EXHIBIT 4.1
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AIRTRAN HOLDINGS, INC.,
as ISSUER
and
WILMINGTON TRUST COMPANY,
as WARRANT AGENT
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WARRANT AGREEMENT
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Dated as of April 12, 2001
Warrants to Purchase
Shares of Common Stock
Par Value $.001 Per Share
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TABLE OF CONTENTS
Page
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WARRANT AGREEMENT.................................................................................................. i
ARTICLE I ISSUANCE, FORM, EXECUTION, DELIVERY AND REGISTRATION OF WARRANT CERTIFICATES................ 1
SECTION 1.1. Issuance of Warrants................................................................ 1
SECTION 1.2. Form of Warrant Certificates........................................................ 2
SECTION 1.3. Execution of Warrant Certificates................................................... 2
SECTION 1.4. Appointment of Warrant Agent........................................................ 2
SECTION 1.5. Authentications and Delivery........................................................ 2
SECTION 1.6. Separation of Warrants and Notes.................................................... 3
SECTION 1.7. Registrar and Warrant Register...................................................... 3
SECTION 1.8. Registration of Transfers and Exchanges............................................. 3
SECTION 1.9. Lost, Stolen, Destroyed, Defaced or Mutilated Warrant Certificates.................. 6
SECTION 1.10. Offices for Exercise, etc........................................................... 7
ARTICLE II DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE............................................ 7
SECTION 2.1. Duration of Warrants................................................................ 7
SECTION 2.2. Exercise, Exercise Price, Settlement and Delivery................................... 7
SECTION 2.3. Cancellation of Warrant Certificates................................................ 9
ARTICLE III OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS.................................. 10
SECTION 3.1. Enforcement of Rights............................................................... 10
ARTICLE IV CERTAIN COVENANTS OF THE COMPANY............................................................. 10
SECTION 4.1. Payment of Taxes.................................................................... 10
SECTION 4.2. Notice of Expiration Date........................................................... 11
SECTION 4.3. Reservation of Common Stock......................................................... 11
SECTION 4.4. Warrant Shares to be Duly Authorized and Issued, Fully Paid and Nonassessable....... 11
SECTION 4.5. Reports............................................................................. 11
SECTION 4.6. Private Placement Numbers........................................................... 12
SECTION 4.7. Right of Action..................................................................... 12
SECTION 4.8. Registration Rights................................................................. 12
SECTION 4.9. Listing/Inclusion for Quotation..................................................... 12
SECTION 4.10. Survival............................................................................ 12
ARTICLE V ADJUSTMENTS.................................................................................. 12
SECTION 5.1. Adjustment of Exercise Price and Number of Warrant Shares Issuable.................. 12
SECTION 5.2. Fractional Interest................................................................. 18
SECTION 5.3. When Adjustment Not Required........................................................ 19
SECTION 5.4. Treasury Stock...................................................................... 19
SECTION 5.5. Notices to Warrant Agent and Holders................................................ 19
ARTICLE VI CONCERNING THE WARRANT AGENT................................................................. 19
SECTION 6.1. Warrant Agent....................................................................... 19
SECTION 6.2. Conditions of Warrant Agent's Obligations........................................... 20
SECTION 6.3. Resignation and Appointment of Successor............................................ 23
ARTICLE VII MISCELLANEOUS................................................................................ 24
SECTION 7.1. Defined Terms....................................................................... 24
SECTION 7.2. Amendment........................................................................... 27
SECTION 7.3. Notices and Demands to the Company and Warrant Agent................................ 27
SECTION 7.4. Address for Notices to the Company and for Transmission of Documents................ 27
SECTION 7.5. Notices to Holders.................................................................. 28
SECTION 7.6. Applicable Law...................................................................... 28
SECTION 7.7. Obtaining of Governmental Approvals................................................. 28
SECTION 7.8. Persons Having Rights Under Agreement............................................... 29
SECTION 7.9. Headings............................................................................ 29
SECTION 7.10. Counterparts........................................................................ 29
SECTION 7.11. Inspection of Warrant Agreement..................................................... 29
SECTION 7.12. Successors.......................................................................... 29
TABLE OF CONTENTS.................................................................................................. i
EXHIBITS 1
EXHIBITS AND SCHEDULES
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EXHIBIT A-1 FORM OF WARRANT CERTIFICATE............................... ▇-▇
▇▇▇▇▇▇▇ ▇-▇ FORM OF WARRANT CERTIFICATE............................... A-12
EXHIBIT B CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS................... B-1
EXHIBIT C TRANSFEREE LETTER OF REPRESENTATION....................... C-1
SCHEDULE 4.3 CAPITALIZATION............................................ D-1
WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Warrant Agreement"), dated as of April 12,
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2001 is executed and delivered by AirTran Holdings, Inc., a Nevada corporation
(together with any successor thereto, the "Company") and Wilmington Trust
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Company, as warrant agent (together with any successor warrant agent, the
"Warrant Agent"), for the benefit of the holders (the "Holders") from time to
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time of the Warrant Certificates (as hereinafter defined).
WHEREAS, the Company and its wholly-owned subsidiary AirTran Airways,
Inc. ("Airways") have entered into a purchase agreement dated as of April 12,
2001 (the "Purchase Agreement") with Boeing Capital Loan Corporation (the
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"Initial Purchasers"), pursuant to which the Company and Airways have agreed,
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among other things, to sell to the Initial Purchasers 166,400 units (the
"Units"), each consisting of (i) $1,000 principal amount of 11.27% Senior
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Secured Notes of Airways due 2008 (each a "Note" and, collectively, the "Notes")
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to be issued under an indenture dated as of even date herewith (the
"Indenture"), between Airways and the Guarantors party thereto and Wilmington
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Trust Company, as trustee (the "Trustee"), (ii) one warrant (each a "Warrant"
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and, collectively, the "Warrants" and the certificates evidencing the Warrants
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being hereinafter referred to as the "Warrant Certificates") entitling the
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Holder thereof to initially purchase 18.02885 shares of the Company's common
stock, $.001 par value per share (the "Common Stock"), subject to adjustment in
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accordance with the terms hereof; and
WHEREAS, the Warrants shall be separately transferable from the Notes
on and after the Separation Date (as hereinafter defined).
NOW, THEREFORE, in consideration of the purchase of the Units by the
Initial Purchaser and for other good and valuable consideration, the adequacy
and receipt of which is hereby acknowledged, and for the purpose of defining the
respective rights and obligations of the Company, the Warrant Agent and the
Holders, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.1.Issuance of Warrants. Each Warrant Certificate shall, when
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countersigned by the Warrant Agent, evidence the number of Warrants specified
therein, and each Warrant evidenced thereby shall represent the right, subject
to the provisions contained herein and therein, to purchase from the Company
(and the Company shall issue and sell to such Holder) 18.02885 fully paid and
non-assessable shares of Common Stock (the shares of Common Stock purchasable
upon exercise of a Warrant being hereinafter referred to as the "Warrant Shares"
and, where appropriate, such term shall also mean the other securities or
property purchasable and deliverable upon exercise of a Warrant as provided in
Article V) at the price specified herein and therein, in each case subject to
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adjustment as provided herein and therein.
SECTION 1.2. Form of Warrant Certificates. The Warrants will be issued
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only in certificated form. The Warrant Certificates evidencing the Warrants to
be delivered pursuant to this Warrant Agreement shall be substantially in the
form set forth in Exhibit A attached hereto, dated the date on which
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countersigned.
SECTION 1.3. Execution of Warrant Certificates. The Warrant
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Certificates shall be executed on behalf of the Company by its President or any
Vice President and attested to by its Secretary or Assistant Secretary, under
its corporate seal. Such signatures may be the manual or facsimile signatures of
the present or any future such officers. The seal of the Company may be in the
form of a facsimile hereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates. Typographical and other minor errors or
defects in any such reproduction of the seal or any such signature shall not
affect the validity or enforceability of any Warrant Certificate that has been
duly countersigned and delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificate so signed shall be countersigned and delivered by the Warrant Agent
or disposed of by the Company, such Warrant Certificate nevertheless may be
countersigned and delivered or disposed of as though the person who signed such
Warrant Certificate had not ceased to be such officer of the Company; and any
Warrant Certificate may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Warrant Certificate, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Warrant Agreement any such person was not such an officer.
SECTION 1.4. Appointment of Warrant Agent. The Company hereby appoints
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the Warrant Agent to act as agent for the Company in accordance with the terms
and conditions set forth in this Agreement, and the Warrant Agent hereby accepts
such appointment.
SECTION 1.5. Authentications and Delivery. Subject to the immediately
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following paragraph of this Section 1.5, Warrant Certificates shall be
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authenticated by manual signature and dated the date of authentication by the
Warrant Agent and shall not be valid for any purpose unless so authenticated and
dated. The Warrant Certificates shall be numbered and shall be registered in the
Warrant Register (as defined in Section 1.7 hereof).
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Upon the receipt by the Warrant Agent of a written order of the
Company, which order shall be signed by its President or any Vice President and
attested to by its Secretary or Assistant Secretary and shall specify the amount
of Warrants to be authenticated, the date of such Warrants and such other
information as the Warrant Agent may reasonably request, without any further
action by the Company, the Warrant Agent is authorized, upon receipt from the
Company at any time and from time to time of the Warrant Certificates, duly
executed as provided in Section 1.3 hereof, to authenticate the Warrant
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Certificates and deliver them. Such authentication shall be by a duly authorized
signatory of the Warrant Agent (although it shall not be necessary for the same
signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such authorized
signatory before the Warrant Certificate shall be disposed of by the Company,
such Warrant Certificate nevertheless may be
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delivered or disposed of as though he person who authenticated such Warrant
Certificate had not ceased to be such authorized signatory of the Warrant Agent;
and any Warrant Certificate may be authenticated on behalf of the Warrant Agent
by such persons as, at the actual time of authentication of such Warrant
Certificates, shall be the duly authorized signatories of the Warrant Agent,
although at the time of the execution and delivery of this Warrant Agreement any
such person is not an authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall be
in substantially the form set forth in Exhibit A hereto.
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SECTION 1.6. Separation of Warrants and Notes. The Warrants will be
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separately transferable from the Notes immediately upon issuance of the Units
(the "Separation Date").
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SECTION 1.7. Registrar and Warrant Register. The Company will keep, at
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the office or agency maintained by the Company for such purpose, a register or
registers in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of, and registration of transfer
and exchange of, Warrants as provided in this Article. Each Person designated by
the Company from time to time as a Person authorized to register the transfer
and exchange of the Warrants is hereinafter called, individually and
collectively, the "Registrar". Initially, Wilmington Trust Company shall act as
Registrar. Upon written notice to the Warrant Agent and any acting Registrar,
the Company may appoint a successor Registrar for such purposes.
The Company will at all times designate one Person (who may be the
Company and who need not be a Registrar) to act as repository of a master list
of names and addresses of the Holders (the "Warrant Register"). The Company will
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act as such repository unless and until some other Person is, by written notice
from the Company to the Warrant Agent and the Registrar, designated by the
Company to act as such. The Company shall cause each Registrar to furnish to
such repository, on a current basis, such information as to all registrations of
transfer and exchanges effected by such Registrar, as may be necessary to enable
such repository to maintain the Warrant Register on as current a basis as is
practicable.
SECTION 1.8. Registration of Transfers and Exchanges.
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(a) Transfer and Exchange. When Warrants are presented to the Warrant
Agent with a request:
(i) to register the transfer of the Warrants; or
(ii) to exchange such Warrants for an equal number of
Warrants, the Warrant Agent shall register the transfer or make the
exchange as requested if the requirements under this Warrant Agreement
as set forth in this Section 1.8 for such transactions are met;
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provided, however, that the Warrants presented or surrendered for
registration of transfer or exchange:
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(x) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Company and the Warrant Agent, duly executed by the
Holder thereof or by its attorney, duly authorized
in writing and
(y) in the case of Warrants the offer and sale of which
has not been registered under the Securities Act,
and are presented for transfer or exchange prior to
(x) the date which is two years after the later of
the date of original issue (the "Issue Date") and
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the last date on which the Company or any affiliate
of the Company was the owner of such Warrant, or any
predecessor thereto and (y) such later date, if any,
as may be required by any subsequent change in
applicable law (the "Resale Restriction Termination
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Date"), such Warrants shall be accompanied, in the
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sole discretion of the Company, by the following
additional information and documents, as applicable:
(A) if such Warrant is being delivered to the
Warrant Agent by a Holder for registration in
the name of such Holder, without transfer, a
certification from such Holder to that effect
(in substantially the form of Exhibit B
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hereto); or
(B) if such Warrant is being transferred in
reliance on any exemption from the
registration requirements of the Securities
Act, a certification to that effect (in
substantially the form of Exhibit B hereto)
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and an opinion of counsel reasonably
acceptable to the Company to the effect that
such transfer is in compliance with the
Securities Act.
(b) Legends.
(i) Except to the extent permitted by paragraph (ii) of
this Section 1.8(b), each Warrant Certificate (and all Warrants issued
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in exchange therefor or substitution thereof) shall bear a legend
substantially to the following effect:
NEITHER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE SHARES OF
COMMON STOCK, PAR VALUE $.001 PER SHARE, OF AIRTRAN HOLDINGS, INC. FOR WHICH THE
WARRANT IS EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
WARRANT CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN NOR ANY SHARE OF
COMMON STOCK ACQUIRED UPON EXERCISE HEREOF MAY BE REOFFERED, SOLD, ASSIGNED,
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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.
THE HOLDER OF THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE OR ANY
SECURITIES OF THE COMPANY FOR WHICH THE WARRANT IS EXERCISABLE, BY ITS
ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THE WARRANTS
REPRESENTED BY THIS WARRANT CERTIFICATE ONLY (A) TO THE COMPANY, (B) PURSUANT TO
A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE ARE
ELIGIBLE FOR RESALE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE WARRANTS REPRESENTED BY THIS
WARRANT CERTIFICATE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE WARRANT AGENT'S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION REASONABLY
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, AN ASSIGNMENT
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS WARRANT CERTIFICATE IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE WARRANT AGENT. THIS LEGEND SHALL BE
REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
THIS SECURITY IS SUBJECT TO A REGISTRATION RIGHTS AGREEMENT DATED AS OF APRIL
12, 2001 BETWEEN THE COMPANY, BOEING CAPITAL LOAN CORPORATION (THE "INITIAL
PURCHASERS"), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(ii) Upon any sale or transfer of a Warrant pursuant to
Rule 144 under the Securities Act in accordance with this Section 1.8
or an effective registration statement under the Securities Act, the
Warrant Agent shall permit the
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Holder thereof to exchange such Warrant Certificate for a Warrant
Certificate that does not bear the first paragraph of the legend set
forth above and rescind any related restriction on the transfer of such
Warrant; and
(c) Obligations with Respect to Transfers and Exchanges.
(i) The Company shall execute and the Warrant Agent
shall, at the Company's request, authenticate Warrants to permit
registration of transfers and exchanges.
(ii) All Warrants issued upon any registration of
transfer or exchange thereof shall be the valid obligations of the
Company, entitled to the same benefits under this Warrant Agreement as
the Warrants surrendered upon the registration of transfer or exchange.
(iii) Prior to due presentment for registration of
transfer of any Warrant, the Warrant Agent and the Company may deem and
treat the Person in whose name any Warrant is registered as the
absolute owner of such Warrant, and neither the Warrant Agent nor the
Company shall be affected by notice to the contrary.
(d) Payment of Taxes. The Company or the Warrant Agent may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any exchange or transfer pursuant to this
Section 1.8.
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SECTION 1.9. Lost, Stolen, Destroyed, Defaced or Mutilated Warrant
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Certificates. Upon receipt by the Company and the Warrant Agent (or any agent of
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the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or mutilation
of any Warrant Certificate and of indemnity reasonably satisfactory to them and,
in the case of mutilation or defacement, upon surrender thereof to the Warrant
Agent for cancellation, then, in the absence of notice to the Company or the
Warrant Agent that such Warrant Certificate has been acquired by a bona fide
purchaser or holder in due course, the Company shall execute, and an authorized
signatory of the Warrant Agent shall manually authenticate and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced or mutilated
Warrant Certificate, a new Warrant Certificate representing a like number of
Warrants, bearing a number or other distinguishing symbol not contemporaneously
outstanding. Upon the issuance of any new Warrant Certificate under this Section
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1.9, the Company or the Warrant Agent may require the payment from the Holder of
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such Warrant Certificate of a sum sufficient to cover any tax, stamp tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Warrant Agent and the
Registrar) in connection therewith. Every substitute Warrant Certificate
executed and delivered pursuant to this Section 1.9 in lieu of any lost, stolen
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or destroyed Warrant Certificate shall constitute an additional contractual
obligation of the Company, whether or not the lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone, and shall be entitled to
the benefits of (but shall be subject to all the limitations of rights set forth
in) this Warrant Agreement equally and proportionately with any and all other
Warrant Certificates duly executed and delivered hereunder. The provisions of
this Section 1.9 are exclusive with respect to the replacement of lost, stolen,
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destroyed, defaced or mutilated Warrant Certificates and shall preclude (to the
extent lawful) any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates.
The Warrant Agent is hereby authorized to authenticate and deliver the
new Warrant Certificates required pursuant to the provisions of this Section
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1.9.
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SECTION 1.10. Offices for Exercise, etc. So long as any of the Warrants
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remain outstanding, the Company will designate and maintain in the continental
United States: (a) an office or agency where the Warrant Certificates may be
presented for exercise, (b) an office or agency where the Warrant Certificates
may be presented for registration of transfer and for exchange (including the
exchange of temporary Warrant Certificates for definitive Warrant Certificates
pursuant to Section 1.5 hereof), and (c) an office or agency where notices and
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demands to or upon the Company in respect of the Warrants or of this Warrant
Agreement may be served. The Company may from time to time change or rescind
such designation, as it may deem desirable or expedient. The Company will give
to the Warrant Agent written notice of the location of any such office or agency
and of any change of location thereof. The Company hereby designates the
corporate trust office of the Warrant Agent in Wilmington, Delaware (the
"Warrant Agent Office"), as the initial agency maintained for each such purpose.
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ARTICLE II
DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE
SECTION 2.1. Duration of Warrants. Subject to the terms and conditions
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established herein, the Warrants shall expire at 5:00 p.m., New York City time
on April 12, 2006 (the "Expiration Date"). Warrants may be exercised on any
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Business Day (as hereinafter defined) on or after the Exercisability Date (as
hereinafter defined) and on or prior to the Expiration Date.
Any Warrant not exercised before the close of business on the
Expiration Date relating to such Warrant shall become void, and all rights of
the Holder under the Warrant Certificate evidencing such Warrant and under this
Warrant Agreement shall cease.
SECTION 2.2. Exercise, Exercise Price, Settlement and Delivery.
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(a) Subject to the provisions of this Warrant Agreement, each Warrant
Holder shall have the right to purchase from the Company on or after the
Separation Date (the "Exercisability Date") and on or prior to the Expiration
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Date, up to 18.02885 fully paid and non-assessable Warrant Shares per each
Warrant such Holder owns, subject to adjustment in accordance with Article V
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hereof, at the initial purchase price of $4.51 for each Warrant Share purchased,
subject to adjustment in accordance with Article V hereof (the "Exercise
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Price").
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(b) Warrants may be exercised, in whole or in part, on or after the
Exercisability Date by (i) surrendering at any Warrant Agent office the Warrant
Certificate evidencing such Warrants with the form of election to purchase
Warrant Shares set forth on the reverse side of the
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Warrant Certificate (the "Election to Exercise") duly completed and signed by
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the registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney and (ii) paying in full
the Exercise Price for each such Warrant Share purchased and any other amounts
required to be paid pursuant to Section 4.1 hereof.
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(c) Simultaneously with the exercise of each Warrant, payment in full
of the Exercise Price shall be made (i) in cash or by certified or official bank
check payable to the order of the Company, delivered to the office or agency
where the Warrant Certificate is being surrendered or (ii) by delivery of
Warrant Certificates pursuant to Section 2.2(d). Subject to the provisions of
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this Warrant Agreement, the rights represented by the Warrants shall be
exercisable at the election of the Holders thereof either in full at any time or
from time to time in part.
(d) In the event that any Holder of Warrant Certificates delivers
such Warrant Certificates to the Company and indicates on the Election to
Exercise that such Holder intends to exercise all, or any portion of, the
Warrants represented by such Warrant Certificate to satisfy its obligation to
pay the Exercise Price in respect thereof by virtue of the provisions of this
Section 2.2(d), such Holder shall become entitled to receive, instead of the
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number of Warrant Shares such Holder would have received had the Exercise Price
been paid in cash pursuant to Section 2.2(c), a number of Warrant Shares in
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respect of the exercise of such Warrants equal to the product of:
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(A) the number of Warrant Shares issuable upon
such exercise of such Warrant Certificates
(or, if only a portion of such Warrant
Certificates are being exercised, issuable
upon the exercise of such portion) multiplied
by
(B) the quotient of:
(i) the difference of:
(X) the per share Fair Market Value of
the Common Stock at the time of
such exercise; minus
(Y) the Exercise Price at the time of
such exercise; divided by
(ii) the per share Fair Market Value of the
Common Stock at the time of such
exercise.
For purposes of Rule 144 under the Securities Act, the Company and the
Warrant Agent, on behalf of the Holders, hereby agree that the exercise of any
Warrants in accordance with this Section 2.2(d) shall be deemed to be a
conversion of such Warrants, pursuant to the terms of this Warrant Agreement and
the Warrants, into Warrant Shares.
(e) Upon such surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Agent Office, such Warrant
Certificate and payment shall be promptly delivered to the Warrant Agent but in
no event later than the third Business Day after
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surrender of such Warrant Certificate. The "Exercise Date" for a Warrant shall
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be the date when all of the items referred to in the first sentence of
paragraphs (b) and (c) of this Section 2.2 are received by the Warrant Agent at
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or prior to 2:00 p.m., New York City time, on a Business Day and the exercise of
the Warrants will be effective as of such Exercise Date. If any items referred
to in the first sentence of paragraphs (b) and (c) of this Section 2.2 are
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received after 2:00 p.m., New York City time, on a Business Day, the exercise of
the Warrants to which such item relates will be effective on the next succeeding
Business Day. Notwithstanding the foregoing, in the case of an exercise of
Warrants on the Expiration Date, if all of the items referred to in the first
sentence of paragraphs (b) and (c) of this Section 2.2 are received by the
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Warrant Agent at or prior to 5:00 p.m., New York City time, on such Expiration
Date, the exercise of the Warrants to which such items relate will be effective
on the Expiration Date.
(f) Upon the exercise of a Warrant in accordance with the terms
hereof, the receipt of a Warrant Certificate and payment of the Exercise Price,
the Warrant Agent shall: (i) cause an amount equal to the Exercise Price,
whether in cash or Warrant Certificates, to be delivered or paid to the Company
by crediting the same to the account designated by the Company in writing to the
Warrant Agent for that purpose; (ii) in the case of a payment of the Exercise
Price in cash, advise the Company immediately by telephone of the amount so
deposited to the Company's account and promptly confirm such telephonic advice
in writing; (iii) in the case of a payment of the Exercise Price in Warrant
Certificates, advise the Company immediately by telephone of the number of
Warrant Certificates surrendered and promptly confirm such telephonic advice in
writing; and (iv) as soon as practicable, advise the Company in writing of the
number of Warrants exercised in accordance with the terms and conditions of this
Warrant Agreement and the Warrant Certificates, the instructions of each
exercising Holder with respect to delivery of the Warrant Shares to which such
Holder is entitled upon such exercise, and such other information as the Company
shall reasonably request.
(g) Subject to Section 5.2 hereof, as soon as practicable after the
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exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
registered Holder evidencing such exercised Warrant or Warrants, a certificate
or certificates evidencing the Warrant Shares to which such Holder is entitled,
in fully registered form, registered in such name or names as may be directed by
such Holder pursuant to the Election to Exercise, as set forth on the reverse of
the Warrant Certificate. The Warrant Agent shall have no obligation to ascertain
the number of Warrant Shares to be issued with respect to the exercised Warrant
or Warrants. Such certificate or certificates evidencing the Warrant Shares
shall be deemed to have been issued and any Persons who are designated to be
named therein shall be deemed to have become the Holder of record of such
Warrant Shares as of the close of business on the Exercise Date. After such
exercise of any Warrant or Warrants, the Company shall also issue or cause to be
issued to or upon the written order of the registered Holder of such Warrant
Certificate, a new Warrant Certificate, countersigned by the Warrant Agent
pursuant to the Company's written instruction, evidencing the number of
Warrants, if any, remaining unexercised (unless such Warrants shall have
expired).
SECTION 2.3. Cancellation of Warrant Certificates. In the event the
------------------------------------
Company shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall be canceled by it and
9
retired. The Warrant Agent shall cancel all Warrant Certificates properly
surrendered for exchange, substitution, transfer or exercise. The Warrant Agent
shall destroy canceled Warrant Certificates held by it and deliver a certificate
of destruction to the Company. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the Company
all money received by the Warrant Agent for the purchase of Warrant Shares
through the exercise of such Warrants.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.1. Enforcement of Rights.
---------------------
(a) Notwithstanding any of the other provisions of this Warrant
Agreement, any Holder of Warrant Certificates or holder of Warrant Shares,
without the consent of the Warrant Agent, may, in and for its own behalf,
enforce, and may institute and maintain any suit, action or proceeding against
the Company suitable to enforce, its right to exercise the Warrant or Warrants
evidenced by its Warrant Certificate as provided in such Warrant Certificate and
in this Warrant Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall entitle
the Holders thereof to any of the rights of a holder of Common Stock, including,
without limitation, as applicable, the right to vote or to receive any dividends
or other payments or to consent or to receive notice as stockholders in respect
of the meetings of stockholders or for the election of directors of the Company
or to share in the assets of the Company in the event of the liquidation,
dissolution or winding up of the Company's affairs or any other matter, or any
rights whatsoever as stockholders of the Company.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.1. Payment of Taxes. The Company will pay all documentary
----------------
stamp taxes attributable to the initial issuance of Warrants and of the Warrant
Shares upon the exercise of Warrants and all documentary stamp taxes
attributable to the separation of the Warrants from the Notes on the Separation
Date; provided, however, that the Company shall not be required to pay any tax
or other governmental charge which may be payable in respect of any transfer
involved in the issue of any Warrant Certificates or any certificates for
Warrant Shares in a name other than the registered Holder surrendered upon the
exercise of a Warrant. In any such case, the Company shall not be required to
issue or deliver such Warrant Certificate or certificate for Warrant Shares
unless or until the Person or Persons requesting issuance thereof shall have
paid to the Company the amount of such tax or other governmental charge or shall
have established to the satisfaction of the Company that such tax or other
governmental charge has been paid or an exemption is available therefrom.
10
SECTION 4.2. Notice of Expiration Date. The Company will give notice
-------------------------
of the Expiration Date to all Holders of the then outstanding Warrants, not less
than 90 and not more than 120 days prior to the Expiration Date; provided,
however, the failure of the Company to deliver any such notice shall not extend
or otherwise affect the Expiration Date.
SECTION 4.3. Reservation of Common Stock. The Company covenants and
---------------------------
agrees that it will at all times cause to be reserved and kept available out of
its authorized and unissued shares of Common Stock such number of shares of
Common Stock as will be sufficient to permit the exercise in full of all
Warrants issued hereunder and all other rights, warrants or options exercisable
into, and the conversion of all securities convertible into, Common Stock. All
of the outstanding shares of capital stock of each of the Company have been duly
authorized and validly issued, are fully paid and nonassessable, and were not
issued in violation of, and are not subject to, any preemptive or similar
rights. Schedule 4.3 sets forth (a) the Capitalization of the Company s as of
------------
the Closing Date and (b) the pro forma Capitalization of the Company after
giving effect to the Transactions. "Capitalization" shall mean (a) the number of
authorized and outstanding shares of Common Stock, (b) the number of authorized
and outstanding shares of each series of preferred stock, (c) a description of
outstanding securities convertible into or exchangeable for Common Stock and the
maximum number of shares of Common Stock issuable upon exercise of all such
outstanding rights, (d) a description of any option plans and the number of
authorized options and the number of outstanding options, and (e) the number of
any other outstanding shares or securities.
SECTION 4.4. Warrant Shares to be Duly Authorized and Issued, Fully
------------------------------------------------------
Paid and Nonassessable. The Company covenants and agrees that it will take all
----------------------
such action as may be necessary to ensure that all Warrant Shares delivered upon
the exercise in full of any Warrants, at the time of delivery of the
certificates representing such shares, shall be duly and validly authorized and
issued and fully paid and nonassessable, free of any preemptive rights in favor
of any Person in respect of such issuance and free of any security interest,
lien or other encumbrance of any kind or nature created by, arising out of
actions of, the Company, any subsidiary or any affiliate of the Company.
SECTION 4.5. Reports. For so long as any Warrants are outstanding,
-------
if at any time the Company is not subject to the requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the Securities Exchange
Commission (the "SEC"), to the extent permitted, and distribute to the Warrant
---
Agent and to each Holder copies of the quarterly and annual financial
information that would have been required to be contained in a filing with the
SEC on Forms 10-Q and 10-K and all current reports that would be required to be
filed with the SEC on Form 8-K had the Company been subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act. All such financial
information shall include consolidated financial statements (including
footnotes) prepared in accordance with generally accepted accounting principles.
Such annual financial information shall also include an opinion thereon
expressed by an independent accounting firm of established national reputation.
All such consolidated financial statements shall be accompanied by a
"Management's Discussion and Analysis of Financial Condition and Results of
Operation." The financial and other information to be distributed to Holders
shall be filed with the Warrant Agent and mailed to the Holders at their
respective addresses appearing in the Warrant Register maintained by the Warrant
Agent, within 120 days after the end of the Company's fiscal year and within 60
days after the end of each of the first three quarters of each such fiscal year.
11
From and after the date of effectiveness of any registration statement filed
with the SEC with respect to the Warrants, the Company will file with the SEC
such Forms 10-Q and 10-K and any other information required to be filed by it.
SECTION 4.6. Private Placement Numbers. The Company covenants and
-------------------------
agrees to obtain, and thereafter maintain, a private placement number in respect
of the Warrants and a private placement number or CUSIP number, as appropriate,
in respect of the Warrant Shares from the CUSIP Service Bureau of Standard &
Poor's, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc.
SECTION 4.7. Right of Action. All rights of action in respect of the
---------------
Warrants are vested in the respective registered Holders of the Warrant
Certificates, and any registered Holder of any Warrant Certificate, without the
consent of the Holder of any other Warrant Certificate, may, on its own behalf
and for its own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, its right to exercise the Warrants evidenced by such Warrant Certificate in
the manner provided in such Warrant Certificate and in this Warrant Agreement.
SECTION 4.8. Registration Rights. All shares of Common Stock or
-------------------
other securities issued or issuable upon exercise of the Warrants shall have the
registration rights and related obligations set forth in the Registration Rights
Agreement, and the parties hereto shall each execute such agreements, documents
and instruments in connection therewith as reasonably requested to fulfill the
purposes of this Section 4.8.
-----------
SECTION 4.9. Listing/Inclusion for Quotation. The Company covenants
-------------------------------
and agrees to (i) list all Common Stock issued or issuable upon exercise of the
Warrants on the American Stock Exchange or any other securities exchange on
which the Common Stock is then listed or (ii) authorize for quotation on the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or the National Market System of NASDAQ all Common Stock issued or issuable upon
exercise of the Warrants if the Common Stock is then so authorized for
quotation.
SECTION 4.10. Survival. The agreements of the Company contained in
--------
Section 4.1, Section 4.7, Section 4.8 and Section 4.9 shall survive the exercise
----------- ----------- ----------- -----------
of and the expiration of the Warrants.
ARTICLE V
ADJUSTMENTS
SECTION 5.1. Adjustment of Exercise Price and Number of Warrant
--------------------------------------------------
Shares Issuable. The Exercise Price and the number and kind of Warrant Shares
---------------
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as follows:
(a) Stock Dividends, Subdivisions and Combinations. In case the
Company shall hereafter (A) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock, (B) reclassify by subdivision its
outstanding shares of Common Stock into a
12
greater number of shares or (C) reclassify by combination its outstanding shares
of Common Stock into a smaller number of shares, (i) the number of Warrant
Shares purchasable upon exercise of each Warrant immediately prior thereto shall
be adjusted so that the Holder of any Warrant Certificate thereafter exercised
shall be entitled to receive the number of Warrant Shares which such Holder
would have owned immediately following such action had such Warrant been
exercised immediately prior thereto, and (ii) the Exercise Price shall be
adjusted by multiplying such Exercise Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
purchasable immediately thereafter. An adjustment made pursuant to this Section
-------
5.1(a) shall become effective immediately after the record date, in the case of
------
a dividend, and shall become effective immediately after the effective date, in
the case of a subdivision, combination or reclassification. If, as a result of
an adjustment made pursuant to this Section 5.1(a), the Holder of any Warrant
--------------
Certificate thereafter exercised shall become entitled to receive shares of two
or more classes of capital stock of the Company, the Board of Directors of the
Company shall determine, in its reasonable discretion, the allocation of the
adjusted Exercise Price between or among shares of such classes of capital
stock.
(b) Reclassification, Combinations, Mergers, etc. If (A) any capital
reorganization, reclassification or change of outstanding shares of Common Stock
(other than as set forth in Section 5.1(a) and other than a change in par value,
--------------
or from par value to no par value, or from no par value to par value provided
that the Company shall not increase the par value of the Common Stock to exceed
the Exercise Price), or (B) in case of any consolidation or merger of the
Company with or into another corporation or other entity (other than a merger in
which the Company is the continuing corporation and which does not result in any
reclassification or change of the then outstanding shares of Common Stock or
other capital stock of the Company (other than a change in par value, or from
par value to no par value, or from no par value to par value or as a result of a
subdivision or combination)) or (C) in case of any sale or conveyance to another
corporation or other entity of all or substantially all of the assets of the
Company shall be effected in such a way that the holders of Common Stock shall
be entitled to receive shares of common stock, other securities or assets
(whether such stock, other securities or assets are issued or distributed by the
Company or another Person) with respect to or in exchange for Common Stock,
then, as a condition of such reclassification, reorganization, change,
consolidation, merger, sale or conveyance, the Company or such a successor or
purchasing corporation or other entity, as the case may be, shall forthwith make
lawful and adequate provision whereby the Holder of such Warrant Certificate
then outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of shares of stock and other securities and assets
receivable upon such reclassification, reorganization, change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
that such holders would have been entitled to receive upon exercise of such
Warrant had such Warrant been exercised immediately before such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article V and enter into a supplemental warrant
---------
agreement so providing.
For purposes of this Section 5.1(b), "shares of stock and other
--------------
securities and property" receivable upon a reclassification, change,
consolidation, merger, sale or conveyance
13
shall include stock of any successor or acquiring corporation of any class which
is not subject to redemption and shall also include any evidence of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event including any warrants or
other rights to subscribe for or purchase any such stock. If the issuer of
securities deliverable upon exercise of Warrants under the supplemental warrant
agreement is an affiliate of the formed, surviving or transferee corporation or
other entity, such issuer shall join in the supplemental warrant agreement.
In case of any such reclassification, reorganization, merger,
consolidation or dispositions of assets, the successor or acquiring corporation
or other entity shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant Agreement
to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of Warrant Shares into which
each Warrant is exercisable, which shall be as nearly equivalent as practicable
to the adjustments provided for in this Article V.
---------
(c) Issuances of Common Stock or Rights. In the event that the
Company shall, at any time or from time to time after the date hereof, issue,
sell distribute or otherwise grant (in any such case, a "Distribution") shares
------------
of Common Stock or Rights, whether or not such Rights are immediately
exercisable, convertible or exchangeable, at a Consideration Per Share lower
than the per share Fair Market Value of the Common Stock on the date of such
issuance or sale, or if the Company shall amend any of the provisions of any
Rights, including, without limitation, a change in the purchase, conversion,
exchange or exercise price per share of Common Stock of any such Right, or the
Aggregate Consideration Receivable applicable to any such Right (other than
under or by reason of provisions designed to protect against dilution upon an
event which results in an adjustment pursuant to this Article V which is no less
---------
favorable to the Holders than such adjustment is to the holder of such Rights),
then, immediately after the date of such issuance or sale,
(A) the number of Warrant Shares purchasable upon
exercise of each Warrant shall be increased so that the
Holders thereafter will be entitled to receive the number of
Warrant Shares determined by multiplying:
(i) the number of shares of Common Stock
such Holders would have been entitled to receive immediately
before the date of such issuance or sale had such Holders
exercised their Warrants immediately prior thereto; by
(ii) a fraction, the numerator of which
shall be the sum of: (X) the number of shares of Common Stock
outstanding on such date plus (Y) the number of additional
shares of Common Stock offered for subscription or purchase
(or into which the Rights so offered are initially convertible
or exchangeable or exercisable, as the case may be), and the
denominator of which shall be the sum of: (X) the number of
shares of Common Stock outstanding on such date plus (Y) the
number of shares of Common Stock that the Aggregate
Consideration Receivable would
14
purchase at such per share Fair Market Value of the Common
Stock on the date of such issuance or sale, and
(B) the Exercise Price in effect immediately
after such Distribution shall be adjusted by multiplying the
Exercise Price in effect immediately prior to such
Distribution by the quotient of:
(i) the sum of: (A) the number of shares of
Common Stock outstanding immediately prior to such
Distribution; plus (B) the quotient of: (X) the Aggregate
Consideration Receivable; divided by (Y) the per share Fair
Market Value of the Common Stock; in each case immediately
prior to such Distribution; divided by
(ii) the sum of: (A) the number of shares of
Common Stock outstanding immediately prior to such
Distribution; plus (B) the number of shares of Common Stock so
issued or sold (or initially issuable pursuant to any Rights).
No adjustment shall be made pursuant to subparagraph (A) above
which would decrease the number of shares of Common Stock purchasable upon
exercise of a Warrant. No adjustment shall be made pursuant to subparagraph (B)
above which would increase the Exercise Price of a Warrant.
For purposes of the foregoing calculation, the total maximum
number of shares of Common Stock issuable upon exercise, conversion or exchange,
as applicable, of all Rights shall be deemed to have been issued as of the date
of such Distribution and thereafter shall be deemed to be outstanding and the
Company shall be deemed to have received as consideration therefor the Aggregate
Consideration Receivable applicable thereto after giving effect to such
exercise, conversion or exchange. Except as provided in Section 5.1(g), no
--------------
additional adjustments of the Exercise Price shall be made upon the actual
exercise, exchange or conversion, as applicable, of such Rights.
(d) Dividends and Distributions. In the event the Company
shall, at any time or from time to time after the date hereof, make or pay any
dividend of, or distribute to holders of Common Stock (in any such case, a
"Dividend"), shares of capital stock, any of its property or assets, including,
--------
without limitation, cash, evidences of its indebtedness, Rights or other
securities (in each case, other than dividends payable in Common Stock)
(collectively, "Dividend Securities"), then, in each such case, the Company
-------------------
shall reserve shares or other units of such Dividend Securities for distribution
to the Holders upon exercise of their Warrants so that, in addition to the
Warrant Shares issuable upon exercise thereof, such Holders will receive upon
such exercise the amount and kind of such Dividend Securities that such Holders
would have received if the Holders had, immediately prior to the record date for
the distribution of the Dividend Securities, exercised the Warrants.
(e) Self-Tenders. If, at any time or from time to time
after the date hereof, the Company or any subsidiary of the Company shall
repurchase, by self-tender offer or otherwise, any shares of Common Stock of the
Company or any Right at a weighted average purchase price in
15
excess of the per share Fair Market Value of the Common Stock then on the
Business Day immediately prior to the earliest of (i) the date of such
repurchase, (ii) the commencement of an offer to repurchase or (iii) the public
announcement of either (such date being referred to as the "Determination
-------------
Date"), the Company shall (x) offer to repurchase the Warrant Shares on the same
----
terms and conditions on which it has offered to repurchase the shares of Common
Stock that were the subject of the self-tender or (y) offer to repurchase the
Warrants on the same terms and conditions on which it has offered to repurchase
the rights that were the subject of the self-tender.
(f) Fair Market Value of Consideration Received.
Notwithstanding any provision to the contrary herein, for purposes of this
Article V, if any Rights shall be issued in connection with the issuance and
---------
sale of other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such Rights by
the parties thereto, such Rights shall be deemed to have been issued without
consideration, provided, however, that if any such Rights have an exercise price
(to the extent applicable) equal to or greater than the per share Fair Market
Value of the Common Stock on the date of issuance of such Rights, then such
Rights shall be deemed to have been issued for consideration equal to such
exercise price.
(g) Deferral of Certain Adjustments. No adjustment need be
made for a change in the par value of the Common Stock; provided, however, the
Company shall not increase the par value of the Common Stock to exceed the
Exercise Price. All calculations under this Section 5.1 shall be made to the
-----------
nearest 1/1,000 of one cent or to the nearest 1/1,000th of a Warrant Share, as
the case may be.
(h) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Article V, Holders shall become
---------
entitled to receive any securities of the Company other than shares of Common
Stock, thereafter the number of such other securities so receivable upon
exercise of each Warrant and the Exercise Price applicable to such exercise
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares and the Exercise Price contained in this Article V, and all other
---------
relevant provisions of this Article V that are applicable to shares of Common
---------
Stock shall be applicable to such other securities. In case at any time or from
time to time the Company shall take any action in respect of its outstanding
shares of Common Stock, other than any action described in this Article V, or
---------
any event occurs as to which the provisions of this Article V are not strictly
---------
applicable, then the number of Warrant Shares for which each Warrant is
exercisable shall be adjusted in such manner as may be equitable in the
circumstances and on terms as nearly equivalent as practicable to the provisions
with respect to the Warrant Shares and the Exercise Price contained in this
Article V and as shall be reasonably necessary, in the good faith opinion of the
---------
Board of Directors of the Company, to protect the exercise rights of the
Holders, but in no event shall any such adjustment have the effect of adversely
affecting the Holders. If the Company shall at any time or from time to time
issue, sell or distribute any shares of capital stock (other than Common Stock),
any evidences of indebtedness, any property or assets, Rights or other
securities, then, in each such case, such issuance, sale or distribution shall
be deemed to be of, or in respect of, Common Stock for purposes of this Article
-------
V.
-
(i) Statement of Warrant Certificates. Irrespective of any
adjustment in the number or kind of Warrant Shares issuable upon the exercise of
each Warrant or the Exercise Price, Warrant Certificates theretofore or
thereafter issued shall continue to express the same number and
16
kind of Warrant Shares and Exercise Price as are stated in the Warrant
Certificates initially issuable pursuant to this Warrant Agreement.
(j) Increased Warrant Shares or Reduced Exercise Price.
From time to time, the Company may, for a period of not less than 20 Business
Days, in its discretion, upon written notice to the Warrant Agent, increase the
number of Warrant Shares purchasable upon the exercise of each Warrant, without
making any adjustment to the Exercise Price, or reduce the Exercise Price,
without making any adjustment to the number of Warrant Shares purchasable upon
the exercise of each Warrant; provided that in the event that the Company elects
to make any such adjustment, the Company shall make the same or proportional
adjustment, as the case may be, with respect to all outstanding Warrants.
(k) No Adjustments for Certain Incentive Compensation.
Notwithstanding any other provision hereof, it is expressly understood that the
Warrants shall not be adjusted with respect to (a) Common Stock or Rights, in
any case, that may be issued to any of the Company's officers or employees
pursuant to the stock option plans or similar plans of the Company, including,
without limitation, under the AirTran Holdings, Inc. 1995 Employee Stock
Purchase Plan, 1993 Incentive Stock Options Plan, 1994 and 1996 stock option
plans, Airways Corporation's 1995 Stock Option Plan, and Airways Corporation's
1995 Director Stock Option Plan (collectively, the "Plans"), to the extent that
-----
shares of Common Stock or other securities issued or granted under such Plans
are issued or granted at a price, or with an exercise price, that is no less
than the per share Fair Market Value of the Common Stock at the date of grant or
issuance and such grant or issuance, together with all previous grants and
issuances under all such Plans, represents not more than 10% of the fully
diluted Common Stock at the time of such grant or issuance, (b) the issuance of
any Warrant Shares, or (c) the issuance of any Common Stock upon conversion of
the Convertible Notes.
(l) No Impairment. The Company will not, by amendment of
its certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, liquidation, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 5.1 and in the taking of all such action as may
-----------
be necessary or appropriate in order to protect the rights of the Holders
against impairment.
(m) Further Equitable Adjustments. If, after one or more
adjustments to the Exercise Price pursuant to this Section 5.1, the Exercise
-----------
Price cannot be reduced further without falling below the greater of (i) the par
value of the Common Stock or (ii) the lowest positive exercise price legally
permissible for warrants to acquire shares of common stock, the Company shall
make further adjustments to compensate the Holders, consistent with the
foregoing principles, as the Board of Directors of the Company, acting in good
faith, deems necessary, including an increase in the number of Warrant Shares
issuable upon exercise of outstanding Warrants and/or a cash payment to the
Holders.
(n) Other Adjustments.
17
(i) Adjustments shall be made pursuant to this
Section 5.1 successively whenever any of the events referred
-----------
to in Section 5.1(a) through Section 5.1(e), inclusive, shall
-------------- --------------
occur.
(ii) If any Warrant shall be exercised subsequent to
the record date for any of the events referred to in this
Section 5.1, but prior to the effective date thereof,
-----------
appropriate adjustments shall be made immediately after such
effective date so that the Holder of such Warrant on such
record date shall have received, in the aggregate, the kind
and number of shares of Common Stock or other securities or
property or assets that it would have owned or been entitled
to receive on such effective date had such Warrant been
exercised prior to such record date.
(iii) Shares of Common Stock owned by or held for the
account of the Company shall not, for purposes of the
adjustments set forth in this Section 5.1 be deemed
-----------
outstanding.
(o) Expiration of Rights. Upon the expiration of any Rights
referred to in this Section 5.1, without the exercise, exchange or conversion,
-----------
as applicable, thereof, the Exercise Price and the number of Warrant Shares
shall, upon such expiration, be readjusted and shall thereafter be such Exercise
Price and such number of Warrant Shares as would have been had such Exercise
Price and such number of Warrant Shares originally been adjusted (or had the
original adjustment not been required, as the case may be) as if:
(i) the only shares of Common Stock so issued were
the shares of Common Stock, if any, actually issued or sold
upon the exercise of such Rights; and
(ii) such shares of Common Stock, if any, were issued
or sold 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, whether or not exercised; provided,
however, that no such readjustment shall have the effect of
increasing the Exercise Price by an amount in excess of the
amount of the reduction initially made in respect of the
issuance, sale, or grant of such Rights.
SECTION 5.2. Fractional Interest. The Company shall not be
-------------------
required to issue fractional shares of Common Stock on the exercise of Warrants.
If more than one Warrant shall be presented for exercise in full at the same
time by the same Holder, the number of full shares of Common Stock which shall
be issuable upon such exercise shall be computed on the basis of the aggregate
number of shares of Common Stock which may be acquired on exercise of the
Warrants so presented. If any fraction of a share of Common Stock would, except
for the provisions of this Section 5.2, be issuable on the exercise of any
-----------
Warrant, the Company shall either (i) pay an amount in cash calculated by the
Company to equal the per share Fair Market Value of the Common Stock multiplied
by such fraction of a share of Common Stock computed to the nearest whole cent
or (ii) aggregate all such fractional shares of Common Stock into a whole number
of shares and sell such aggregated fractional shares on behalf of the Holders
entitled thereto in a public or private sale and distribute, on a pro rata
basis, the net cash proceeds therefrom to such Holders. While the Company will
use its best efforts to secure the best available sale price for such aggregated
18
fractional shares, such price shall not necessarily be the highest price
obtainable for such shares. By their acceptances of the Warrant Certificates,
Holders expressly waive any and all rights to receive any fraction of a share of
Common Stock or a stock certificate or scrip representing a fraction of a share
of Common Stock.
SECTION 5.3. When Adjustment Not Required. If the Company
----------------------------
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
SECTION 5.4. Treasury Stock. The sale or other disposition of
--------------
any issued shares of Common Stock owned or held by or for the account of the
Company shall be deemed an issuance thereof and, except for a voluntary tender
or exchange offer made by the Company or any subsidiary of the Company subject
to Section 13(e) of the Exchange Act, a repurchase thereof and designation of
such shares as treasury stock shall not be deemed to be a redemption thereof for
the purposes of this Warrant Agreement.
SECTION 5.5. Notices to Warrant Agent and Holders. Whenever
------------------------------------
the number of Warrant Shares is adjusted or the Exercise Price in respect
thereof is adjusted, as herein provided, the Company shall promptly give to each
Holder notice of such adjustment or adjustments and shall promptly deliver to
each Holder and the Warrant Agent an Officer's Certificate (confirmed by a
certificate from the Company's independent certified public accountants) setting
forth: (i) the number of Warrant Shares issuable upon the exercise of each
Warrant and the Purchase Price of such shares after such adjustment; (ii) a
brief statement of the facts requiring such adjustment; and (iii) the
computation by which such adjustment was made.
So long as any Warrant is outstanding, within ninety (90) days
of the end of each fiscal year of the Company, the Company shall deliver to each
Holder an Officer's Certificate setting forth: (i) the number of Warrant Shares
issuable upon the exercise of each Warrant and the Exercise Price of such shares
as of the end of such fiscal year; (ii) a brief statement of the facts requiring
each adjustment, if any, required to be made in such fiscal year; and (iii) the
computation by which each such adjustment was made.
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.1. Warrant Agent. At no time when the Company may
-------------
be acting as its own Warrant Agent shall any of its obligations to the Holders
be in any respect reduced as a result thereof. The Warrant Agent shall have the
powers and authority specifically granted to and conferred upon it in the
Warrant Certificates and this Warrant Agreement and such further powers and
authority to act on behalf of the Company as the Company may hereafter grant to
or confer upon it and it shall accept in writing. All of the terms and
provisions with respect to such powers
19
and authority contained in the Warrant Certificates are subject to and governed
by the terms and provisions hereof.
SECTION 6.2. Conditions of Warrant Agent's Obligations. The
-----------------------------------------
Warrant Agent accepts its obligations herein set forth upon the terms and
conditions hereof and in the Warrant Certificates, including the following, to
all of which the Company agrees and to all of which the rights hereunder of the
Holders from time to time of the Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to compensation to be
agreed upon in a separate fee agreement with the Company in writing for all
services rendered by it and the Company agrees promptly to pay such compensation
and to reimburse the Warrant Agent for its reasonable out-of-pocket expenses
(including reasonable fees and expenses of counsel) incurred without gross
negligence, bad faith or willful misconduct on its part in connection with the
services rendered by it hereunder. The Company also agrees to indemnify the
Warrant Agent, each predecessor Warrant Agent, and their respective directors,
officers, affiliates, agents and employees for, and to hold it and its
directors, officers, affiliates, agents and employees harmless against, any
loss, liability or expense of any nature whatsoever (including, without
limitation, fees and expenses of counsel) incurred without gross negligence, bad
faith or willful misconduct on the part of the Warrant Agent or predecessor
Warrant Agent, arising out of or in connection with its acting as such Warrant
Agent hereunder and its exercise or failure to exercise of its rights and
performance of its obligations hereunder. The obligations of the Company under
this Section 6.2 shall survive the exercise and the expiration of the Warrant
-----------
Certificates and the resignation and removal of the Warrant Agent.
(b) In acting under this Warrant Agreement and in connection
with the Warrant Certificates, the Warrant Agent is acting solely as agent of
the Company and does not assume any obligation or relationship of agency or
trust for or with any of the owners or Holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel and any advice
or written opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice or opinion.
(d) The Warrant Agent shall be fully protected and shall
incur no liability for or in respect of any action taken or omitted to be taken
or thing suffered by it in reliance upon any Warrant Certificate, notice,
direction, consent, certificate, affidavit, opinion of counsel, instruction,
statement or other paper or document reasonably believed by it to be genuine and
to have been presented or signed by the proper parties.
(e) The Warrant Agent and its Related Parties may become the
owners of, or acquire any interest in, Warrant Certificates, shares or other
obligations of the Company with the same rights that it or they would have it if
were not the Warrant Agent hereunder and, to the extent permitted by applicable
law, it or they may engage or be interested in any financial or other
transaction with the Company and may act on, or as depositary, trustee or agent
for, any committee or body of holders of shares or other obligations of the
Company as freely as if it were not the
20
Warrant Agent hereunder. Nothing in this Warrant Agreement shall be deemed to
prevent the Warrant Agent or such Related Parties from acting in any other
capacity for the Company.
(f) The Warrant Agent shall not be under any liability for
interest on, and shall not be required to invest, any money at any time received
by it pursuant to any of the provisions of this Warrant Agreement or of the
Warrant Certificates.
(g) The Warrant Agent shall not be under any responsibility
in respect of the validity of this Warrant Agreement (or any term or provision
hereof) or the execution and delivery hereof or in respect of the validity or
execution of any Warrant Certificate (except its authentication thereof).
(h) The recitals and other statements contained herein and in
the Warrant Certificates (except as to the Warrant Agent's authentication
thereon) shall be taken as the statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of such recitals or other
statements. The Warrant Agent does not make any representation as to the
validity or sufficiency of this Warrant Agreement or the Warrant Certificates;
provided, however, that the Warrant Agent shall not be relieved of its duty to
authenticate the Warrant Certificates as authorized by this Warrant Agreement.
The Warrant Agent shall not be accountable for the use or application by the
Company of the proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrain from acting with
respect to any matter contemplated by this Warrant Agreement, it may require:
(A) an Officers' Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for
in this Warrant Agreement relating to the proposed action have
been complied with; and
(B) if reasonably necessary in the sole judgment of the
Warrant Agent, an opinion of counsel for the Company stating
that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Each Officers' Certificate or, if requested, an opinion of
counsel (with respect to which such counsel may rely, as to matters of fact, on
a certificate or certificates of Officers of the Company) with respect to
compliance with a condition or covenant provided for in this Warrant Agreement
shall include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person,
he or she has made such examination or investigation as is necessary to
enable him or her to
21
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform such
duties as are specifically set forth herein and in the Warrant Certificates and
no implied duties or obligations shall be read into this Warrant Agreement or
the Warrant Certificates against the Warrant Agent. The Warrant Agent shall not
be accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates authenticated by the Warrant Agent and delivered
by it to the Company pursuant to this Warrant Agreement. The Warrant Agent shall
have no duty or responsibility in case of any default by the Company in the
performance of its covenants or agreements contained in the Warrant Certificates
or in the case of the receipt of any written demand from a Holder with respect
to such default, including, without limiting the generality of the foregoing,
any duty or responsibility to initiate or attempt to initiate any proceedings at
law or otherwise or, except as provided in Section 7.2 hereof, to make any
-----------
demand upon the Company. The Warrant Agent shall not be obligated to perform any
duty to the extent prohibited by law.
(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from the Company
made or given under any provision of this Warrant Agreement shall be sufficient
if signed by its President or, Vice President and attested by its Treasurer,
Controller, Secretary or any Assistant Secretary.
(l) The Warrant Agent shall have no responsibility in respect
of any adjustment pursuant to Article V hereof.
---------
(m) The Company agrees that it will perform, execute,
acknowledge and deliver, or cause to be performed, executed, acknowledged and
delivered, all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
by the Warrant Agent of the provisions of this Warrant Agreement.
(n) The Warrant Agent is hereby authorized and directed to
accept written instructions with respect to the performance of its duties
hereunder from any one of the President, the Treasurer, the Controller, any Vice
President or the Secretary of the Company or any other officer or official of
the Company reasonably believed to be authorized to give such instructions and
to apply to such officers or officials for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions with respect to any
matter arising in connection with the Warrant Agent's duties and obligations
arising under this Warrant Agreement. Such application by the Warrant Agent for
written instructions from the Company may, at the option of the Warrant Agent,
set forth in writing any action proposed to be taken or omitted by the Warrant
Agent with respect to its duties or obligations under this Warrant Agreement and
the date on or after which such action shall be taken, and the Warrant Agent
shall not be liable for any action taken or omitted to be taken in accordance
with a proposal included in any such application on or after the date specified
therein (which date shall be not less than 10 Business Days after the Company
receives such application unless the Company consents to a shorter period),
provided that (i) such application includes a statement to
22
the effect that it is being made pursuant to this Section 6.2(n) and that unless
--------------
objected to prior to such date specified in the application, the Warrant Agent
will not be liable for any such action or omission to the extent set forth in
such application and (ii) prior to taking or omitting any such action, the
Warrant Agent has not received written instructions objecting to such proposed
action or omission.
(o) Whenever in the performance of its duties under this
Warrant Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
President, the Treasurer, the Controller, any Vice President or the Secretary of
the Company or any other officer or official of the Company reasonably believed
by the Warrant Agent to be authorized to give such instructions and delivered to
the Warrant Agent and such certificate shall grant full authorization to the
Warrant Agent for any action taken or suffered in good faith by it under the
provisions of this Warrant Agreement in reliance upon such certificate.
(p) The Warrant Agent shall not be required to risk or expend
its own funds in the performance of its obligations and duties hereunder.
SECTION 6.3. Resignation and Appointment of Successor.
----------------------------------------
(a) The Company agrees, for the benefit of the Holders, that
there shall at all times be a Warrant Agent hereunder.
(b) The institution serving as Warrant Agent may at any time
resign as Warrant Agent by giving written notice to the Company of such
intention on its part, specifying the date on which its desired resignation
shall become effective, provided that such date shall be at least 30 days after
the date on which such notice is given unless the Company agrees to accept less
notice. Upon receiving such notice of resignation, or in the event the Company
shall determine not to continue to act as its own Warrant Agent, the Company
shall promptly appoint a successor Warrant Agent, qualified as provided in
Section 6.3(d) hereof, by written instrument in duplicate signed on behalf of
--------------
the Company, one copy of which shall be delivered to the resigning Warrant Agent
and one copy to the successor Warrant Agent. As provided in Section 6.3(d)
--------------
hereof, such resignation shall become effective upon the earlier of (x) the
acceptance of the appointment by the successor Warrant Agent or (y) 30 days
after receipt by the Company of notice of such resignation. The Company may, at
any time and for any reason, and shall, upon any event set forth in the next
succeeding sentence, remove the Warrant Agent and appoint a successor Warrant
Agent by written instrument in duplicate, specifying such removal and the date
on which it is intended to become effective, signed on behalf of the Company,
one copy of which shall be delivered to the Warrant Agent being removed and one
copy to the successor Warrant Agent. The Warrant Agent shall be removed as
aforesaid if it shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Warrant Agent or of its property
shall be appointed, or any public officer shall take charge or control of it or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation. Any removal of the Warrant Agent and any appointment of a successor
Warrant Agent shall become effective upon acceptance of appointment by the
successor Warrant Agent as provided in Section 6.3(d). As soon as practicable
--------------
after appointment of the
23
successor Warrant Agent, the Company shall cause written notice of the change in
the Warrant Agent to be given to each of the registered Holders in the manner
provided for in Section 7.4 hereof.
-----------
(c) Upon resignation or removal of the Warrant Agent, if the
Company shall fail to appoint a successor Warrant Agent within a period of 30
days after receipt of such notice of resignation or removal, then the Holder or
the Warrant Agent may apply to a court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to the Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company.
(d) Any successor Warrant Agent, whether appointed by the
Company or by a court, shall be a bank or trust company in good standing,
incorporated under the laws of the United States of America or any State thereof
and having, at the time of its appointment, a combined capital surplus of at
least $200 million. Such successor Warrant Agent shall execute and deliver to
its predecessor and to the Company an instrument accepting such appointment
hereunder and all the provisions of this Warrant Agreement, and thereupon such
successor Warrant Agent, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Warrant Agent
hereunder, and such predecessor shall thereupon become obligated to (i) transfer
and deliver, and such successor Warrant Agent shall be entitled to receive, all
securities, records or other property on deposit with or held by such
predecessor as Warrant Agent hereunder and (ii) upon payment of the amounts then
due it pursuant to Section 6.2(a) hereof, pay over, and such successor Warrant
--------------
Agent shall be entitled to receive, all money deposited with or held by any
predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent
hereunder may be merged or converted, or any corporation or bank with which the
Warrant Agent may be consolidated, or any corporation or bank resulting from any
merger, conversion or consolidation to which the Warrant Agent shall be a party,
or any corporation or bank to which the Warrant Agent shall sell or otherwise
transfer all or substantially all of its corporate trust business or assets,
shall be the successor to the Warrant Agent under this Warrant Agreement
(provided that such corporation or bank shall be qualified as aforesaid) without
the execution or filing of any document or any further act on the part of any of
the parties hereto.
(f) No Warrant Agent under this Warrant Agreement shall be
personally liable for any action or omission of any successor Warrant Agent or
of the Company.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Defined Terms. Unless otherwise defined in this
-------------
Warrant Agreement, the capitalized terms set forth below and used in this
Warrant Agreement shall have the meanings given to such terms below:
24
"Aggregate Consideration Receivable" means, in the case of a
----------------------------------
sale, issuance or other distribution of shares of Common Stock, the aggregate
amount paid to the Company in connection therewith and, in the case of an
issuance, sale or other distribution of Rights, or any amendment thereto, the
sum of: (a) the aggregate amount paid to the Company for such Rights; plus (b)
the aggregate consideration or premium stated in such Rights to be payable for
the shares of Common Stock covered thereby, in each case, without deduction for
any fees, expenses or underwriters discounts; provided, further, that if all or
any portion of the aggregate amount paid to the Company for such Rights was not
paid in cash, the amount of such consideration other than cash received by the
Company shall be deemed to be the then Fair Market Value of such consideration.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday
------------
and Friday on which (i) banks in New York City or the city in which the
principal corporate trust office of the Warrant Agent is located, (ii) the
principal national securities exchange or market, if any, on which the Common
Stock or the Warrants are listed or admitted to trading, in each case, are not
obligated by law or executive order to be closed.
"Capitalization" has the meaning set forth in Section 4.3.
-------------- -----------
"Capital Stock" means, with respect to any person, any and all
-------------
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock and any and all warrants, options and rights with
respect thereto, including, without limitation, each class of common stock and
preferred stock, partnership interests and other indicia of ownership of such
person.
"Closing Prices" means, per share of Common Stock or any other
--------------
security, on any date specified herein:
(i) the last sale price, regular way, on such date or, if no
such sale takes place on such date, the average of the
closing bid and asked prices on such date, in each case
as officially reported on the principal national
securities exchange on which the Common Stock or other
security is then listed or admitted to trading; and
(ii) if the Common Stock or other security is not then listed
or admitted to trading on any national securities
exchange, but is designated as a national market system
security by the National Association of Securities
Dealers, Inc. ("NASD"), the last trading price of the
Common Stock or such other security on such date, or if
there shall have been no trading on such date or if the
Common Stock or such other security is not so
designated, the average of the reported closing bid and
asked prices on such date as shown by the NASDAQ.
"Consideration Per Share" means, with respect to shares of
-----------------------
Common Stock or Rights, the quotient of: (a) the Aggregate Consideration
Receivable in respect of such shares of Common Stock or such Rights, divided by
(b) the total number of such shares of Common Stock or, in the case of Rights,
the total number of shares of Common Stock into which such Rights are
exercisable or convertible.
25
"Fair Market Value" means, per share of Common Stock or any
-----------------
other security, as of any date of determination, the arithmetic mean of the
daily Closing Prices for the 30 consecutive trading days before such date of
determination; provided, however, that if the Common Stock or such other
security is then neither listed or admitted to trading on any national
securities exchange, designated as a national market system security by the NASD
or quoted by NASDAQ, then "Fair Market Value" means the fair market value of one
-----------------
share of Common Stock, or such other security as determined by an Independent
Financial Advisor as of the date of determination. Any such valuation by an
Independent Financial Advisor shall be based on a sale of the Company, and such
valuation shall not be discounted based on a lack of liquidity or voting rights,
with respect to any such shares, or based on a lack of control of the Company or
by the minority position of the holders of any such shares.
"Independent Financial Advisor" means such firm of independent
-----------------------------
certified public accountants, an investment banking or appraisal firm (which
firm shall own no equity interest of, and shall not be an affiliate, subsidiary
or Related Party of the Company) of recognized national standing to be retained
by the Company and acceptable to Holders of a majority of the outstanding
Warrants and the Warrant Agent.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Related Party" means, with respect to any Person: (A) any
-------------
other Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, such Person, (B) any spouse or immediate family
member of such Person or (C) a trust, corporation, partnership or other entity,
the beneficiaries, stockholders, partners, owners or Persons holding a 5% or
more controlling interest of which consist of such Person and/or such other
Persons or entities referred to in the immediately preceding clause (A). A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise.
"Right" means and includes:
-----
(a) any warrant (including, without limitation, any
Warrant) or any option (including, without limitation,
employee stock options) to acquire directly or indirectly
Common Stock;
(b) any right issued to holders of the Common Stock,
or any class thereof, permitting the holders thereof to
subscribe directly or indirectly for shares of additional
Common Stock (pursuant to a rights offering or otherwise);
(c) any right to acquire Common Stock or pursuant to
the provisions of any security convertible directly or
indirectly or exchangeable directly or indirectly into Common
Stock; and
26
(d) any similar right permitting the holder thereof
directly or indirectly to subscribe for or purchase shares of
Common Stock.
"Securities Act" means the Securities Act of 1933, as amended,
--------------
and the rules and regulations promulgated thereunder.
"Transactions" has the meaning set forth in the Indenture.
------------
SECTION 7.2. Amendment. This Warrant Agreement and the terms
---------
of the Warrants may be amended by the Company and the Warrant Agent, without the
consent of any Holder, (i) for the purpose of curing any ambiguity, (ii) or for
curing, correcting or supplementing any defective or inconsistent provision
contained herein or therein or (iii) in any other manner which the Company may
reasonably deem necessary or desirable, which, in each of clauses (i), (ii) and
(iii), shall not adversely affect in any respect the interests of any of the
Holders.
The Company and the Warrant Agent may modify this Warrant
Agreement and the terms of the Warrants with the consent of not less than a
majority in number of the then outstanding Warrants representing a majority of
the Warrant Shares then issuable upon the exercise of all then outstanding
Warrants (excluding Warrants held by the Company or by any subsidiary or
affiliate of the Company) for the purpose of adding any provision to or changing
in any manner or eliminating any of the provisions of this Warrant Agreement or
modifying in any manner the rights of the Holders; provided, however, that no
such modification that increases the Exercise Price, reduces the number of
Warrant Shares purchasable upon the exercise of Warrants, reduces the period of
time during which the Warrants are exercisable hereunder, otherwise adversely
affects the exercise rights of the Holders, reduces the percentage required for
modification, or effects any change to this Section 7.1, may be made with
-----------
respect to an outstanding Warrant without the consent of the Holder of such
Warrant.
Any modification or amendment made in accordance with this
Warrant Agreement will be conclusive and binding on all present and future
Holders whether or not they have consented to such modification or amendment or
waiver and whether or not notation of such modification or amendment is made
upon such Warrant Certificates. Any instrument given by or on behalf of any
Holder in connection with any consent to any modification or amendment will be
conclusive and binding on all subsequent Holders.
SECTION 7.3. Notices and Demands to the Company and Warrant
----------------------------------------------
Agent. If the Warrant Agent shall receive any notice or demand addressed to the
-----
Company by the Holder of a Warrant Certificate pursuant to the provisions hereof
or of the Warrant Certificates, the Warrant Agent shall promptly forward such
notice or demand to the Company.
SECTION 7.4. Address for Notices to the Company and for
------------------------------------------
Transmission of Documents. All notices hereunder to the Company and the Warrant
-------------------------
Agent shall be deemed to have been given when sent by certified or registered
mail, postage prepaid, or by telecopy, confirmed by first class mail, postage
prepaid, addressed as follows:
To the Company:
27
AirTran Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Treasurer
With a copy (which shall not constitute notice) to:
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
To the Warrant Agent:
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
SECTION 7.5. Notices to Holders. Notices to Holders shall be
------------------
mailed to such Holders at the addresses of such Holders as they appear in the
Warrant Register. Any such notice shall be sufficiently given if sent by first-
class mail, postage prepaid.
SECTION 7.6. Applicable Law. THE VALIDITY, INTERPRETATION AND
--------------
PERFORMANCE OF THIS WARRANT AGREEMENT AND EACH WARRANT ISSUED HEREUNDER AND OF
THE RESPECTIVE TERMS AND PROVISIONS THEREOF SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PROVISIONS
THEREOF.
SECTION 7.7. Obtaining of Governmental Approvals. The Company
-----------------------------------
will from time to time take all action required to be taken by it which may be
necessary to obtain and keep effective any and all permits, consents and
approvals of governmental agencies and authorities and securities laws filings
under United States federal and State laws, and the rules and regulations of all
stock exchanges or markets on which the Warrants may be listed, which may be or
become requisite in connection with the issuance, sale, transfer, and delivery
of the Warrant Certificates, the exercise of the Warrants or the issuance, sale,
transfer and delivery of the Warrant Shares, it being understood, however, that
the only contractual registration rights of the Holders are those set forth in
the Registration Rights Agreement in respect of the Warrants, dated of even date
herewith (the "Registration Rights Agreement"), between the Company and the
-----------------------------
Initial Purchaser.
28
SECTION 7.8. Persons Having Rights Under Agreement. Nothing
-------------------------------------
in this Warrant Agreement expressed or implied and nothing that may be inferred
from any of the provisions hereof is intended, or shall be construed, to confer
upon, or give to, any Person other than the Company, the Warrant Agent and the
Holders from time to time of the Warrant Certificates, any right, remedy or
claim under or by reason of this Warrant Agreement or of any covenant,
condition, stipulation, promise or agreement hereof and all covenants,
conditions, stipulations, promises and agreements in this Warrant Agreement
contained shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the Holders from time to time of the Warrant Certificates.
SECTION 7.9. Headings. The descriptive headings of the
--------
several Articles and Sections of this Warrant Agreement are inserted for
convenience of reference only and shall not control or affect the meaning or
construction of any of the provisions hereof.
SECTION 7.10. Counterparts. This Warrant Agreement may be
------------
executed in any number of counterparts, each of which so executed shall be
deemed to be an original; but such Counterparts shall together constitute but
one and the same instrument.
SECTION 7.11. Inspection of Warrant Agreement. A copy of this
-------------------------------
Warrant Agreement shall be available at all reasonable times at the Warrant
Agent Office, for inspection by the Holder of any Warrant Certificate. The
Warrant Agent may require such Holder to submit his Warrant Certificate for
inspection by it.
SECTION 7.12. Successors. All the covenants and provisions of
----------
this Warrant Agreement by or for the benefit of the Company or the Warrant Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
* * * * *
29
IN WITNESS WHEREOF, this Warrant Agreement has been duly
executed by the Company and the Warrant Agent as of the day and year first above
written.
AIRTRAN HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. Rossum
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Name: ▇▇▇▇▇▇ ▇. Rossum
Title: Vice President and Treasurer
WILMINGTON TRUST COMPANY,
as Warrant Agent
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Financial Services Officer