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EXHIBIT 99(c)
WARRANT AGREEMENT
Dated as of January 22, 1999
by and among
KEY ENERGY SERVICES, INC.
and
THE BANK OF NEW YORK
as Warrant Agent
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TABLE OF CONTENTS
Page
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SECTION 1. Certain Definitions............................................................................ 1
SECTION 2. Appointment of Warrant Agent................................................................... 6
SECTION 3. Issuance of Warrants; Warrant Certificates..................................................... 6
SECTION 4. Separation of Warrants......................................................................... 19
SECTION 5. Registration and Countersignature.............................................................. 19
SECTION 6. Terms of Warrants; Exercise of Warrants........................................................ 19
SECTION 7. Payment of Taxes............................................................................... 22
SECTION 8. Reservation of Warrant Shares.................................................................. 22
SECTION 9. Obtaining Stock Exchange Listings.............................................................. 23
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares Issuable............................. 23
SECTION 11. Statement on Warrants.......................................................................... 29
SECTION 12. No Dilution or Impairment; Capital and Ownership Structure..................................... 29
SECTION 13. Fractional Interest............................................................................ 30
SECTION 14. Notices to Warrant Holders; No Rights as Shareholders.......................................... 29
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent....................................... 30
SECTION 16. Warrant Agent.................................................................................. 31
SECTION 17. Resignation and Removal of Warrant Agent; Appointment of Successor............................. 34
SECTION 18. Registration................................................................................... 37
SECTION 19. Reports........................................................................................ 37
SECTION 20. Rule 144A and Rule 144......................................................................... 37
SECTION 21. Notices to Company and Warrant Agent........................................................... 38
SECTION 22. Supplements and Amendments..................................................................... 38
SECTION 23. Successors..................................................................................... 39
SECTION 24. Termination.................................................................................... 39
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SECTION 25. Governing Law.................................................................................. 39
SECTION 26. Benefits of This Agreement..................................................................... 39
SECTION 27. Counterparts................................................................................... 39
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WARRANT AGREEMENT, dated as of January 22, 1999 (the "AGREEMENT"),
between Key Energy Services, Inc., a Maryland corporation (the "COMPANY"), and
The Bank of New York, a New York banking corporation as warrant agent (the
"WARRANT AGENT").
WHEREAS, the Company proposes to issue warrants, as hereinafter
described (the "WARRANTS"), to purchase up to an aggregate of 2,032,565 shares
of Common Stock (as defined below), in connection with the offering by the
Company of $150.0 million principal amount of the Company's 14% Senior
Subordinated Notes due 2009 (the "NOTES") and 150,000 Warrants of the Company,
each Warrant entitling the holder thereof to purchase 13.5504 shares of Common
Stock of the Company. The Notes and Warrants will be sold in Units (the
"UNITS"), each Unit consisting of $1,000 principal amount of Notes and one
Warrant.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company, the Warrant Agent and the Holders (as
defined below), the parties hereto agree as follows:
SECTION 1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"144A GLOBAL WARRANT" means a Global Warrant substantially in the form
of Exhibit A hereto bearing the Global Warrant Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding number of the Warrants sold in reliance on Rule 144A.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such specified Person, whether through the ownership
of voting securities, by agreement or otherwise; provided that beneficial
ownership of 10% or more of the voting securities of a Person shall be deemed to
be control.
"APPLICABLE PROCEDURES" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Warrant, the rules and procedures
of the Depositary, Euroclear and Cedel Bank that apply to such transfer or
exchange.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CASHLESS EXERCISE" means the exercise of a Warrant without the payment
of cash, by reducing the number of shares of Common Stock that would be
obtainable upon the exercise of a Warrant and payment of the Exercise Price in
cash so as to yield a number of shares of Common
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Stock issuable upon the exercise of the Warrant equal to the product of (a) the
number of shares of Common Stock into which the Warrant is exercisable as of the
date of exercise (if the Exercise Price were being paid in cash) and (b) the
Cashless Exercise Ratio.
"CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator of
which is the excess of the Current Market Value per share of Common Stock on the
date of exercise of a Warrant over the Exercise Price per share as of the such
date and the denominator of which is the Current Market Value per share of the
Common Stock on the date of exercise of a Warrant.
"CEDEL BANK" means Cedel Bank, SA.
"CLOSING DATE" means the date hereof.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON EQUITY SECURITIES" means Common Stock and securities
convertible into, or exercisable or exchangeable for, Common Stock or rights or
options to acquire Common Stock or such other securities, excluding the
Warrants.
"COMMON STOCK" means the common stock, par value $.10 per share, of the
Company.
"COMPANY" means Key Energy Services, Inc., a Maryland corporation, and
its successors and assigns.
"CURRENT MARKET VALUE" for any Share of Common Stock means (A) if the
Common Stock is publicly traded and listed on the Nasdaq National Market or a
national securities exchange, the average closing price as quoted on the Nasdaq
National Market of the Common Stock for each of the 10 trading days immediately
prior to the exercise date (or, if the Common Stock is listed on a national
securities exchange, the average closing price as reported on such national
securities exchange during such 10-trading-day period); or (B) if the Common
Stock is not publicly traded, or otherwise is not listed on a national
securities exchange, the fair market value shall be equal to the value per share
as determined in good faith by the Board of Directors of the Company.
"DEBT REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated as of January 22, 1999, by and between the Company, the
Guarantors (as defined therein) and the Initial Purchasers relating to the
Notes.
"DEFINITIVE WARRANT" means, individually and collectively, each of the
Restricted Definitive Warrants and the Unrestricted Definitive Warrants in the
form of a certificated Warrant registered in the name of the Holder thereof and
issued in accordance with Section 3.5 hereof, substantially in the form of
Exhibit A hereto except that such Warrant shall not bear the Global Warrant
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Warrant" attached thereto.
"DEPOSITARY" means, with respect to the Warrants issuable or issued, in
whole or in part, in global form, the Person specified in Section 3.3 hereof as
the Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of this Agreement.
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"DTC" means The Depository Trust Company.
"EUROCLEAR" means ▇▇▇▇▇▇ Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXERCISE DATE" means any time on or after January 25, 2000.
"EXERCISE PRICE" means the purchase price per share of Common Stock to
be paid upon the exercise of each Warrant in accordance with the terms hereof,
which price shall initially be $4.88125 per share, subject to adjustment from
time to time pursuant to Sections 10 and 12 hereof.
"EXPIRATION DATE" means 5:00 p.m., New York City time, on January 15,
2009.
"GLOBAL WARRANTS" means, individually and collectively, each of the
Restricted Global Warrants and the Unrestricted Global Warrants, substantially
in the form of Exhibit A hereto issued in accordance with Section 3.1(b) and 3.5
hereof.
"GLOBAL WARRANT LEGEND" means the legend set forth in Section
3.5(g)(ii), which is required to be placed on all Global Warrants issued under
this Warrant Agreement.
"HOLDER" means a person who holds of record any Warrants.
"INDENTURE" means the indenture, dated January 22, 1999, among the
Company, the Guarantors (as defined in the Purchase Agreement) and The Bank of
New York, the Trustee relating to the Notes.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest
in a Global Warrant through a Participant.
"INITIAL PURCHASERS" means ▇▇▇▇▇▇ Brothers Inc., Bear, ▇▇▇▇▇▇▇ & Co.
Inc., F.A.C./Equities, a division of First Albany Corporation, and ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, a division of ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared
by the Company and sent to all Holders for use by such Holders in connection
with the Registration Statement.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"NOTES" means the 14% Senior Subordinated Notes due 2009 of the
Company, being sold
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and issued pursuant to the Purchase Agreement and the Indenture, or any Notes
exchanged therefor as contemplated by the Indenture and the Debt Registration
Rights Agreement.
"OFFICER" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary, any Assistant Secretary or any Vice-President of such Person.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Warrant Agent in form and substance reasonably
acceptable to the Warrant Agent. The counsel may be an employee of or counsel to
the Company, any subsidiary of the Company or the Warrant Agent.
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
3.5(g)(i) to be placed on all Warrants issued under this Warrant Agreement
except where otherwise permitted by the provisions of this Warrant Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement, dated as of January
19, 1999, by and among the Company, the Guarantors and the Initial Purchasers
relating to the Units.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"REGISTRABLE SECURITIES" shall have the meaning ascribed to such term
in the Warrant Registration Rights Agreement.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"REGULATION S GLOBAL WARRANT" means a Global Warrant in the form of
Exhibit A hereto bearing the Global Warrant Legend, the Private Placement Legend
and the Regulation S Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding number of the Warrants resold in reliance on Rule 903 or Rule 904 of
Regulation S.
"RESPONSIBLE OFFICER" means, when used with respect to the Warrant
Agent, any officer of the Warrant Agent, including any vice president, assistant
vice president, assistant secretary, assistant treasurer or any other officer of
the Warrant Agent who customarily performs functions similar to those performed
by the Persons who at the time shall be such officers, respectively, or to
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whom any corporate trust matter is referred because of such person's knowledge
of and familiarity with the particular subject and who shall have direct
responsibility for the administration of the Warrant Agreement.
"REGULATION S LEGEND" means the legend set forth in Section 3.5(g)(iv)
to be placed on all Registrable Securities resold pursuant to Regulation S.
"RESTRICTED DEFINITIVE WARRANT" means a Definitive Warrant bearing the
Private Placement Legend.
"RESTRICTED GLOBAL WARRANT" means a Global Warrant bearing the Private
Placement Legend.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEPARATION DATE" means the earliest of (i) July 15, 1999, (ii) the
commencement of the Exchange Offer (as defined in the Debt Registration Rights
Agreement) or the date a Registration Statement (as defined in the Debt
Registration Rights Agreement) with respect to the Notes is declared effective
under the Securities Act or (iii) such date as ▇▇▇▇▇▇ Brothers shall determine.
"TRUSTEE" means The Bank of New York, a New York banking corporation,
the trustee under the Indenture.
"UNRESTRICTED GLOBAL WARRANT" means a Global Warrant substantially in
the form of Exhibit A attached hereto that bears the Global Warrant Legend and
that has the "Schedule of Exchanges of Interests in the Global Warrant" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Warrants that do not bear the
Private Placement Legend.
"UNRESTRICTED DEFINITIVE WARRANT" means one or more Definitive Warrants
that do not bear and are not required to bear the Private Placement Legend.
"U.S. PERSON" means a U.S. person as defined in Rule 902(k) under the
Securities Act.
"WARRANT AGENT" means The Bank of New York or the successor or
successors of such Warrant Agent appointed in accordance with the terms hereof.
"WARRANT COUNTERSIGNATURE ORDER" has the meaning assigned to such term
in Section 3.2 hereof.
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"WARRANT REGISTRAR" has the meaning assigned to such term in Section
3.3 hereof.
"WARRANT CERTIFICATE" has the meaning assigned to such term in Section
3.1(a) hereof.
"WARRANT REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement, dated as of January 22, 1999, by and among the Company and the
Initial Purchasers relating to the Warrants and the Warrant Shares.
"WARRANT SHARES" means the shares of Common Stock issued or issuable
upon the exercise of the Warrants.
SECTION 2. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 3. Issuance of Warrants; Warrant Certificates.
3.1 Form and Dating.
(a) General.
The Warrants shall be substantially in the form of Exhibit A hereto
(the "WARRANT CERTIFICATES"). The Warrants may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Warrant shall
be dated the date of the countersignature.
The terms and provisions contained in the Warrants shall constitute,
and are hereby expressly made, a part of this Warrant Agreement. The Company and
the Warrant Agent, by their execution and delivery of this Warrant Agreement,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Warrant conflicts with the express provisions
of this Warrant Agreement, the provisions of this Warrant Agreement shall govern
and be controlling.
(b) Global Warrants.
Each Global Warrant shall represent such of the outstanding Warrants as
shall be specified therein and each shall provide that it shall represent the
number of outstanding Warrants from time to time endorsed thereon and that the
number of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Warrant to reflect the amount of any increase or
decrease in the number of outstanding Warrants represented thereby shall be made
by the Warrant Agent in accordance with instructions given by the Holder thereof
as required by Section 3.5 hereof.
(c) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in
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the Regulation S Global Warrant that are held by Participants through Euroclear
or Cedel Bank.
3.2 Execution.
An Officer shall sign the Warrants for the Company by manual or
facsimile signature.
If the Officer whose signature is on a Warrant no longer holds that
office at the time a Warrant is countersigned, the Warrant shall nevertheless be
valid.
A Warrant shall not be valid until countersigned by the manual
signature of the Warrant Agent. The signature shall be conclusive evidence that
the Warrant has been properly issued under this Warrant Agreement.
The Warrant Agent shall, upon a written order of the Company signed by
an Officer (a "WARRANT COUNTERSIGNATURE ORDER"), countersign Warrants for
original issue up to the number stated in the preamble hereto.
The Warrant Agent may appoint an agent acceptable to the Company to
countersign Warrants. Such an agent may countersign Warrants whenever the
Warrant Agent may do so. Each reference in this Warrant Agreement to a
countersignature by the Warrant Agent includes a countersignature by such agent.
Such an agent has the same rights as the Warrant Agent to deal with the Company
or an Affiliate of the Company.
3.3 Warrant Registrar.
The Company shall maintain an office or agency where Warrants may be
presented for registration of transfer or for exchange (the "WARRANT
REGISTRAR"). The Warrant Registrar shall keep a register of the Warrants and of
their transfer and exchange. The Company may appoint one or more co-Warrant
Registrars. The term "Warrant Registrar" includes any co-Warrant Registrar. The
Company may change any Warrant Registrar without notice to any holder. The
Company shall notify the Warrant Agent in writing of the name and address of any
Warrant Registrar not a party to this Warrant Agreement. If the Company fails to
appoint or maintain another entity as Warrant Registrar, the Warrant Agent shall
act as such. The Company or any of its subsidiaries may act as Warrant
Registrar.
The Company initially appoints DTC to act as Depositary with respect to
the Global Warrants.
The Company initially appoints the Warrant Agent to act as the Warrant
Registrar with respect to the Global Warrants.
3.4 Holder Lists.
The Warrant Agent shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders. If the Warrant Agent is not the Warrant Registrar, the Company
shall promptly furnish to the Warrant Agent at such times as the Warrant Agent
may request in writing, a list in such form and as of such date as the Warrant
Agent
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may reasonably require of the names and addresses of the Holders.
3.5 Transfer and Exchange.
(a) Transfer and Exchange of Global Warrants. A Global Warrant
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Warrants will be exchanged by the Company for Definitive Warrants if (i) the
Company delivers to the Warrant Agent notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Warrants (in whole but not in part) should
be exchanged for Definitive Warrants and delivers a written notice to such
effect to the Warrant Agent. Upon the occurrence of either of the preceding
events in (i) or (ii) above, Definitive Warrants shall be issued in such names
as the Depositary shall instruct the Warrant Agent. Global Warrants also may be
exchanged or replaced, in whole or in part, as provided in Sections 3.6 and 3.7
hereof. Every Warrant countersigned and delivered in exchange for, or in lieu
of, a Global Warrant or any portion thereof, pursuant to this Section 3.5 or
Sections 3.6 or 3.7 hereof, shall be countersigned and delivered in the form of,
and shall be, a Global Warrant. A Global Warrant may not be exchanged for
another Warrant other than as provided in this Section 3.5(a), however,
beneficial interests in a Global Warrant may be transferred and exchanged as
provided in Section 3.5(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Warrants. The transfer and exchange of beneficial interests in the Global
Warrants shall be effected through the Depositary, in accordance with the
provisions of this Warrant Agreement and the Applicable Procedures. Beneficial
interests in the Restricted Global Warrants shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Warrants also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global
Warrant. Beneficial interests in any Restricted Global Warrant may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Warrant in accordance
with the transfer restrictions set forth in the Private Placement
Legend. Beneficial interests in any Unrestricted Global Warrant may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Warrant. No written
orders or instructions shall be required to be delivered to the Warrant
Registrar to effect the transfers described in this Section 3.5(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Warrants. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 3.5(b)(i) above,
the transferor of any such beneficial interest must deliver
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to the Warrant Registrar either (A) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global
Warrant in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order
from a Participant or an Indirect Participant given to the Depositary
in accordance with the Applicable Procedures directing the Depositary
to cause to be issued a Definitive Warrant in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Warrant Registrar containing information
regarding the Person in whose name such Definitive Warrant shall be
registered. Upon effectiveness of the Registration Statement in
accordance with Section 3.5(f) hereof, the requirements of this Section
3.5(b)(ii) shall be deemed to have been satisfied upon receipt by the
Warrant Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Warrants. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Warrants contained in this Agreement and the Warrants or otherwise
applicable under the Securities Act, the Warrant Agent shall adjust the
principal amount of the relevant Global Warrant(s) pursuant to Section
3.5(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Warrant. A beneficial interest in any Restricted Global Warrant
may be transferred to a Person who takes delivery thereof in the form
of a beneficial interest in another Restricted Global Warrant if the
transfer complies with the requirements of Section 3.5(b)(ii) above and
the Warrant Registrar receives the following:
(A) if the transferee will take delivery in the form
of a beneficial interest in the ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form
of a beneficial interest in the Regulation S Global Warrant,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2)
thereof.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Warrant for Beneficial Interests in the Unrestricted
Global Warrant. A beneficial interest in any Restricted Global Warrant
may be exchanged by any Holder thereof for a beneficial interest in an
Unrestricted Global Warrant or transferred to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Warrant if the exchange or transfer complies with
the requirements of Section 3.5(b)(ii) above and:
(A) such transfer is effected pursuant to the
Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
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(1) if the holder of such beneficial
interest in a Restricted Global Warrant proposes to
exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Warrant, a
certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a)
thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Warrant proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
beneficial interest in an Unrestricted Global
Warrant, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
If any such transfer is effected pursuant to subparagraph (B) above at
a time when an Unrestricted Global Warrant has not yet been issued, the Company
shall issue and, upon receipt of an Warrant Countersignature Order in accordance
with Section 3.2 hereof, the Warrant Agent shall countersign one or more
Unrestricted Global Warrants in the number equal to the number of beneficial
interests transferred pursuant to subparagraph (B) above.
(c) Transfer and Exchange of Beneficial Interests for
Definitive Warrants.
(i) Beneficial Interests in Restricted Global
Warrants to Restricted Definitive Warrants. If any holder of a
beneficial interest in a Restricted Global Warrant proposes to exchange
such beneficial interest for a Restricted Definitive Warrant or to
transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Warrant, then, upon
receipt by the Warrant Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such beneficial
interest for a Restricted Definitive Warrant, a certificate
from such holder in the form of Exhibit C hereto, including
the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities
Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a)
thereof;
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(E) if such beneficial interest is being transferred
to the Company or any of its Subsidiaries, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Warrant Agent shall cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Warrant Agent, the number of Warrants represented by the Global Warrant
to be reduced by the number of Warrants to be represented by the
Definitive Warrant pursuant to Section 3.5(h) hereof, and the Company
shall execute and the Warrant Agent shall countersign and deliver to
the Person designated in the instructions a Definitive Warrant in the
appropriate amount. Any Definitive Warrant issued in exchange for a
beneficial interest in a Restricted Global Warrant pursuant to this
Section 3.5(c) shall be registered in such name or names as the holder
of such beneficial interest shall instruct the Warrant Registrar
through instructions from the Depositary and the Participant or
Indirect Participant. The Warrant Agent shall deliver such Definitive
Warrants to the Persons in whose names such Warrants are so registered.
Any Definitive Warrant issued in exchange for a beneficial interest in
a Restricted Global Warrant pursuant to this Section 3.5(c)(i) shall
bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Warrants to
Unrestricted Definitive Warrants. A holder of a beneficial interest in a
Restricted Global Warrant may exchange such beneficial interest for an
Unrestricted Definitive Warrant or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Warrant only if:
(A) such transfer is effected pursuant to the
Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Warrant proposes to
exchange such beneficial interest for a Definitive
Warrant that does not bear the Private Placement
Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in
item (1)(b) thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Warrant proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
Definitive Warrant that does not bear the Private
Placement Legend, a certificate from such holder in
the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities
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Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Warrants to
Unrestricted Definitive Warrants. If any holder of a beneficial
interest in an Unrestricted Global Warrant proposes to exchange such
beneficial interest for an Unrestricted Definitive Warrant or to
transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Warrant, then, upon
satisfaction of the conditions set forth in Section 3.5(b)(ii) hereof,
the Warrant Agent shall cause the amount of the applicable Unrestricted
Global Warrant to be reduced accordingly pursuant to Section 3.5(h)
hereof, and the Company shall execute and the Warrant Agent shall
countersign and deliver to the Person designated in the instructions an
Unrestricted Definitive Warrant in the appropriate principal amount.
Any Unrestricted Definitive Warrant issued in exchange for a beneficial
interest pursuant to this Section 3.5(c)(iii) shall be registered in
such name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the Warrant
Registrar through instructions from the Depositary and the Participant
or Indirect Participant. The Warrant Agent shall deliver such
Unrestricted Definitive Warrants to the Persons in whose names such
Warrants are so registered. Any Unrestricted Definitive Warrant issued
in exchange for a beneficial interest pursuant to this Section
3.5(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Warrants for
Beneficial Interests.
(i) Restricted Definitive Warrants to Beneficial
Interests in Restricted Global Warrants. If any Holder of a Restricted
Definitive Warrant proposes to exchange such Warrant for a beneficial
interest in a Restricted Global Warrant or to transfer such Restricted
Definitive Warrants to a Person who takes delivery thereof in the form
of a beneficial interest in a Restricted Global Warrant, then, upon
receipt by the Warrant Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive
Warrant proposes to exchange such Warrant for a beneficial
interest in a Restricted Global Warrant, a certificate from
such Holder in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Warrant is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Warrant is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Warrant is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
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(E) if such Restricted Definitive Warrant is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(F) if such Restricted Definitive Warrant is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Warrant Agent shall cancel the Restricted Definitive Warrant,
increase or cause to be increased the amount of, in the case of clause
(A) above, the appropriate Restricted Global Warrant, in the case of
clause (B) above, the ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and in the case of clause
(C) above, the Regulation S Global Warrant.
(ii) Restricted Definitive Warrants to Beneficial Interests in
Unrestricted Global Warrants. A Holder of a Restricted Definitive
Warrant may exchange such Warrant for a beneficial interest in an
Unrestricted Global Warrant or transfer such Restricted Definitive
Warrant to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Warrant only if:
(A) such transfer is effected pursuant to the
Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Definitive
Warrants proposes to exchange such Warrants for a
beneficial interest in the Unrestricted Global
Warrant, a certificate from such Holder in the form
of Exhibit C hereto, including the certifications in
item (1)(c) thereof; or
(2) if the Holder of such Definitive
Warrants proposes to transfer such Warrants to a
Person who shall take delivery thereof in the form of
a beneficial interest in the Unrestricted Global
Warrant, a certificate from such Holder in the form
of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (d), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 3.5(d)(ii), the Warrant Agent shall cancel the Definitive
Warrants and increase or cause to be increased the aggregate amount of
the applicable Unrestricted Global Warrant.
(iii) Unrestricted Definitive Warrants to Beneficial Interests
in Unrestricted Global Warrants. A Holder of an Unrestricted Definitive
Warrant may exchange such Warrant for a beneficial interest in an
Unrestricted Global Warrant or transfer such Definitive Warrants to a
Person who takes delivery thereof in the form of a beneficial interest
in an Unrestricted Global Warrant at any time. Upon receipt of a
request for such an exchange or
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transfer, the Warrant Agent shall cancel the applicable Unrestricted
Definitive Warrant and increase or cause to be increased the amount of
one of the Unrestricted Global Warrants.
If any such exchange or transfer from a Definitive Warrant to a
beneficial interest is effected pursuant to subparagraphs (ii)(B) or
(iii) above at a time when an Unrestricted Global Warrant has not yet
been issued, the Company shall issue and, upon receipt of a Warrant
Countersignature Order in accordance with Section 3.2 hereof, the
Warrant Agent shall countersign one or more Unrestricted Global
Warrants in the number equal to the number of beneficial interests of
Definitive Warrants so transferred.
(e) Transfer and Exchange of Definitive Warrants for
Definitive Warrants. Upon request by a Holder of Definitive Warrants and such
Holder's compliance with the provisions of this Section 3.5(e), the Warrant
Registrar shall register the transfer or exchange of Definitive Warrants. Prior
to such registration of transfer or exchange, the requesting Holder shall
present or surrender to the Warrant Registrar the Definitive Warrants duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Warrant Registrar duly executed by such Holder or by its
attorney, duly authorized in writing. In addition, the requesting Holder shall
provide any additional certifications, documents and information, as applicable,
required pursuant to the following provisions of this Section 3.5(e).
(i) Restricted Definitive Warrants to Restricted Definitive
Warrants. Any Restricted Definitive Warrant may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Warrant if the Warrant Registrar receives
the following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903
or Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; or
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Warrants to Unrestricted Definitive
Warrants. Any Restricted Definitive Warrant may be exchanged by the
Holder thereof for an Unrestricted Definitive Warrant or transferred to
a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Warrant if:
(A) any such transfer is effected pursuant to the
Registration Statement in accordance with the Warrant
Registration Rights Agreement; or
(B) the Warrant Registrar receives the following:
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(1) if the Holder of such Restricted
Definitive Warrants proposes to exchange such
Warrants for an Unrestricted Definitive Warrant, a
certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d)
thereof; or
(2) if the Holder of such Restricted
Definitive Warrants proposes to transfer such
Warrants to a Person who shall take delivery thereof
in the form of an Unrestricted Definitive Warrant, a
certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Warrants to Unrestricted
Definitive Warrants. A Holder of Unrestricted Definitive Warrants may
transfer such Warrants to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Warrant. Upon receipt of a request
to register such a transfer, the Warrant Registrar shall register the
Unrestricted Definitive Warrants pursuant to the instructions from the
Holder thereof.
(f) Registration Statement. Upon the effectiveness of the
Registration Statement in accordance with the Warrant Registration Rights
Agreement, the Company shall issue and, upon receipt of a Warrant
Countersignature Order in accordance with Section 3.2, the Warrant Agent shall
countersign one or more Unrestricted Global Warrants in an amount up to the
amount of the beneficial interests in the Restricted Global Warrants covered by
such Shelf Registration Statement and concurrently with the resales or exercise
of Warrants pursuant to the Registration Statement, the Warrant Agent shall
cause the amount of the applicable Restricted Global Warrants to be reduced
accordingly, will increase the beneficial interests in the Unrestricted Global
Warrant or issue additional Unrestricted Definitive Warrants as provided in this
Section 3. Resales of Warrants represented by Restricted Definitive Warrants
pursuant to the Registration Statement shall be dealt with pursuant to the
provisions of this Section 3.
(g) Legends. The following legends shall appear on the face of
all Global Warrants and Definitive Warrants issued under this Warrant Agreement
unless specifically stated otherwise in the applicable provisions of this
Warrant Agreement.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below,
each Global Warrant and each Definitive Warrant (and all
Warrants issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED,
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SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any Global Warrant
or Definitive Warrant issued pursuant to subparagraphs
(b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii),
(e)(iii) or (f) to this Section 3.5 (and all Warrants issued
in exchange therefor or substitution thereof) shall not bear
the Private Placement Legend.
(ii) Global Warrant Legend. Each Global Warrant shall bear a
legend in substantially the following form:
"THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN
THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY
FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE
WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (II) THIS GLOBAL
WARRANT MAY BE EXCHANGED OR TRANSFERRED PURSUANT TO SECTIONS 3.5(a),
3.6 AND 3.7 OF THE WARRANT AGREEMENT AND (III) THIS GLOBAL WARRANT MAY
BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION
3.8 OF THE WARRANT AGREEMENT."
(iii) Unit Legend. Each Warrant issued prior to the Separation
Date shall bear a legend in substantially the following form:
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY
ISSUED AS PART OF AN ISSUANCE OF UNITS (THE "UNITS"), EACH OF WHICH
CONSISTS OF $1,000 PRINCIPAL AMOUNT OF THE 14% SENIOR SUBORDINATED
NOTES DUE 2009 (THE "NOTES") OF KEY ENERGY SERVICES, INC. (THE
"COMPANY") AND ONE WARRANT OF THE COMPANY (THE "WARRANTS") INITIALLY
ENTITLING THE HOLDER THEREOF TO PURCHASE 13.5504 SHARES, PAR VALUE
$0.10 PER SHARE, OF THE COMMON STOCK
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OF THE COMPANY. PRIOR TO THE EARLIEST TO OCCUR OF (i) JULY 15, 1999,
(ii) THE COMMENCEMENT OF THE EXCHANGE OFFER OR THE DATE A REGISTRATION
STATEMENT WITH RESPECT TO THE NOTES IS DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, OR (iii) SUCH DATE AS ▇▇▇▇▇▇ BROTHERS SHALL DETERMINE,
THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY
TOGETHER WITH, THE NOTES."
(iv) Regulation S Legend. Each Warrant that is a Registrable
Security and issued pursuant to Regulation S shall bear the following
legends on the face thereof:
"THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS
EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND THE
WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
IN ORDER TO EXERCISE THIS WARRANT, THE HOLDER MUST FURNISH TO THE
COMPANY AND THE WARRANT AGENT EITHER (A) A WRITTEN CERTIFICATION THAT
IT IS NOT A U.S. PERSON AND THE WARRANT IS NOT BEING EXERCISED ON
BEHALF OF A U.S. PERSON OR (B) A WRITTEN OPINION OF COUNSEL TO THE
EFFECT THAT THE SECURITIES DELIVERED UPON EXERCISE OF THE WARRANT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OR THAT THE DELIVERY OF SUCH
SECURITIES IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. TERMS IN THIS LEGEND HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT."
"HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT."
(h) Cancellation and/or Adjustment of Global Warrants.
At such time as all beneficial interests in a particular
Global Warrant have been exercised or exchanged for Definitive Warrants or a
particular Global Warrant has been exercised, redeemed, repurchased or canceled
in whole and not in part, each such Global Warrant shall be returned to or
retained and canceled by the Warrant Agent in accordance with Section 3.8
hereof. At any time prior to such cancellation, if any beneficial interest in a
Global Warrant is exercised or exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Warrant or for Definitive Warrants, the amount of Warrants represented by such
Global Warrant shall be reduced accordingly and an endorsement shall be made on
such Global Warrant by the Warrant Agent or by the Depositary at the direction
of the Warrant Agent to reflect such reduction; and if the beneficial interest
is being exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Warrant, such other
Global Warrant shall be increased accordingly and an endorsement shall be made
on such Global Warrant by the Warrant Agent or by the Depositary at the
direction of the Warrant Agent to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute Global Warrants and Definitive
Warrants at the Warrant Registrar's request. The
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Warrant Agent shall countersign Global Warrants and Definitive Warrants
in accordance with the provisions of Section 3.2 hereof.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Warrant or to a holder of a Definitive
Warrant for any registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Section 7 hereof).
(iii) All Global Warrants and Definitive Warrants issued
upon any registration of transfer or exchange of Global Warrants or
Definitive Warrants shall be the duly authorized, executed and issued
warrants for Common Stock of the Company, not subject to any preemptive
rights, and entitled to the same benefits under this Warrant Agreement,
as the Global Warrants or Definitive Warrants surrendered upon such
registration of transfer or exchange.
(iv) Prior to due presentment for the registration of a
transfer of any Warrant, the Warrant Agent, the Warrant Registrar and
the Company may deem and treat the Person in whose name any Warrant is
registered as the absolute owner of such Warrant for all purposes and
none of the Warrant Agent, the Warrant Registrar or the Company shall be
affected by notice to the contrary.
(j) Facsimile Submissions to Warrant Agent.
All certifications, certificates and Opinions of Counsel
required to be submitted to the Warrant Registrar pursuant to this Section 3.5
to effect a registration of transfer or exchange may be submitted by facsimile.
Notwithstanding anything herein to the contrary, as to any
certificates and/or certifications delivered to the Warrant Registrar pursuant
to this Section 3.5, the Warrant Registrar's duties shall be limited to
confirming that any such certifications and certificates delivered to it are in
the form of Exhibits B and C attached hereto. The Warrant Registrar shall not be
responsible for confirming the truth or accuracy of representations made in any
such certifications or certificates. As to any Opinions of Counsel delivered
pursuant to this Section 3.5, the Warrant Registrar may conclusively rely upon,
and be fully protected in relying upon, such Opinions.
3.6 Replacement Warrants.
In case any of the Warrant Certificates shall be mutilated,
lost, stolen or destroyed, the Company may in its discretion issue and the
Warrant Agent may countersign, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company and the Warrant Agent of such loss, theft or destruction of such Warrant
Certificate. If required by the Warrant Agent or the Company, an indemnity bond
must be supplied by the Holder that is sufficient in the judgment of the Warrant
Agent and the Company to protect the Company, the Warrant Agent, and any other
agent for purposes of the countersignature from any loss that any of them may
suffer if a Warrant is replaced. Applicants for such
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substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company and the Warrant
Agent may prescribe. The Company may charge for its expenses in replacing a
Warrant.
Every replacement Warrant is an additional warrant of the
Company and shall be entitled to all of the benefits of this Warrant Agreement
equally and proportionately with all other Warrants duly issued hereunder.
3.7 Temporary Warrants.
Until certificates representing Warrants are ready for
delivery, the Company may prepare and the Warrant Agent, upon receipt of a
Warrant Countersignature Order, shall issue temporary Warrants. Temporary
Warrants shall be substantially in the form of certificated Warrants but may
have variations that the Company considers appropriate for temporary Warrants
and as shall be reasonably acceptable to the Warrant Agent. Without unreasonable
delay, the Company shall prepare and the Warrant Agent shall countersign
definitive Warrants in exchange for temporary Warrants.
Holders of temporary Warrants shall be entitled to all of the
benefits of this Warrant Agreement.
3.8 Cancellation.
Subject to Section 3.5(h) hereof, the Company at any time may deliver
Warrants to the Warrant Agent for cancellation. The Warrant Registrar shall
forward to the Warrant Agent any Warrants surrendered to them for registration
of transfer, exchange or exercise. The Warrant Agent and no one else shall
cancel all Warrants surrendered for registration of transfer, exchange,
exercise, replacement or cancellation and shall return such canceled Warrants to
the Company (subject to the record retention requirement of the Exchange Act).
The Company may not issue new Warrants to replace Warrants that have been
exercised or that have been delivered to the Warrant Agent for cancellation.
SECTION 4. Separation of Warrants. The Notes and Warrants shall not be
separately transferable prior to the Separation Date.
SECTION 5. Registration and Countersignature. (a) The Warrant Agent,
on behalf of the Company, shall number and register the Warrant Certificates in
a register as they are issued by the Company.
(b) Warrant Certificates shall be manually countersigned by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned.
(c) The Company and the Warrant Agent may deem and treat the
Holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary. Prior to Separation Date, DTC shall
be deemed the registered Holder of such Warrants for all purposes hereunder.
SECTION 6. Terms of Warrants; Exercise of Warrants. Subject to the
terms of this
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Agreement, each Holder shall have the right, which may be exercised commencing
at the opening of business on the Exercise Date and until 5:00 p.m., New York
City time on the Expiration Date to receive from the Company the number of fully
paid and nonassessable Warrant Shares which the Holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price then in effect for such Warrant Shares; provided that no Holder shall be
entitled to exercise such Holder's Warrants at any time, unless, at the time of
exercise (A) (i) a registration statement under the Securities Act relating to
the Warrant Shares has been filed with, and declared effective by, the
Commission, and no stop order suspending the effectiveness of such registration
statement has been issued by the Commission or (ii) the issuance of the Warrant
Shares is permitted pursuant to an exemption from the registration requirements
of the Securities Act; (B) such Warrant Shares are qualified for sale or exempt
from qualification under the applicable securities laws of the states in which
the various holders of the Warrants or other Persons to whom it is proposed that
the Warrant Shares be issued on exercise of the Warrants reside; and (C) the
Black Out Period as defined in the Warrant Registration Rights Agreement is not
in effect. Each Warrant not exercised prior to 5:00 p.m., New York City time, on
the Expiration Date shall become void and all rights thereunder and all rights
in respect thereof under this Agreement shall cease as of such time. No
adjustments as to dividends will be made upon exercise of the Warrants.
The Company shall give notice not less than 90, and not more than 120,
days prior to the Expiration Date to the Holders of all then outstanding
Warrants to the effect that the Warrants will terminate and become void as of
the 5:00 p.m., New York City time on the Expiration Date. If the Company fails
to give such notice, the Warrants will not expire until 90 days after the
Company gives such notice, provided in no event will Holders be entitled to any
damages or other remedy for the Company's failure to give such notice other than
any such extension.
In order to exercise all or any of the Warrants represented by a
Warrant Certificate, (i) in the case of Definitive Warrants, the Holder thereof
must surrender for exercise the Warrant Certificate to the Company at the office
of the Warrant Agent at its New York corporate trust office, (ii) in the case of
a book-entry interest in a Global Warrant, the exercising Participant whose name
appears on a securities position listing of the Depositary as the holder of such
book-entry interest must comply with the Applicable Procedures relating to the
exercise of such book-entry interest in such Global Warrant and (iii) in the
case of both Global Warrants and Definitive Warrants, the holder thereof or the
Participant, as applicable, must deliver to the Company at the office of the
Warrant Agent the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be medallion guaranteed by an
institution which is a member of a Securities Transfer Association recognized
signature guarantee program, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price, which is set forth in the form of
Warrant Certificate as adjusted as herein provided, for the number of Warrant
Shares in respect of which such Warrants are then exercised. In addition, if the
Holder is exercising warrants resold pursuant to Regulation S, (A) such Holder
must certify in writing (i) it is not a "U.S. person" within the meaning of Rule
902(k) of Regulation S under the Securities Act, (ii) the Warrants are not being
purchased or exercised on behalf of or for the account or benefit of a "U.S.
person," (iii) such Holder will resell such Warrants only in accordance with the
provisions of Rules 901 through 905 of Regulation S, pursuant to registration
under the Securities Act or pursuant to an available exemption from registration
and (iv) such Holder will not engage in hedging transactions with regard to the
Warrants and the shares issuable on exercise of such Warrants unless in
compliance with the Securities Act or (B) give a written opinion of counsel to
the effect that the warrant and the securities delivered upon exercise thereof
have been registered under the Securities Act or are exempt from registration
thereunder.
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Payment of the aggregate Exercise Price shall be made (i) in cash by
wire transfer or by certified or official bank check, payable to the order of
the Company in United States dollars or (ii) by a Cashless Exercise for any
share of Common Stock.
When a Holder surrenders a Warrant Certificate representing more than
one Warrant in connection with an option to elect a Cashless Exercise, the
number of shares of Common Stock deliverable upon such Cashless Exercise shall
be equal to the number of shares of Common Stock issuable upon the exercise of
the Warrants that the Holder specifies are to be exercised pursuant to a
Cashless Exercise multiplied by the Cashless Exercise Ratio. The exercise of
Warrants by Holders of beneficial interest in Global Warrants shall be effected
only in accordance with this Agreement and the procedures of the Depositary
therefor.
Subject to the provisions of Section 7 hereof, upon surrender of
Warrants and payment of the Exercise Price as provided above, the Warrant Agent
shall thereupon promptly notify the Company, and the Company shall or shall
cause its Transfer Agent (as defined) promptly transfer to the Holder of such
Warrant Certificate a certificate or certificates for the appropriate number of
Warrant Shares or other securities or property (including any money) to which
the Holder is entitled, registered or otherwise placed in, or payable to the
order of, such name or names as may be directed in writing by the Holder, and
shall deliver such certificate or certificates representing the Warrant Shares
and any other securities or property (including any money) to the person or
persons entitled to receive the same, together with an amount in cash in lieu of
any fraction of a share as provided in Section 13 hereof. Any such certificate
or certificates representing the Warrant Shares shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a Holder of record of such Warrant Shares as of the date of the surrender
of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable commencing on the Exercise Date, at
the election of the Holders thereof, either in full or from time to time in
part. If less than all the Warrants represented by a Definitive Warrant are
exercised, such Definitive Warrant shall be surrendered and a new Definitive
Warrant of the same tenor and for the number of Warrants which were not
exercised shall be executed by the Company and delivered to the Warrant Agent
and the Warrant Agent shall countersign the new Definitive Warrant, registered
in such name or names as may be directed in writing by the Holder, and shall
deliver the new Definitive Warrant to the Person or Persons entitled to receive
the same. The Warrant Agent shall make such notations on the "Schedule of
Exchanges of Interests on the Global Warrants" to each Global Warrant as are
required to reflect any change in the number of Warrants represented by such
Global Warrant resulting from any exercise in accordance with the terms hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled by the Warrant Agent. Such canceled Warrant Certificates shall then be
disposed of by the Warrant Agent in a manner satisfactory to the Company. The
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of the Warrant Shares through the exercise of such
Warrants. The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder by or from the Company available for inspection by
the Holders during normal business
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hours at its office. The Company shall supply the Warrant Agent from time to
time with such numbers of copies of this Agreement as the Warrant Agent may
reasonably request.
All certificates representing Warrant Shares issued in a transaction
exempt from registration under the Securities Act shall bear the following
legend (provided that if no legend is required none shall be placed on the
Warrant Shares):
"THIS SECURITY MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM REGISTRATION
REQUIREMENTS."
SECTION 7. Payment of Taxes. The Company shall pay all documentary
stamp taxes attributable (a) to the initial issuance of Warrant Shares upon the
exercise of Warrants or (b) to any Separation Date; provided that, in each case,
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issue of any Warrant Certificates or
any certificates for Warrant Shares in a name other than that of the Holder of a
Warrant Certificate surrendered upon the exercise of a Warrant, and the Company
shall not be required to issue or deliver such Warrant Certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
SECTION 8. Reservation of Warrant Shares.
(a) The Company shall at all times reserve and keep available,
free from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock or its authorized and issued Common Stock held in its treasury, for
the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants.
(b) The Company will be irrevocably authorized and directed at
all times to reserve such number of authorized shares of Common Stock as shall
be required for issuance upon exercise of the Warrants.
(c) Before taking any action which would cause an adjustment
pursuant to Sections 10 or 12 hereof to reduce the Exercise Price below the then
par value (if any) of the Warrant Shares, the Company will take any corporate
action which may, in the opinion of its counsel (which may be counsel employed
by the Company), be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
(d) The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants in accordance with the terms of this Agreement
(including the terms of the Exercise Price) will, after receipt of the Exercise
Price and upon issue, be duly and validly issued, fully paid and nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof (other than those created by the
Holders).
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SECTION 9. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets (including, without limitation,
the Nasdaq Stock Market) within the United States of America, if any, on which
other shares of Common Stock are then listed. Upon the listing of such Warrant
Shares, the Company shall notify the Warrant Agent in writing. The Company will
obtain and keep all required permits and records in connection with such
listing.
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The number and kind of shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (B) subdivide its outstanding shares of Common Stock, (C)
combine its outstanding shares of Common Stock into a smaller number of shares
or (D) issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect immediately prior to
such action shall be adjusted so that the Holder of any Warrant thereafter
exercised shall be entitled to receive upon payment of the Exercise Price the
number of shares of capital stock of the Company which such Holder would have
owned immediately following such action had such Warrant been exercised
immediately prior thereto. An adjustment made pursuant to this paragraph 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 paragraph, the Holder of any Warrant 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 (whose determination shall
be conclusive) shall determine the allocation of the adjusted Exercise Price
between or among shares of such classes of capital stock.
(b) Reclassification, Combinations, Mergers, etc. In case of
any reclassification or change of outstanding shares of Common Stock issuable
upon exercise of the Warrants (other than as set forth in paragraph (a) above
and 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 in
case of any consolidation or merger of the Company with or into another
corporation (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 issuable upon
exercise of the Warrants) or in case of any sale or conveyance to another
corporation of the assets of the Company as an entirety or substantially as an
entirety, then, as a condition of such reclassification, change, consolidation,
merger, sale or conveyance, the Company or such a successor or purchasing
corporation, as the case may be, shall forthwith make lawful and adequate
provision whereby the Holder of such Warrant then outstanding shall have the
right thereafter to receive on exercise of such Warrant the kind and amount of
shares of stock or other securities or property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a Holder
of the number of shares of Common Stock issuable upon exercise of such Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance and
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enter into a supplemental warrant agreement so providing. Such provisions shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 10. 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,
that issuer shall join in the supplemental warrant agreement. The above
provisions of this paragraph (b) shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
(c) Issuance of Options or Convertible Securities. In the event
that both (x) the Company shall, at any time or from time to time after the date
hereof, issue, sell, distribute or otherwise grant in any manner (including by
assumption) to all holders of the Common Stock any rights to subscribe for or to
purchase, or any warrants or options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common Stock (any such
rights, warrants or options being herein called "OPTIONS" and any such
convertible or exchangeable stock or securities being herein called "CONVERTIBLE
SECURITIES") or any Convertible Securities (other than upon exercise of any
Option), whether or not such Options or the rights to convert or exchange such
Convertible Securities are immediately exercisable, and (y) the price per share
at which Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by dividing
(i) the aggregate amount, if any, received or receivable by the Company as
consideration for the issuance, sale, distribution or granting of such Options
or any such Convertible Security, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise of
all such Options or upon conversion or exchange of all such Convertible
Securities, plus, in the case of Options to acquire Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon the
conversion or exchange of all such Convertible Securities, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of all such
Options or upon the conversion or exchange of all such Convertible Securities or
upon the conversion or exchange of all Convertible Securities issuable upon the
exercise of all such Options) shall be less than the current market price per
share of Common Stock on the record date for the issuance, sale, distribution or
granting of such Options or Convertible Securities (any such event being herein
called a "DISTRIBUTION"), then, effective upon such Distribution, (I) the
Exercise Price shall be reduced to the price (calculated to the nearest 1/1,000
of one cent) determined by multiplying the Exercise Price in effect immediately
prior to such Distribution by a fraction, the numerator of which shall be the
sum of (1) the number of shares of Common Stock outstanding immediately prior to
such Distribution multiplied by the current market price per share of Common
Stock on the date of such Distribution plus (2) the consideration, if any,
received by the Company upon such Distribution plus consideration to be received
by the Company upon the exercise, conversion or exchange of such Options or
Convertible Securities, if any, and the denominator of which shall be the
product of (A) the total number of shares of Common Stock outstanding
immediately after such Distribution multiplied by (B) the current market price
per share of Common Stock on the record date for such Distribution and (II) the
number of shares of Common Stock purchasable upon the exercise of each Warrant
shall be increased to a number determined by multiplying the number of shares of
Common Stock so purchasable immediately prior to the record date for such
Distribution by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to the adjustment required by clause (I) of this
sentence and the denominator of which shall be the Exercise Price in
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effect immediately after such adjustment (for the purposes of this clause (ii)
without giving effect to the provisions of Section 10(j)). For purposes of the
foregoing, the total maximum number of shares of Common Stock issuable upon
exercise of all such Options or upon conversion or exchange of all such
Convertible Securities or upon the conversion or exchange of the total maximum
amount of the Convertible Securities issuable upon the exercise of all such
Options 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 such price per share, determined as
provided above. No adjustment to the number of Warrant Shares issuable upon the
exercise of the Warrants or to the Exercise Price shall be made, however, as a
result of (i) the issuance of shares of Common Stock under any Options or upon
the exercise, conversion or exchange of Options or Convertible Securities
existing on the date hereof or issued pursuant hereto, (ii) the issuance of
shares of Common Stock in bona fide public or private offerings or (iii) the
issuance of Options or shares of Common Stock pursuant to any Option, under any
employee benefit plans approved by the Board of Directors. Such adjustments
shall be made whenever such rights, options or warrants or convertible
securities are issued. Except as provided in paragraphs (l) and (m) below, no
additional adjustment of the Exercise Price shall be made upon the actual
exercise of such Options or upon conversion or exchange of the Convertible
Securities or upon the conversion or exchange of the Convertible Securities
issuable upon the exercise of such Options.
(d) Other Issuances of Common Stock, Options or Convertible
Securities. Upon any issuance of Common Stock, Options or Convertible Securities
as to which paragraphs (a), (b) and (c) above are not applicable, in the event
that at any time or from time to time the Company shall issue (i) shares of
Common Stock (subject to the provisions below), (ii) Options (provided, however,
that no adjustment shall be made upon the exercise of such Options) or (iii)
Convertible Securities (provided, however, that no adjustment shall be made upon
the conversion, exchange or exercise of such securities (other than issuances
specified in (i), (ii) or (iii) which are made as the result of antidilution
adjustments in such securities)), at a price per share at the record date of
such issuance that is less than the then current market price per share of
Common Stock, then the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock theretofore issuable upon
exercise of each Warrant by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such sale or
issuance plus the number of additional shares of Common Stock offered for
subscription or purchase or into or for which such securities that are issued
are convertible, exchangeable or exercisable, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
sale or issuance plus the total number of shares of Common Stock which the
aggregate consideration expected to be received by the Company (assuming the
exercise or conversion of all such Options or Convertible Securities, if any)
would purchase at the then current market price per share of Common Stock, and
subject to paragraph (j) below, the Exercise Price shall be adjusted to a number
determined by dividing the Exercise Price immediately prior to such date of
issuance by the aforementioned fraction; provided, however, that no adjustment
to the number of Warrant Shares issuable upon the exercise of the Warrants or to
the Exercise Price shall be made as a result of (i) the issuance of shares of
Common Stock under any Options existing on the date hereof or issued pursuant
hereto or upon the conversion or exchange of any Convertible Securities, (ii)
the issuance of shares of Common Stock in bona fide public or private offerings
or (iii) the issuance of Options or shares of
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Common Stock pursuant to any Option, under any employee benefit plans approved
by the Board of Directors. Such adjustments shall be made whenever such rights,
options or warrants or convertible securities are issued. No adjustment shall be
made pursuant to this paragraph (d) which shall have the effect of decreasing
the number of shares of Common Stock issuable upon exercise of each warrant or
of increasing the Exercise Price, except by operation of paragraph (l) below.
For purposes of this paragraph (c) hereof and this paragraph (d) only, any
issuance of Common Stock, Options or Convertible Securities, which issuance (or
agreement to issue) (A) is in exchange for or otherwise in connection with the
bona fide acquisition of property or assets of any kind (excluding any such
exchange exclusively for cash) of any Person and (B) is at a price per share
determined by the Board of Directors to be equal to the fair market value
thereof at the time an agreement in principle is reached or at the time a
definitive agreement is entered into, shall be deemed to have been made at a
price per share equal to the current market price per share at the record date
with respect to such issuance (the time of closing or consummation of such
exchange or acquisition) if such definitive agreement is entered into within 90
days of the date of such agreement in principle. The consideration the Company
receives in any public or private offering shall be deemed to include the amount
of fees, discounts and commissions paid to underwriters, agents and financial
advisors.
(e) Combination; Liquidation. In the event of (A) a
consolidation or merger of the Company or a sale of all or substantially all of
the assets of the Company where consideration to the holders of Common Stock in
exchange for their shares is payable solely in cash or (B) the dissolution,
liquidation or winding-up of the Company, Holders shall be entitled to receive,
upon surrender of their Warrant Certificates, distributions on an equal basis
with the holders of Common Stock or other securities, issuable upon exercise of
the Warrants, as if the Warrants had been exercised immediately prior to such
event, less the Exercise Price. Upon receipt of such payment, if any, the
Warrants will expire and the rights of the Holders will cease. In case of any
combination described in this paragraph (e), the surviving or acquiring Person
and, in the event of any dissolution, liquidation or winding-up of the Company,
the Company shall deposit promptly with the Warrant Agent the funds, if any,
necessary to pay to the holders of the Warrant the amounts to which they are
entitled as described above. After such funds and the surrendered Warrant
Certificates are received, the Warrant Agent is required to deliver a check in
such amount as is appropriate (or, in the case of consideration other than cash,
such other consideration as is appropriate) to such Person or Persons as it may
be directed in writing by the Holders surrendering such Warrants.
(f) Dividends and Distributions. In the event the Company shall,
at any time or from time to time after the date thereof, distribute to all the
holders of Common Stock any dividend or other distribution of cash, evidences of
its indebtedness, other securities or other properties or assets (in each case
other than (i) dividends payable in Common Stock, Options or Convertible
Securities and (ii) any cash dividend and other cash distribution from current
or retained earnings, or any options, warrants or other rights to subscribe for
or purchase any of the foregoing, then (A) the Exercise Price shall be decreased
to a price determined by multiplying the Exercise Price then in effect by a
fraction, the numerator of which shall be the current market price per share of
Common Stock on the record date for such distribution less the sum of (X) the
cash portion, if any, of such distribution per share of Common Stock outstanding
(exclusive of any treasury shares) on the record date for such distribution plus
(Y) the then fair market value (as determined in good faith by the Board of
Directors of the Company) per share of Common Stock outstanding (exclusive of
any treasury shares) on
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the record date for such distribution of that portion, if any, of such
distribution consisting of evidences of indebtedness, other securities,
properties, assets, options, warrants or subscription or purchase rights, and
the denominator of which shall be such current market price per share of Common
Stock and (B) the number of shares of Common Stock purchasable upon the exercise
of each Warrant shall be increased to a number determined by multiplying the
number of shares of Common Stock so purchasable immediately prior to the record
date for such distribution by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to the adjustment required by clause
(A) of this sentence and the denominator of which shall be the Exercise Price in
effect immediately after such adjustment (for the purposes of this clause (B)
without giving effect to the provisions of Section 10(j)). The adjustments
required by this paragraph (f) shall be made whenever any such distribution
occurs retroactive to the record date for the determination of stockholders
entitled to receive such distribution.
(g) Current Market Price. For the purpose of any computation of
current market price under this Section 10, Section 12 and Section 13, the
current market price per share of Common Stock at any date shall be (x) for
purposes of Section 12, the closing price on the business day immediately prior
to the exercise of the applicable Warrant pursuant to Section 6 and (y) in all
other cases, the average of the daily closing prices for the shorter of (i) the
20 consecutive trading days ending on the last full trading day on the exchange
or market specified in the second succeeding sentence prior to the Time of
Determination (as defined below) and (ii) the period commencing on the date next
succeeding the first public announcement of the issuance, sale, distribution or
granting in question through such last full trading day prior to the Time of
Determination. The term "TIME OF DETERMINATION" as used herein shall be the time
and date of the earlier to occur of (A) the date as of which the current market
price is to be computed and (B) the last full trading day on such exchange or
market before the commencement of "ex-dividend" trading in the Common Stock
relating to the event giving rise to the adjustment required by paragraph (a),
(b), (c), (d), (e) or (f). The closing price for any day shall be the last
reported sale price regular way or, in case no such reported sale takes place on
such day, the average of the closing bid and asked prices regular way for such
day, in each case (1) on the principal national securities exchange on which the
shares of Common Stock are listed or to which such shares are admitted to
trading or (2) if the Common Stock is not listed or admitted to trading on a
national securities exchange, in the over-the-counter market as reported by
Nasdaq National Market or any comparable system or (3) if the Common Stock is
not listed on Nasdaq National Market or a comparable system, as furnished by two
members of the NASD selected from time to time in good faith by the Board of
Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any other reason the current market price per share cannot
be determined pursuant to the foregoing provisions of this paragraph (g), the
current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company.
(h) Certain Distributions. If the Company shall pay a dividend
payable in Options or Convertible Securities or make any other distribution
payable in Options or Convertible Securities, then, for purposes of paragraph
(c) above, such Options or Convertible Securities shall be deemed to have been
issued or sold without consideration.
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(i) Consideration Received. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold or distributed for
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then
current market price of such consideration (as determined in good faith by the
Board of Directors of the Company). If any Options 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 Options by the parties thereto, such Options shall be deemed
to have been issued without consideration; provided, that if such Options have
an exercise price equal to or greater than the fair market value of the Common
Stock on the date of issuance of such Options, then such Options shall be deemed
to have been issued for consideration equal to such exercise price.
(j) Deferral of Certain Adjustments. No adjustment to the
Exercise Price (including the related adjustment to the number of shares of
Common Stock purchasable upon the exercise of each Warrant) shall be required
hereunder unless such adjustment, together with other adjustments carried
forward as provided below, would result in an increase or decrease of at least
one percent of the Exercise Price; provided that any adjustments which by reason
of this paragraph (j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. No adjustment need be made for
a change in the par value of the Common Stock. All calculations under this
Section shall be made to the nearest 1/1,000 of one cent or to the nearest
1/1,000 of a share, as the case may be.
(k) Changes in Options and Convertible Securities. If the
exercise price provided for in any Options referred to in paragraphs (c) and (d)
above, the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in paragraphs (c) and (d)
above, or the rate at which any Convertible Securities referred to in paragraphs
(c) and (d) above are convertible into or exchangeable for Common Stock shall
change at any time (other than under or by reason of provisions designed to
protect against dilution upon an event which results in a related adjustment
pursuant to this Section 10), the Exercise Price then in effect and the number
of shares of Common Stock purchasable upon the exercise of each Warrant shall
forthwith be readjusted (effective only with respect to any exercise of any
Warrant after such readjustment) to the Exercise Price and number of shares of
Common Stock so purchasable that would then be in effect had the adjustment made
upon the issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.
(l) Expiration of Options and Convertible Securities. If, at any
time after any adjustment to the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall have been made pursuant to paragraph
(c), (d) or (k) above or this paragraph (l), any Options or Convertible
Securities shall have expired unexercised, the number of such shares purchasable
upon the exercise of each Warrant shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may be)
as if (i) the only shares of Common Stock deemed to have been issued in
connection with such Options or Convertible Securities were the shares of
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Common Stock, if any, actually issued or sold upon the exercise of such Options
or Convertible Securities 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, distribution or granting of all such Options or
Convertible Securities, whether or not exercised; provided that no such
readjustment shall have the effect of decreasing the number of such shares so
purchasable by an amount (calculated by adjusting such decrease to account for
all other adjustments made pursuant to this Section 10 following the date of the
original adjustment referred to above) in excess of the amount of the adjustment
initially made in respect of the issuance, sale, distribution or granting of
such Options or Convertible Securities.
(m) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Section 10, the 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 the Warrants 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 shares of
Common Stock contained in this Section 10.
(n) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to this Section 10 or upon the occurrence of any event
or action which would require an adjustment of the Exercise Price pursuant to
this Section 10 but for Section 10(j), each Warrant outstanding prior to the
making of the adjustment in the Exercise Price shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
shares of Common Stock obtained by dividing (i) the sum of the adjusted number
of Warrant Shares issuable upon exercise of a Warrant by payment of the adjusted
Exercise Price plus the Exercise Price prior to adjustment by (ii) the adjusted
Exercise Price (without giving effect to the provisions of Section 10(j)).
SECTION 11. Statement on Warrants. Irrespective of any adjustment in
the number or kind of shares issuable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 12. No Dilution or Impairment; Capital and Ownership Structure.
If any event shall occur, which in the judgment of a majority in interest of the
Holders, requires an adjustment to the Exercise Price or the number of Warrant
Shares issuable hereunder, but as to which the provisions of Section 10 are not
strictly applicable (the "Proposed Adjustments"), the Holders shall send to the
Company a written demand notice specifically setting forth such Proposed
Adjustments within 30 days after the events giving rise to such Proposed
Adjustments. If the Company does not receive the written demand notice within
such 30-day period, the Holders shall be deemed to have waived any demands for
Proposed Adjustments. If the Company rejects the Proposed Adjustments specified
in the demand notice, then within 60 days after delivery thereof, the Company
and a majority in interest of the Holders shall mutually agree on the retention
of a nationally-recognized investment banking firm (the "Firm") to review the
propriety of the Proposed Adjustments. The Firm shall render a written report
within 90 days of its retention setting forth its independent
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financial advice as to whether the Proposed Adjustments are warranted. If the
Firm determines the Proposed Adjustments are warranted, the Company will make
such adjustments and pay the fees and expenses of the Firm. If the Firm
determines the Proposed Adjustments are not warranted, such adjustments will not
be made and the Holders shall pay the firm's fees and expenses.
The Company will not, by amendment of its certificate of incorporation
or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Warrants,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holders against dilution or other impairment.
Without limiting the generality of the foregoing, the Company (a) will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock on
the exercise of the Warrants from time to time outstanding and (b) will not take
any action which results in any adjustment of the Exercise Price if the total
number of Warrant Shares issuable after the action upon the exercise of all of
the Warrants would exceed the total number of shares of Common Stock then
authorized by the Company's certificate of incorporation and available for the
purposes of issue upon such exercise. A consolidation, merger, reorganization or
transfer of assets involving the Company covered by Section 10(b) shall not be
prohibited by or require any adjustment under this Section 12.
It is the intent of this Agreement to provide that, on and as of the
Closing Date, the number of Warrant Shares into which the Warrants are
exercisable represent 10% of the issued and outstanding shares of Common Stock
on a fully diluted basis. For purposes of this paragraph, the phrase "on a fully
diluted basis" shall include any and all options, warrants or other rights to
acquire common equity of the Company, whether or not exercisable on the Closing
Date but excluding all such options, warrants (other than the Warrants) or other
rights to acquire common equity at an exercise or conversion price greater than
the exercise price of the Warrants as of the Closing Date, as adjusted. If
either (i) the issuance of the Warrants causes the application of the
anti-dilution provisions of any of the Company's warrants, options or
convertible securities outstanding as of the Closing Date to result in an
increase in the number of shares of Common Stock issuable thereunder or (ii)
after the Closing Date the exercise price of the Company's then outstanding
warrants, options or convertible securities is adjusted to an exercise price
equal to or less than the Exercise Price of the Warrants, such additional shares
of Common Stock, or such shares of Common Stock issuable upon the exercise or
conversion of such warrants, options or convertible securities, as the case may
be, will be included in the calculation of the Common Stock on a fully basis,
then the number of Warrant Shares issuable upon exercise of each Warrant
automatically shall be adjusted upward by an amount sufficient to bring the
total number of Warrant Shares issuable pursuant to the Warrant Agreement to a
number representing 10% of the then issued and outstanding shares of Common
Stock of the Company on a fully diluted basis.
SECTION 13. 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
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of shares of Common Stock acquirable on exercise of the Warrants so presented.
If any fraction of a share of Common Stock would, except for the provisions of
this Section, be issuable on the exercise of any Warrant (or specified portion
thereof), the Company shall direct the Transfer Agent to pay an amount in cash
calculated by it to equal the then current market price per share multiplied by
such fraction computed to the nearest whole cent less such fraction of the
Exercise Price. The Holders, by their acceptance of the Warrant Certificates,
expressly waive any and all rights to receive any fraction of a share of Common
Stock or a stock certificate representing a fraction of a share of Common Stock.
SECTION 14. Notices to Warrant Holders; No Rights as Shareholders. Upon
any adjustment of the Exercise Price pursuant to Sections 10 or 12, the Company
shall promptly thereafter (i) cause to be filed with the Warrant Agent a
certificate of a firm of independent public accountants of nationally recognized
standing selected by the Board of Directors of the Company (who may be the
regular auditors of the Company) setting forth the Exercise Price after such
adjustment and setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based and setting forth the number of
Warrant Shares (or portion thereof) issuable after such adjustment in the
Exercise Price, upon exercise of a Warrant and payment of the adjusted Exercise
Price, which certificate shall be conclusive evidence of the correctness of the
matters set forth therein, and (ii) cause to be given to each of the registered
Holders (or the DTC Participants with interests in the Global Warrant) at
his/her address appearing on the Warrant register written notice of such
adjustments by first-class mail, postage prepaid. The Warrant Agent shall be
entitled to rely on the above-referenced accountant's certificate and shall be
under no duty or responsibility with respect to any such certificate, except to
exhibit the same from time to time to any Holder desiring an inspection thereof
during reasonable business hours. The Warrant Agent shall not at any time be
under any duty or responsibility to any Holder to determine whether any facts
exist that may require any adjustment of the number of shares of Common Stock or
other stock or property issuable on exercise of the Warrants or the Exercise
Price, or with respect to the nature or extent of any such adjustment when made,
or with respect to the method employed in making such adjustment or the validity
or value (or the kind or amount) of any shares of Common Stock or other stock or
property which may be issuable on exercise of the Warrants. The Warrant Agent
shall not be responsible for any failure of the Company to make any cash payment
or to issue, transfer or deliver any shares of Common Stock or stock
certificates or other common stock or property upon the exercise of any Warrant.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in shares
of Common Stock or distributions referred to in Section 10 hereof); or
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(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) a Change of Control (as defined in the Indenture) occurs;
or
(f) the Company proposes to take any other action that would
require an adjustment of the Exercise Price or the number of Warrant
Shares pursuant to Sections 10 or 12;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered Holders of the Warrant Certificates at
such Holder's address appearing on the Warrant register, at least 20 days (or 10
days in any case specified in clauses (a) or (b) above) prior to the applicable
record date hereinafter specified, or promptly in the case of events for which
there is no record date, by first class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up or Change of Control is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up or Change of Control. The failure to give the notice required by this Section
14 or any defect therein shall not affect the legality or validity of any
distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or Change of Control or the
vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the Holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor warrant agent under the provisions of
Section 17. Any such successor Warrant Agent shall promptly cause notice of its
succession as Warrant Agent to be mailed (by first class mail, postage prepaid)
to each Holder at such Holder's last address as shown on the register maintained
by the Warrant Agent pursuant this Agreement. In case at the time such successor
to the Warrant Agent shall succeed to the agency created by this Agreement, and
in case at that time any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor
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to the Warrant Agent may adopt the countersignature of the original Warrant
Agent; and in case at that time any of the Warrant Certificates shall not have
been countersigned, any successor to the Warrant Agent may countersign such
Warrant Certificates either in the name of the predecessor Warrant Agent or in
the name of the successor to the Warrant Agent; and in all such cases such
Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 16. Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the Holders of Warrants, by their acceptance
thereof, shall be bound:
(a) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrant
Certificates except as otherwise provided by the express terms of this
Agreement.
(b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with any of the covenants contained in this Agreement
or in the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel of
its own selection (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any Holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(d) Before the Warrant Agent acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel, or both. The
Warrant Agent shall incur no liability or responsibility to the Company or to
any Holder of any Warrant Certificate for any action taken in reliance on any
Warrant Certificate, certificate of shares, notice, resolution, waiver, consent,
order, certificate, or other paper, document or instrument (whether in its
original or facsimile form) believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent such
compensation as shall be agreed upon from time to time in writing for all
services rendered by the Warrant Agent in the execution of this Agreement, to
reimburse the Warrant Agent for all expenses, taxes and governmental charges and
other charges of any kind and nature reasonably incurred by the Warrant
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Agent in the execution of this Agreement and to indemnify the Warrant Agent and
any predecessor Warrant Agent and save it harmless against any and all
liabilities, claims, damages, losses and expenses (including taxes other than
taxes based on the income of the Warrant Agent) including judgments, reasonable
costs and counsel fees and expenses, for anything done or omitted by the Warrant
Agent in the execution of this Agreement or arising out of or in connection with
its performance of its obligations or duties under this Agreement, except to the
extent such liabilities are attributable to its gross negligence or willful
misconduct. The Warrant Agent shall notify the Company promptly of any claim for
which it may seek indemnity; provided that the failure by the Warrant Agent to
so notify the Company shall not relieve or reduce its obligations hereunder
except to the extent the failure to so notify the Company of any claim of which
a Responsible Officer of the Warrant Agent has actual knowledge materially
prejudices the Company. The Company shall defend the claim and the Warrant
Agent shall cooperate in the defense. The Warrant Agent may have separate
counsel and the Company shall pay the reasonable fees and expense of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
(f) The Warrant Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more Holders of Warrant
Certificates shall furnish the Warrant Agent with security and indemnity
reasonably satisfactory to it for any costs and expenses which may be incurred,
but this provision shall not affect the power of the Warrant Agent to take such
action as is necessary, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent and any recovery of judgment shall
be for the ratable benefit of the Holders of the Warrants, as their respective
rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for
the Company, and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not be liable for anything which it may do or refrain
from doing in connection with this Agreement except for its own gross negligence
or willful misconduct.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the
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method employed in making the same. The Warrant Agent shall not be accountable
with respect to the validity or value or the kind or amount of any Warrant
Shares or of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant or with respect to whether any such
Warrant Shares or other securities will when issued be validly issued and fully
paid and nonassessable, and makes no representation with respect thereto.
(j) The Warrant Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Warrant
Agent.
(k) The Warrant Agent may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Warrant Agent and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Warrant Agent, the Warrant Agent shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement (but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein).
(l) The Warrant Agent shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be proved
that the Warrant Agent was negligent in ascertaining the pertinent facts.
(m) The Warrant Agent shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority interest of Warrants relating to the
time, method and place of conducting any proceeding for any remedy available to
the Warrant Agent, or exercising any trust or power conferred upon the Warrant
Agent, under this Agreement with respect to the Units, Warrants or Notes, as
applicable.
(n) No provision of this Agreement shall require the Warrant
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(o) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Warrant Agent shall be subject to the
provisions of this Section.
(p) The Warrant Agent may conclusively rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(q) The Warrant Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
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direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Warrant Agent, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may see
fit, and, if the Warrant Agent shall determine to make such further inquiry or
investigation, it shall be entitled to, during reasonable business hours,
examine the books, records and premises of the Company, personally or by agent
or attorney at the sole cost of the Warrant Agent and shall incur no liability
or additional liability of any kind by any reason of such inquiry or
investigation.
(r) The Warrant Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Warrant Agent shall not be responsible for any
willful misconduct or gross negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(s) The Warrant Agent shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Agreement.
(t) The rights, privileges, protections, immunities and benefits
given to the Warrant Agent, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Warrant Agent in
each of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 17. Resignation and Removal of Warrant Agent; Appointment of
Successor. No resignation or removal of the Warrant Agent and no appointment of
a successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant Agent
may resign its duties and be discharged from all further duties and liability
hereunder (except liability arising as a result of the Warrant Agent's own
negligence, willful misconduct or bad faith) after giving written notice to the
Company. The Company may remove the Warrant Agent upon written notice, and the
Warrant Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall,
at the Company's expense, cause to be mailed (by first class mail, postage
prepaid) to each Holder at his last address as shown on the register of the
Company maintained by the Warrant Registrar a copy of said notice of resignation
or notice of removal, as the case may be. Upon such resignation or removal, the
Company shall appoint in writing a successor warrant agent. If the Company shall
fail to make such appointment within a period of 30 days after it has been
notified in writing of such resignation by the resigning Warrant Agent or after
such removal, then the resigning Warrant Agent or the Holder of any Warrant may
at the expense of the Company apply to any court of competent jurisdiction for
the appointment of a new warrant agent. Any new warrant agent, whether appointed
by the Company or by such a court, shall be a corporation doing business under
the laws of the United States or any state thereof, in good standing and having
a combined capital and surplus of not less than $50,000,000. The combined
capital and surplus of any such new warrant agent shall be deemed to be the
combined capital and surplus as set forth in the most recent annual report of
its condition published by such warrant agent prior to its appointment, provided
that such reports are published at least annually pursuant to law or to the
requirements of a federal or state supervising or examining authority. After
acceptance in writing of such appointment by the
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new warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such
appointment, the Company shall give notice thereof to the resigning or removed
Warrant Agent. Failure to give any notice provided for in this Section, however,
or any defect therein, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new warrant agent, as
the case may be.
SECTION 18. Registration. The Company and the Warrant Agent acknowledge
that Holders shall have the registration rights set forth in the Warrant
Registration Rights Agreement, a copy of which is attached hereto as Exhibit D.
The Warrant Agent further acknowledges and agrees that pursuant to the terms
thereof it may be required, upon receipt of written instructions of the Company,
to remit to Holders certain Liquidated Damages payable by the Company to such
Holders upon receipt of such monies from the Company.
SECTION 19. Reports. (a) So long as any of the Warrants remain
outstanding, and to the extent the Company is required to send such documents to
the holders of its outstanding Common Stock, the Company shall, upon request,
furnish to the registered Holders of the Warrants and to the beneficial Holders,
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants; and (ii) all current reports that would be required to
be filed with the Commission on Form 8-K if the Company were required to file
such reports. In addition, whether or not required by the rules and regulations
of the Commission, the Company will file a copy of all such information and
reports with the Commission for public availability (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request.
Delivery of such reports, information and documents to the Warrant
Agent is for informational purposes only and the Warrant Agent's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Warrant Agent is
entitled to rely exclusively on Officers' Certificates).
(b) The Company shall provide the Warrant Agent with a
sufficient number of copies of all reports filed with the Commission pursuant to
clause (a) above that the Warrant Agent may be required to deliver to the
Holders of the Warrants under this Section 19.
SECTION 20. Rule 144A and Rule 144. The Company hereby agrees with each
Holder, for so long as any Registrable Securities remain outstanding, and during
any period in which the Company (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder of Registrable
Securities, to such Holder or beneficial owner of Registrable
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Securities, the information required by Rule 144A(d)(4) under the Securities Act
in order to permit resales of such Registrable Securities pursuant to Rule 144A,
and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all
filings required thereby in a timely manner in order to permit resales of such
Registrable Securities pursuant to Rule 144.
SECTION 21. Notices to Company and Warrant Agent. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by the
Holder Certificate to or on the Company shall be sufficiently given or made when
and if deposited in the mail, first class or registered, postage prepaid,
addressed (until another address is filed in writing by the Company with the
Warrant Agent), as follows:
Key Energy Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or by
the Holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if deposited in the mail, first-class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) to the Warrant Agent as follows:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 22. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any Holders of Warrant Certificates in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Warrant Agent may deem necessary or desirable and which shall not in any
way materially adversely affect the interests of any Holder of Warrant
Certificates. Any amendment or supplement to this Agreement that has a material
adverse effect on the interests of Holders shall require the written consent of
Holders representing a majority of the then outstanding Warrants (excluding
Warrants held by the Company or any of its Affiliates). The consent of each
Holder affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
upon exercise of Warrants would be decreased (other than pursuant to adjustments
provided by this Agreement). The Warrant Agent shall be entitled to receive and,
subject to Section 18, shall be fully protected in relying upon, an officers'
certificate
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and opinion of counsel as conclusive evidence that any such amendment or
supplement is authorized or permitted hereunder, that it is not inconsistent
herewith, and that it will be valid and binding upon the Company in accordance
with its terms.
SECTION 23. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 24. Termination. This Agreement (other than the Company's
obligations with respect to Warrants previously exercised and with respect to
indemnification under Section 17) shall terminate on the earlier to occur of (i)
5:00 p.m., New York City time on the Expiration Date (ii) the date on which all
Warrants are exercised into Warrant Shares or (iii) the payment to Holders of
the distributions referred to in Section 10(e) upon surrender of their Warrant
Certificates.
SECTION 25. Governing Law. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF
LAWS PRINCIPLES.
SECTION 26. Benefits of This Agreement. (a) Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the Holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Warrant Agent and the
Holders of the Warrant Certificates.
(b) Prior to the exercise of the Warrants, no Holder of a
Warrant Certificate, as such, shall be entitled to any rights of a stockholder
of the Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of meetings of stockholders for the election of
directors of the Company or any other matter or to receive any notice of any
proceedings of the Company, except as may be specifically provided for herein.
The Holders of the Warrants are not entitled to share in the assets of the
Company in the event of the liquidation, dissolution or winding up of the
Company's affairs.
(c) All rights of action in respect of this Agreement are
vested in the Holders of the Warrants, and any Holder of any Warrant, without
the consent of the Warrant Agent or the Holder of any other Warrant, may, on
such Holder's own behalf and for such Holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder's rights hereunder,
including the right to exercise, exchange or surrender for purchase such
Holder's Warrants in the manner provided in this Agreement.
SECTION 27. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
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[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
KEY ENERGY SERVICES, INC.
By: _____________________________________
Name:
Title:
THE BANK OF NEW YORK, as Warrant Agent
By: ____________________________
(Authorized Signature)
Warrant Agreement Signature Pages