to a second satellite
pursuant to the Company's agreement with Space Systems/Loral, Inc.
regarding delivery of satellites, in which event the exercise price of
such Second Tranche Warrants shall be equal to 110% of the Current
Market Value at such date;
(ii) the satisfaction of, or the waiver by
LCPI of, the conditions precedent to the borrowing by the Company under
the Term Loan Agreement and the making available by LCPI to the Company
of the amount to be borrowed under the Term Loan Agreement, whether or
not the Company actually borrows under the Term Loan Agreement, in
which event the exercise price of such Second Tranche Warrants shall be
equal to 110% of the Current Market Value at the date of such
satisfaction or waiver, as applicable, provided, however, that in the
event that LCPI desires to waive any such conditions precedent to
borrowing, LCPI will give the Company 20 days' prior written notice
before making such waiver and in no event will LCPI give such notice
prior to September 30, 2000; and
(iii) the termination by the Company of the
commitment of LCPI under the Term Loan Agreement on or prior to the
Initial Commitment Termination Date or Extended Commitment Termination
Date, as the case may be, in which event the exercise price of such
Second Tranche Warrants shall be equal to 110% of the Current Market
Value at the date of such termination;
provided, however, that if such exercise price, as determined in accordance with
clause (i), (ii), or (iii) (the "Formula Price"), is less than 110% of the
closing sales price of the Common Stock of the Company on the date hereof (the
"144A Price"), then Lehman shall be able to select at its option the Second
Tranche Exercise Price to be either the Formula Price or the 144A Price. In the
event that Lehman selects the Formula Price and it is less than the 144A Price,
then the Second Tranche Warrants will be evidenced only by Certificated
Warrants. The Second Tranche Exercise Price will be subject to adjustment
pursuant to the terms of this Agreement.
(d) Within ten Business Days of the date on which the Second
Tranche Exercise Price becomes determinable, 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 calculation of the Second Tranche
Exercise Price (including a description of the basis on which the Current Market
11
Value of the Common Stock was determined, if such determination was required).
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 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. Without
limiting the foregoing, the Warrant Agent shall not at any time be under any
duty or responsibility to any Holder to review such certificate, determine
whether such certificate complies with this Section 3.01, determine whether the
Second Tranche Exercise Price can be determined or determine such price.
SECTION 3.02. Exercise; Restrictions on Exercise. Subject to
the terms and conditions set forth herein, including without limitation Section
3.09, the Warrants shall be exercisable on any Business Day on or after the
Exercisability Date. Any Warrants not exercised by 5:00 p.m., New York City
time, on the relevant Expiration Date shall expire and all rights of the Holders
of such Warrants shall terminate.
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) to the extent the
Company would be permitted to repurchase the requisite number of its Warrant
Shares at such time under applicable law, 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 clause (ii) of 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
12
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 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 (but only to the extent permitted by applicable law and the
instruments and agreements governing the indebtedness of the Company and its
subsidiaries at such time and if the payment of cash is not so permitted, the
Company shall issue Warrant Shares in an amount equal to the next highest whole
number). 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.
13
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 immediately
preceding the date the Warrant is presented for exercise, multiplied by such
fraction, computed to the nearest whole cent (but only to the extent permitted
by applicable law and the instruments and agreements governing the indebtedness
of the Company and its subsidiaries at such time and if the payment of cash is
not so permitted, the Company shall issue Warrant Shares in an amount equal to
the next highest whole number).
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. Escrow of Warrants. (a) The Company shall
promptly deliver to the Warrant Agent for deposit into an escrow account, which
the Warrant Agent shall establish specifically for the purpose of complying with
14
this Agreement (the "Escrow Account"), the First Tranche Warrants and the Second
Tranche Warrants.
(b) The Warrant Agent shall release Warrants from the Escrow
Account only on or after the Vesting Date for such Warrants as provided in
Section 3.08 of this Agreement. Warrants so released from the Escrow Account
shall be delivered by the Warrant Agent in accordance with a written direction
from LBI to the Warrant Agent. For purposes of determining the Vesting Dates of
the Warrants, the Warrant Agent may rely on certificates signed by an officer of
LBI, who is a managing director or officer senior thereto, and by an officer of
the Company eligible to sign a Company Request.
SECTION 3.08. Vesting of Warrants. (a) The Warrants shall be
released from escrow and absolute ownership thereof shall be vested in LCPI as
follows (the date on which any Warrants are released is referred to as the
"Vesting Date" for such Warrants):
(i) 100% of the Warrants held in escrow
(other than the First Tranche Warrants if previously released pursuant
to clause (ii) below) shall be so released and shall vest on the
earliest to occur of (A) the satisfaction of, or the waiver by LCPI of,
the conditions precedent to the borrowing by the Company under the Term
Loan Agreement and the making available by LCPI of the Loans, whether
or not the Company actually borrows under the Term Loan Agreement,
provided, however, that in the event that LCPI desires to waive any
such conditions precedent to borrowing, LCPI shall give the Company 20
days' prior written notice before making such waiver and in no event
shall LCPI give such notice prior to September 30, 2000, and (B) if the
Company elects to extend the Commitment in accordance with the terms of
the Term Loan Agreement, the termination by the Company of the
Commitment under the Term Loan Agreement on or prior to the Extended
Commitment Termination Date;
(ii) if the Company elects to extend the end
of the Commitment Period to the Extended Commitment Termination Date in
accordance with the terms of the Term Loan Agreement, the First Tranche
Warrants shall be so released and shall vest on the date of the
Company's election to so extend the Commitment; and
(iii) if the Company terminates the
Commitment on or prior to the Initial Commitment Termination Date, all
of the First Tranche Warrants and 33-1/3% of the Second Tranche
Warrants shall be so released and shall vest on the date of such
termination and the remaining 66-2/3% of the Second Tranche Warrants
which do not vest pursuant to this clause (iii) shall be promptly
released to the Company for cancellation.
15
SECTION 3.09. Compliance with Law. (a) Notwithstanding
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 upon
exercise is then effective or (ii) (A) the Company has received the opinion of
counsel to the Holder (in form and substance satisfactory to the Company)
addressed to the Company and the Warrant Agent to the effect that the issuance
of the shares of Common Stock upon the exercise of such Warrants is exempt from
the registration requirements of the Securities Act and (B) there is sufficient
information for the Company to conclude that such securities are qualified for
sale or exempt from qualification under the applicable securities laws of the
states or other jurisdictions in which such Holder resides. The Company shall
use commercially reasonable efforts to cause the Warrant Shares issued upon
exercise to be qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
Holder resides; 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 3.09 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.
(b) If any shares of Common Stock required to be reserved for
purposes of the exercise of Warrants require, 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 or quotation system 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 or quotation system, 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
16
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), and the Exercise
Price shall be adjusted to the price (calculated to the nearest 100th of one
cent) determined by multiplying the Exercise Price immediately prior to such
event by a fraction, the numerator of which shall be the number of Warrant
Shares purchasable with one Warrant immediately prior to such event and the
denominator of which shall be the number of Warrant Shares purchasable with one
Warrant after the adjustment referred to above. 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
subdivision, combination or reclassification.
SECTION 4.02. Cash Dividends and Other Distributions. 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 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
17
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, other than in a bona fide underwritten public
offering by or through a syndicate managed by an investment bank of national or
regional standing, for a consideration per share (which, in the case of
convertible, exchangeable or exercisable securities shall be the amount received
by the Company in consideration for the sale and issuance of such convertible,
exchangeable or exercisable securities plus the minimum aggregate amount of
additional consideration payable to the Company upon conversion, exchange or
exercise thereof (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), provided, however,
that the value attributable to such convertible, exchangeable or exercisable
securities when issued as part of a unit with debt or other obligations of the
Company shall be excluded to the extent it is a result of calculating the
discount applicable to such debt or other obligations of the Company under
generally accepted accounting principles) that is less than the lesser of (a)
the Current Market Value per share of Common Stock as of the date the Company
agrees in writing to issue such shares and (b) the closing price per share of
Common Stock as of the date the Company agrees in writing to issue such shares,
or entitling the holders of rights, options, warrants or securities not
originally issued in connection with an underwritten public offering to
subscribe for or purchase shares of Common Stock at a price that is equal to the
lesser of (a) the Current Market Value per share of Common Stock as of the date
the Company agrees in writing to issue such rights, options, warrants or
securities and (b) the closing price per share of Common Stock as of the date
the Company agrees in writing to issue such shares, the number of shares of
Common Stock issuable upon the exercise of each Warrant immediately after such
date shall be determined by multiplying the number of shares of Common Stock
issuable upon exercise of each Warrant immediately prior to such date by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately preceding the date
18
the Company agrees in writing to issue 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 the Company agrees in writing to issue 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
purchase at the lesser of (a) the Current Market Value per share of Common Stock
as of the date the Company agrees in writing to issue such shares or rights,
options, warrants or securities and (b) the closing price per share of Common
Stock as of the date the Company agrees in writing to issue such shares, 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 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 vesting or 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) or (iv) the
issuance, exercise, conversion or exchange of options to acquire 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 (iv) shall not
exceed 4% of the number of shares of Common Stock outstanding on a fully diluted
basis on the Issue Date. Any adjustment required by this Section 4.03 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
19
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 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
20
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 this
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 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 adjustments 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
adjustment 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% 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.
21
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 an agreed upon procedures letter 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
then fair value of any evidences of indebtedness, other securities or property
or warrants, options or other subscription or purchase rights was determined 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 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 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. Without limiting the foregoing, 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 Warrants, 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 distribu tion 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 event 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
22
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 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.
23
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 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.
24
SECTION 5.02. Registration; Registration of Transfer and
Exchange. 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 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 under the Securities Act, if
available; or (x) pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act; or (y)
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 (with customary assumptions and
exceptions) or other evidence reasonably satisfactory to them
as to the compliance with the restrictions set forth in the
legend set forth in Exhibit C, including without limitation in
the case of a transfer pursuant to clause (y) in the case of a
Transfer Restricted Security, a representation letter from the
transferee in the form of Exhibit D hereto.
To permit registrations of transfers and exchanges, the
Company shall make available to the Warrant 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
25
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. Initial Certificated Warrants; Book-Entry
Provisions for the Global Warrants. (a) Initially the Warrants shall be in the
form of Certificated Warrants registered in the name of Lehman Brothers or an
affiliate thereof and the Company shall deliver such Certificated Warrants to
the Warrant Agent and direct the Warrant Agent to deposit them into the Escrow
Account and to hold them in accordance with Section 3.07. To the extent the
First Tranche Warrants are eligible for resale under Rule 144A, within ten
Business Days after the date hereof, the Company will exchange such Certificated
Warrants evidencing the First Tranche Warrants for the Global Warrants
evidencing the First Tranche Warrants which initially shall (i) be registered in
the name of DTC or the nominee of DTC, (ii) be delivered to the Warrant Agent,
as custodian for DTC, for deposit into the Escrow Account, and (iii) bear
legends as set forth in Section 2.02 hereof; provided, however, that prior to
the time of such exchange any transfers of interests in such Certificated
Warrants shall be made in accordance with Section 5.02. 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. Within ten Business Days after
the date on which the Second Tranche Exercise Price is determined, to the extent
the Second Tranche Warrants are then eligible for resale under Rule 144A, the
Company will exchange the Certificated Warrants evidencing the Second Tranche
Warrants for Global Warrants evidencing the Second Tranche Warrants which
initially shall (i) be registered in the name of DTC or the nominee of DTC, (ii)
be delivered to the Warrant Agent, as custodian for DTC, for deposit into the
Escrow Account, and (iii) bear legends as set forth in Section 2.02 hereof;
provided, however, that prior to the time of such exchange any transfers of
interests in such Certificated Warrants shall be made in accordance with Section
5.02.
26
(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.
(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
cancellation, 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 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
27
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
such canceled Warrant Certificates as the Company may direct in writing.
ARTICLE VI
Registration Rights; Indemnification
SECTION 6.01. Effectiveness of Registration Statements. (a)
Subject to Section 6.02, the Company shall cause to be filed pursuant to Rule
415 (or any successor provision) of the Securities Act (1) 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 June 1, 2001, (2) to the extent available under then
existing rules, regulations and interpretations of the Commission, a shelf
registration statement covering the issuance of Warrant Shares upon the exercise
of the Warrants that are not at such time Transfer Restricted Securities, (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 June 1, 2001 and (3) a shelf registration statement
covering the resale of Warrant Shares acquired upon exercise of a Warrant that
is at the time of exercise a Transfer Restricted Security, or if the Warrant
Share Shelf Registration Statement is not available under then existing rules,
regulations and interpretations of the Commission, covering the resale of
Warrant Shares acquired upon exercise of any Warrant by the Holder thereof (the
"Resale Shelf Registration Statement"), and shall use its reasonable best
efforts to cause the Resale Shelf Registration Statement to be effective on or
before June 1, 2001. The Registration Statements may be filed with the
Commission on a single registration statement, subject to the rules, regulations
and interpretations of the Commission.
(b) Subject to Section 6.02, 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 and (ii) until all Warrants can be sold without restriction
under the Securities Act, (y) the Warrant Share Shelf Registration Statement to
remain effective until the earliest of (i) such time as all Warrants have been
exercised and
28
(ii) the Expiration Date of the Second Tranche Warrants and (z) the Resale Shelf
Registration Statement to remain effective until the earliest of (i) such time
as all Warrant Shares covered thereby have been sold thereunder and (ii) until
all Warrant Shares covered thereby can be sold without restriction under the
Securities Act.
(c) In connection with either the Warrant Shelf Registration
Statement, the Warrant Share Shelf Registration Statement and the Resale 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 and holders of
Warrant Shares whose securities are covered by such registration
statement, without charge, at least one copy of any registration
statement and any post- effective amendment thereto, including
financial statements and schedules, and, if 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 and holders of Warrant
Shares whose securities are covered by such registration statement,
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 and holders of Warrant
Shares whose securities are covered by such registration statement 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 shall use its commercially reasonable best
efforts to avoid the issuance of or, if issued, obtain the withdrawal
of any order enjoining or suspending the effectiveness of any
registration statement or prospectus or the lifting of any suspension
or qualification (or exemption from qualification) of any securities
covered thereby,
29
(v) the Company may require each Holder of Warrants to be sold
pursuant to the Warrant Shelf Registration Statement or Holder of
Warrant Shares to be sold pursuant to the Resale 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,
(vi) subject to Section 6.02, use its reasonable best efforts
to keep such Registration Statements continuously effective for the
periods specified in Section 6.01 and if reasonably requested by any
selling holders of Warrants or Warrant Shares, promptly include in any
Registration Statement or prospectus pursuant to a supplement or
post-effective amendment, if necessary, such information concerning the
selling holders as they may reasonably request, including, without
limitation, information with respect to the plan of distribution,
(vii) 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
provide a CUSIP number for such securities and
(viii) 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, the holders of Warrant Shares 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 and the holders
of Warrant Shares as are customary and reasonable in connection 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 and the holders of Warrant Shares
as are customary and reasonable in connection with such registration
statements. The Company will furnish the Warrant Agent and the holders
of the Warrant Shares 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 and to the holders
of Warrant Shares for their resale needs. The Company shall promptly
inform the Warrant Agent of any change in the status of the
effectiveness or availability of any registration statement.
30
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 of the First
Tranche Warrants or the Second Tranche Warrants) 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 (i) the Warrant Shelf
Registration Statement has not been declared effective, (ii) the Warrant Share
Shelf Registration Statement, if available under applicable rules, regulations
and interpretations of the Commission, has not been declared effective or (iii)
the Resale Shelf Registration Statement, if required, has not been declared
effective, in each case before June 1, 2001 (each a "Registration Default"),
then the Company will pay liquidated damages in cash to each Holder of Warrants
in an amount equal to $0.0082 per week per Warrant (or Warrant Share, as the
case may be) while such Registration Default continues for the first 90-day
period immediately following such Registration Default; provided, however, that
no Holder shall be entitled to liquidated damages in respect of any Warrant or
Warrant Share that is not at such time a Transfer Restricted Security. The
amount of liquidated damages payable in cash by the Company to each Holder of
Warrants will increase by an amount equal to $0.0055 per week per Warrant (or
Warrant Share, as the case may be) 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 $0.0192 per week per Warrant (or Warrant
Share, as the case may be). All liquidated damages accrued, but not paid, on or
prior to any June 1 or December 1, will be paid to Holders of Warrants (or
Warrant Share, as the case may be) on such date at their registered addresses.
SECTION 6.04. Piggy-Back Registration Rights. (a) If after the
first anniversary of the date hereof 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, a registration statement filed
in connection with an offer of securities solely to existing security holders or
a universal shelf registration statement on Form S-3) or the Company files a
registration statement to cover the sale of Common Stock for the account of any
of its security holders (other than Prime 66 Partners, L.P., Apollo Management,
L.P., The Blackstone Group, L.P., or any successors thereto as holders of the
31
Company's securities) 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, together with any other shares of stock to be included
in such registration statement, 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 not to sell or
otherwise dispose of (except to the extent so included in the offering referred
to in Section 6.04(a)) 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.
(c) The provisions of Sections 6.01(b), 6.01(c) and 6.02 shall
apply to any registration statement governed by Section 6.04(a).
SECTION 6.05. Blue Sky. The Company shall use its reasonable
best efforts to register or qualify the Warrants and the Warrant Shares for
issuance (if available under applicable interpretations of the Commission) and
resale 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
32
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 and the
Resale 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 Registration Statements 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 or for the resale of the Warrants and the Warrant Shares
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 and holders
of Warrant Shares specifically for inclusion therein.
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
33
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 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 in
a timely manner; 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
34
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 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 counsel to the
indemnified 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
35
liable to such indemnified party under this Section 6.07 for any legal or other
expenses (other than in the event the indemnified party retains its own counsel
pursuant to the preceding parenthetical, in which case the indemnifying party
shall be liable for the reasonable fees and expenses of one counsel), other than
reasonable costs of investiga tion, 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, (which shall not 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
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 and the original financing relating thereto, 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). Notwithstanding 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
36
Warrant Shares pursuant to the Warrant Share Shelf Registration Statement or
Resale 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
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 obligations 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 Registration Statements 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 and
disbursements of
37
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 and Escrow 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
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
38
faith in accordance with the instructions of any such officer; however, in its
sole 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.
In the event of any disagreement resulting in adverse claims
or demands being made in connection with the matters covered by this Agreement,
or in the event that the Warrant Agent, in good faith, shall be in doubt as to
what action it should take hereunder, the Warrant Agent may at its option,
refuse to comply with any claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists,
and in any such event, the Warrant Agent shall not be or become liable in any
way or to any person for its failure or refusal to act, and the Warrant Agent
shall be entitled to continue so to refrain from action until (i) the rights of
all interested parties shall have been fully and finally adjudicated by a court
of competent jurisdiction or (ii) all differences shall have been
adjudged and all doubt resolved by agreement among all of the interested
persons, and in each of the cases in clauses (i) and (ii) the Warrant Agent
shall have been notified thereof in a writing signed by all such persons.
Notwithstanding the preceding, the Warrant Agent may in its discretion obey the
order, judgment, decree or levy of any court, whether with or without
jurisdiction, or of any agency of the United States or any political subdivision
thereof, or of any agency of the State of New York or of any political
subdivision thereof, and the Warrant Agent is hereby authorized in its sole
discretion, to comply with and obey (and shall have no liability to any person
for so doing) any such orders, judgments, decrees or levies which the Warrant
Agent is advised by legal counsel of its own choosing is binding upon it. The
rights of the Warrant Agent under this paragraph are in addition to all other
rights which it may have by law or otherwise.
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
39
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 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 rely conclusively 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
40
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 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
41
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 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
42
SECTION 8.01. Warrant Holder Not Deemed a Holder of Common Stock. Prior
to the exercise of the Warrants, no 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.
43
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, 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
144 or 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 Sirius Satellite 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
44
the Warrants (as well as the persons entitled to the benefits of indemnification
under Section 6.07), any right, remedy or claim under or by reason of this
Agreement or any part hereof.
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 (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.
45
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.
[Signature page follows.]
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SIRIUS SATELLITE RADIO INC.
By: /s/ Patrick L. Donnelly
------------------------------------
Name: Patrick L. Donnelly
Title: Senior Vice President
UNITED STATES TRUST COMPANY OF
NEW YORK, Warrant Agent and Escrow Agent
By: /s/ Patricia Gallagher
-------------------------------------
Name: Patricia Gallagher
Title: Assistant Vice President
47
EXHIBIT A TO
WARRANT AGREEMENT
CUSIP No. [ ](1)
No. [ ] Certificate for [ ] [First/Second](1) Tranche Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
SIRIUS SATELLITE 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 SIRIUS SATELLITE RADIO INC., a Delaware corporation
(the "Company"), one (1) share of Common Stock, par value of $0.001 per share,
of the Company (the "Common Stock") at the per share exercise price of
[$44.46/the Second Tranche Exercise Price (as defined in the Warrant
Agreement)]1/ (the "Exercise Price"), or by Cashless Exercise referred to below.
Each Warrant shall terminate and become void as of 5:00 p.m., New York City
time, on the tenth anniversary of the Vesting Date of the Warrant (as defined in
the Warrant Agreement) (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 June 1, 2000 (the "Warrant Agreement"), between
the Company and United States Trust Company of New York, as Warrant Agent and
Escrow Agent (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
- -------------------
(1) To be filled in as applicable to First Tranche Warrants and Second Tranche
Warrants.
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.
The Warrants will initially be delivered by the Company to the Warrant
Agent which will hold the Warrants in escrow pursuant to the Warrant Agreement.
The Warrants may be released from such escrow on or after their Vesting Dates.
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, including the provisions regarding Vesting Dates,
the Warrants shall be exercisable at any 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
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 the tenth anniversary of its
Vesting Date.
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 wholly-owned
subsidiary of the Company that does not result in a reduction in consolidated
net worth), 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
Agree ment, 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.
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.
SIRIUS SATELLITE RADIO INC.
By:
-------------------------------------
Name:
Title:
Countersigned:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Warrant Agent and Escrow Agent,
By:
-----------------------------------
Authorized Signatory
FORM OF ELECTION TO PURCHASE WARRANT SHARES (to
be executed only upon exercise of Warrants)
SIRIUS SATELLITE RADIO INC.
The undersigned hereby irrevocably elects to exercise
______________ [First/Second] Tranche Warrants to acquire shares of Common
Stock, par value $.001 per share, of Sirius Satellite Radio Inc., at an exercise
price per share of Common Stock of [$44.46/the Second Tranche Exercise Price]
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 Sirius
Satellite 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:
---------------------------------------------------
Securities and/or check to be issued to:
Please insert social security or identifying number:
- ----------------
(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.
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:
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
Vesting Date 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) [ ] outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act of 1933; or
(5) [ ] pursuant to another available exemption from registration
provided 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(1)
The following exchanges of a part of this Global Warrant Certificate for
definitive Warrants have been made:
Number of
Warrants in this
Amount of change in Global Warrant
Number of Warrants Certificate Signature of
Date of in this Global following authorized officer
Exchange Warrant Certificate such change of Warrant Agent
- -------- --------------------- ----------- ----------------
- ----------------
(3) 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 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), AN INSTITUTIONAL
"ACCREDITED INVESTOR" OR NOT A "U.S. PERSON" (AS DEFINED IN RULE 902 OF THE
SECURITIES ACT) 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, (D) OUTSIDE
THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
EXHIBIT D TO
WARRANT AGREEMENT
FORM OF ACCREDITED INVESTOR CERTIFICATE
TRANSFEREE LETTER OF REPRESENTATION
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of [ ] Warrants (the
"Warrants") entitling the holders thereof to purchase shares of common stock,
par value $.001 per share, of Sirius Satellite Radio Inc. (the "Issuer"), we
confirm that:
1. We are (a) an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act")), purchasing for our own account
or for the account of such an institutional "accredited investor" as to which we
exercise sole investment discretion, and we have such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of our investment in the Warrants, and we and any account for which we are
acting are each able to bear the economic risk of our or its investment, (b)
a"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) or (c) a non "U.S. person" (as defined in Rule 902 of the Securities Act).
2. We understand and acknowledge that the Warrants have not
been registered under the Securities Act or any other applicable securities law,
and that the Warrants may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any account for
which we are acting, that if we should sell any Warrants within the time period
referred to in Rule 144(k) of the Securities Act, we will do so only (A) to the
Issuer or any subsidiary thereof, (B) to a "qualified institutional buyer" (as
defined in Rule 144A of the Securities Act), or to an institutional "accredited
investor" (as defined above) in either case that, prior to such transfer,
furnishes to the Warrant Agent under the Warrant Agreement, dated as of June 1,
2000, governing the Warrants a signed letter containing certain representations
and agreements relating to the restrictions on transfer of the Warrants (the
form of which letter can be obtained from the Warrant Agent) and an opinion of
counsel acceptable to the Issuer that such transfer is in compliance with
the Securities Act, (C) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (D) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available) or (E)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing any of the Warrants from us a
notice advising such purchaser that resales of the Warrants are restricted as
stated herein.
3. We understand that, on any proposed resale of any Warrants,
we will be required to furnish to the Issuer and the Warrant Agent such
certifications, legal opinions and other information as the Issuers and the
Warrant Agent may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Warrants
purchased by us will bear a legend to the foregoing effect.
4. We are acquiring the Warrants for investment purposes and
not with a view to distribution thereof or with any present intention of
offering or selling any Warrants, except as permitted above; provided that the
disposition of our property and property of any accounts for which we are acting
as fiduciary will remain at all times within our control.
You and the Issuer are entitled to rely upon this letter and
you are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF, OTHER THAN ANY MANDATING THE APPLICATION OF SUCH LAWS).
Very truly yours,
(Name of Purchaser)
By: ____________________________
Name:
Title:
Date: ___________________________
Upon transfer, the Warrants would be registered in the name of
the new beneficial owner as follows:
By: _______________________________
Date: _____________________________
Taxpayer ID number: _______________