EXHIBIT 1
EXECUTION COPY
PREFERENCE WARRANT AGREEMENT
Dated as of January 27, 1999
By and Between
@ENTERTAINMENT, INC.
and
BANKERS TRUST COMPANY,
Preference Warrant Agent
__________________
5.5 million Warrants to Purchase an Aggregate
of 5.5 million Shares of Common Stock
(Par Value $0.01 Per Share)
TABLE OF CONTENTS
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY ANDREGISTRATION OF
PREFERENCE WARRANT CERTIFICATES .............................. 2
SECTION 1.01. ISSUANCE OF PREFERENCE WARRANTS................... 2
SECTION 1.02. FORM OF PREFERENCE WARRANT CERTIFICATE[S]......... 2
SECTION 1.03. EXECUTION OF PREFERENCE WARRANT CERTIFICATES...... 3
SECTION 1.04. AUTHENTICATION AND DELIVERY....................... 3
SECTION 1.05. REGISTRATION...................................... 4
SECTION 1.06. REGISTRATION OF TRANSFERS OR EXCHANGES............ 5
SECTION 1.07. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED
PREFERENCE WARRANT CERTIFICATES.................10
SECTION 1.08. OFFICES FOR EXERCISE, ETC. .......................11
ARTICLE II
DURATION, EXERCISE OF PREFERENCE WARRANTS; EXERCISE PRICE
AND REPURCHASE OF PREFERENCE WARRANTS..........................12
SECTION 2.01. DURATION OF PREFERENCE WARRANTS...................12
SECTION 2.02. EXERCISE, EXERCISE PRICE, SETTLEMENT AND DELIVERY.12
SECTION 2.03. CANCELLATION OF PREFERENCE WARRANT CERTIFICATES...16
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF PREFERENCE
WARRANTS.......................................................16
SECTION 3.01. ENFORCEMENT OF RIGHTS.............................16
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY.................................17
SECTION 4.01. PAYMENT OF TAXES..................................17
SECTION 4.02. RULE 144A.........................................17
SECTION 4.03. SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS............................................17
SECTION 4.05. NOTICE OF PROPOSAL TO ISSUE OR SELL...............18
SECTION 4.06. SALE OR ISSUANCE AFTER NOTICE.....................19
SECTION 4.07. REDEMPTION OF CERTAIN NEW SECURITIES..............19
SECTION 4.08. TERMINATION.......................................19
SECTION 4.09. ASSIGNMENT........................................20
SECTION 4.10. DEFINITIONS.......................................20
ARTICLE V
ADJUSTMENTS......................................................21
SECTION 5.01. ADJUSTMENT OF PREFERENCE EXERCISE RATE; NOTICES...21
SECTION 5.02. FRACTIONAL PREFERENCE WARRANT SHARES..............30
SECTION 5.03. EXCEPTIONS TO ANTIDILUTION PROVISIONS.............30
ARTICLE VI
CONCERNING THE PREFERENCE WARRANT AGENT..........................31
SECTION 6.01. PREFERENCE WARRANT AGENT..........................31
SECTION 6.02. CONDITIONS OF PREFERENCE WARRANT AGENT'S
OBLIGATIONS.....................................31
SECTION 6.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR..........36
ARTICLE VII
MISCELLANEOUS....................................................37
SECTION 7.01. AMENDMENT.........................................37
SECTION 7.02. NOTICES AND DEMANDS TO THE COMPANY AND PREFERENCE
WARRANT AGENT...................................38
SECTION 7.03. ADDRESSES FOR NOTICES TO PARTIES AND FOR
TRANSMISSION OF DOCUMENTS.......................39
SECTION 7.04. NOTICES TO HOLDERS................................39
SECTION 7.05. APPLICABLE LAW....................................39
SECTION 7.06. PERSONS HAVING RIGHTS UNDER AGREEMENT.............40
SECTION 7.07. HEADINGS..........................................40
SECTION 7.08. COUNTERPARTS......................................40
SECTION 7.09. INSPECTION OF AGREEMENT...........................40
SECTION 7.10. AVAILABILITY OF EQUITABLE REMEDIES................40
SECTION 7.11. OBTAINING OF GOVERNMENTAL APPROVALS...............40
EXHIBIT A - Form of Preference Warrant Certificate..................A-1
EXHIBIT B - Form of Legend for Global Preference Warrant............B-1
EXHIBIT C - Certificate to Be Delivered upon Exchange or
Registration of Transfer of Warrants..................C-1
INDEX OF DEFINED TERMS
Defined Term Page
Agreement ..................................................... 1
Business Day........................................12, ▇-▇, ▇-▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇..................................................▇▇
Cashless Exercise..............................................13
Cashless Exercise Ratio........................................13
Common Stock................................................... 2
Definitive Warrants............................................ 2
Election to Exercise...........................................13
Exercise Date..................................................14
Exercise Price.................................................13
Exercise Rate..................................................13
Expiration Date................................................12
Global Shares..................................................15
Global Warrants................................................ 2
Independent Financial Expert...................................29
Initial Purchasers............................................. 1
Notes.......................................................... 1
Officers' Certificate.......................................... 8
Private Placement Legend....................................... 9
Purchase Agreement............................................. 1
Related Parties................................................32
Requisite Warrant Holders......................................38
Resale Restriction Termination Date............................ 5
Surviving Person...............................................25
Time of Determination.............................. 29, ▇-▇, ▇-▇▇
▇▇▇▇▇▇▇........................................................ 1
Warrant Agent.................................................. 1
Warrant Agent Office...........................................12
Warrant Exercise Office........................................11
Warrant Register............................................... 5
Warrant Registration Rights Agreement.......................... 1
Warrant Shares................................................. 2
PREFERENCE WARRANT AGREEMENT
PREFERENCE WARRANT AGREEMENT ("AGREEMENT"), dated as of January
27, 1999 by and between @ENTERTAINMENT, INC. (the "COMPANY"), a Delaware
corporation, and Bankers Trust Company, as preference warrant agent (with
any successor Preference Warrant Agent, the "PREFERENCE WARRANT AGENT").
WHEREAS, the Company has entered into a purchase agreement (the
"MGPE PURCHASE AGREEMENT") dated January 22, 1999 with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Private Equity Limited on behalf of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Development Capital
Syndication Limited ("MGPE"), in which the Company has agreed to sell to
MGPE 45,000 shares of the Company's Series A 12% cumulative preference
shares (the "SERIES A PREFERENCE SHARES"), and (ii) 45,000 warrants (the
"SERIES A PREFERENCE WARRANTS"), each initially entitling the holder
thereof to purchase 110 shares of Common Stock (as defined herein) of the
Company; and
WHEREAS, the Company has entered into a purchase agreement (the
"CHASE PURCHASE AGREEMENT") dated January 22, 1999 with ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇▇ ▇▇▇▇▇"), Ms. ▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇ ▇▇▇▇▇") and ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇ ▇▇▇▇▇", and together with ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, the
"INITIAL CHASE PURCHASERS" and together with the ▇▇▇▇▇▇▇ Trust, the "CHASE
PURCHASERS"), in which the Company has agreed to sell to the Chase
Purchasers an aggregate of 5,000 shares of the Company's Series B 12%
cumulative preference shares (the "SERIES B PREFERENCE SHARES"), and
(ii) 5,000 warrants (the "SERIES B PREFERENCE WARRANTS"), each initially
entitling the holder thereof to purchase 110 shares of Common Stock (as
defined herein) of the Company; the Chase Purchasers and MGPE are herein
after collectively referred to as the "PURCHASERS"; the Series A Preference
Shares and the Series B Preference Shares are hereinafter referred to
collectively as the "PREFERENCE SHARES"; the Series A Preference Warrants
and the Series B Preference Warrants are hereinafter referred to as the
"PREFERENCE WARRANTS" and the certificates evidencing the Preference
Warrants are hereinafter referred to collectively as the "PREFERENCE
WARRANT CERTIFICATES"; and
WHEREAS, the holders of the Preference Warrants are entitled to
the benefits of a Preference Warrant Registration Rights Agreement dated as
of January 27, 1999 between the Company and the Purchasers (the "PREFERENCE
WARRANT REGISTRATION RIGHTS AGREEMENT"); and
WHEREAS, the Company desires the Preference Warrant Agent as
preference warrant agent to assist the Company in connection with the
issuance, exchange, cancellation, replacement and exercise of the
Preference Warrants, and in this Agreement wishes to set forth, among other
things, the terms and conditions on which the Preference Warrants may be
issued, exchanged, canceled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF PREFERENCE WARRANT CERTIFICATES
SECTION 1.01. ISSUANCE OF PREFERENCE WARRANTS. Preference
Warrants shall be originally issued in connection with the sale of the
Preference Shares to the Purchasers.
Each Preference Warrant Certificate shall evidence the number of
Preference Warrants specified therein. Each Preference Warrant evidenced by
a Preference Warrant Certificate shall, when it becomes exercisable as
provided herein and therein, initially represent the right, subject to the
provisions contained herein and therein, to purchase from the Company (and
the Company shall issue and sell to the holder of such Preference Warrant)
110 fully paid and non-assessable Preference Warrant Shares at an exercise
price of $10.00 per share. The number of shares of the Company's common
stock, par value $0.01 per share (the "COMMON STOCK") issuable upon
exercise of a Preference Warrant is subject to adjustment as provided
herein and in the Preference Warrants. The shares of Common Stock issuable
upon exercise of a Preference Warrant are hereinafter referred to as the
"PREFERENCE WARRANT SHARES" and, unless the context otherwise requires,
such term shall also include any other securities issuable and deliverable
upon exercise of a Preference Warrant as provided in Article V, subject to
adjustment as provided herein and in the Preference Warrant Certificates.
SECTION 1.02. FORM OF PREFERENCE WARRANT CERTIFICATE[S]. The
Preference Warrant Certificate[s] will initially be issued either in global
form (the "GLOBAL PREFERENCE WARRANTS") or in registered form as
Certificated Preference Warrant Certificates (the "CERTIFICATED PREFERENCE
WARRANTS"), in either case substantially in the form of EXHIBIT A attached
hereto. Any Global Preference Warrants to be delivered pursuant to this
Agreement shall bear the legend set forth in EXHIBIT B attached hereto.
The Global Preference Warrants shall represent such of the outstanding
Preference Warrants as shall be specified therein, and each Global
Preference Warrant shall provide that it shall represent the aggregate
amount of outstanding Preference Warrants from time to time endorsed
thereon and that the aggregate amount of outstanding Preference Warrants
represented thereby may from time to time be reduced or increased, as
appropriate. Any endorsement of a Global Preference Warrant to reflect the
amount of any increase or decrease in the amount of outstanding Preference
Warrants represented thereby shall be made by the Preference Warrant Agent
and the Depositary (as defined below) in accordance with instructions given
by the holder thereof. The Depository Trust Company shall act as the
"DEPOSITARY" with respect to the Global Preference Warrants until a
successor shall be appointed by the Company and the Preference Warrant
Agent. Upon written request, a holder of Preference Warrants may receive
from the Preference Warrant Agent or the Depositary Certificated Preference
Warrants as set forth in Section 1.07 hereof.
SECTION 1.03. EXECUTION OF PREFERENCE WARRANT CERTIFICATES. The
Preference Warrant Certificates shall be executed on behalf of the Company
by the chairman of its board of directors, its president, its chief
executive officer, its chief financial officer or any vice president and by
its treasurer, assistant treasurer, secretary or assistant secretary. Such
signatures may be the manual or facsimile signatures of the present or any
future such officers. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Preference Warrant Shares. Typographical and other minor
errors or defects in any such reproduction of any such signature shall not
affect the validity or enforceability of any Preference Warrant Certificate
that has been duly countersigned and delivered by the Preference Warrant
Agent.
In case any officer of the Company who shall have signed any of
the Preference Warrant Certificates shall cease to be such officer before
the Preference Warrant Certificate so signed shall be authenticated and
delivered by the Preference Warrant Agent or disposed of by the Company,
such Preference Warrant Certificate nevertheless may be authenticated and
delivered or disposed of as though the person who signed such Preference
Warrant Certificate had not ceased to be such officer of the Company. Any
Preference Warrant Certificate may be signed on behalf of the Company by
such persons as, at the actual date of the execution of such Preference
Warrant Certificate, shall be the proper officers of the Company, although
at the date of the execution and delivery of this Agreement any such person
was not such an officer.
SECTION 1.04. AUTHENTICATION AND DELIVERY. Subject to the
immediately following paragraph, Preference Warrant Certificates shall be
authenticated by manual signature and dated the date of authentication by
the Preference Warrant Agent and shall not be valid for any purpose unless
so authenticated and dated. The Preference Warrant Certificates shall be
numbered and shall be registered in the Preference Warrant Register (as
defined in Section 1.06 hereof).
Upon the receipt by the Preference Warrant Agent of a written
order of the Company, which order shall be signed by the chairman of its
board of directors, its president, its chief executive officer, its chief
financial officer or any vice president and by its treasurer, assistant
treasurer, secretary or assistant secretary, and shall specify the amount
of Preference Warrants to be authenticated, whether the Preference Warrants
are to be Global Preference Warrants or Certificated Preference Warrants,
the date of such Preference Warrants and such other information as the
Preference Warrant Agent may reasonably request, without any further action
by the Company, the Preference Warrant Agent is authorized, upon receipt
from the Company at any time and from time to time of the Preference
Warrant Certificates, duly executed as provided in Section 1.03 hereof, to
authenticate the Preference Warrant Certificates and upon the holder's
request deliver them. Such authentication shall be by a duly authorized
signatory of the Preference Warrant Agent (although it shall not be
necessary for the same signatory to sign all Preference Warrant
Certificates).
In case any authorized signatory of the Preference Warrant Agent
who shall have authenticated any of the Preference Warrant Certificates
shall cease to be such authorized signatory before the Preference Warrant
Certificate shall be disposed of by the Company or the Preference Warrant
Agent, such Preference Warrant Certificate nevertheless may be delivered or
disposed of as though the person who authenticated such Preference Warrant
Certificate had not ceased to be such authorized signatory of the
Preference Warrant Agent; and any Preference Warrant Certificate may be
authenticated on behalf of the Preference Warrant Agent by such persons as,
at the actual time of authentication of such Preference Warrant
Certificates, shall be the duly authorized signatories of the Preference
Warrant Agent, although at the time of the execution and delivery of this
Agreement any such person is not such an authorized signatory.
The Preference Warrant Agent's authentication on all Preference
Warrant Certificates shall be in substantially the form set forth in
EXHIBIT A hereto.
SECTION 1.05. REGISTRATION. The Company will keep, at the
office or agency maintained by the Company for such purpose, a register or
registers in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of, and
registration of transfer and exchange of, Preference Warrants as provided
in this Article. Each person designated by the Company from time to time
as a person authorized to register the transfer and exchange of the
Preference Warrants is hereinafter called, individually and collectively,
the "PREFERENCE REGISTRAR." The Company hereby initially appoints the
Preference Warrant Agent as Preference Registrar. Upon written notice to
the Preference Warrant Agent and any acting Preference Registrar, the
Company may appoint a successor Preference Registrar for such purposes.
In connection with the separate units offering being conducted
simultaneously, the Company is issuing a number of Warrants. The Company
agrees to keep separate registers for the Warrants and the Preference
Warrants. The Company may utilize the same entity as Registrar for the
Warrants and for the Preference Warrants. The Preference Warrant Agent is
also the warrant agent for the Warrants being issued by the Company in the
Units Offering. The functions and obligations of the Registrar and of the
Preference Registrar are virtually identical. Likewise, the functions and
obligations of the Preference Warrant Agent and of the Warrant Agent are
virtually identical. In each case, this Agreement relates only to the
relationship between the Company and the Preference Warrants Agent and
Preference Registrar. The relationship between the Company and the Warrant
Agent and Registrar of the Units is covered by a separate warrant agreement
which is dated as of the date hereof.
The Company will at all times designate one person (which may be
the Company and which need not be a Preference Registrar) to act as
repository of a master list of names and addresses of the holders of
Preference Warrants (the "PREFERENCE WARRANT REGISTER"). The Preference
Warrant Agent will act as such repository unless and until some other
person is, by written notice from the Company to the Preference Warrant
Agent and the Preference Registrar, designated by the Company to act as
such. The Company shall cause each Preference Registrar to furnish to such
repository, on a current basis, such information as to all registrations of
transfer and exchanges effected by such Preference Registrar, as may be
necessary to enable such repository to maintain the Preference Warrant
Register on as current a basis as is practicable.
SECTION 1.06. REGISTRATION OF TRANSFERS OR EXCHANGES.
(a) TRANSFER OR EXCHANGE OF CERTIFICATED PREFERENCE WARRANTS.
When Certificated Preference Warrants are presented to the Preference
Warrant Agent with a request from the holder:
(i) to register the transfer of the Certificated Preference Warrants;
or
(ii) to exchange such Certificated Preference Warrants for an equal
number of Certificated Preference Warrants of other authorized
denominations,
the Preference Warrant Agent shall register the transfer or make the
exchange as requested if the requirements under this Preference Warrant
Agreement as set forth in this Section 1.06 for such transactions are met;
PROVIDED, HOWEVER, that the Certificated Preference Warrants presented or
surrendered by a holder for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer or exchange in form satisfactory to the Company and the
Preference Warrant Agent, duly executed by such holder or by his
attorney, duly authorized in writing; and
(y) in the case of Preference Warrants the offer and sale of which
have not been registered under the Securities Act of 1933 (the
"Securities Act") and are presented for transfer or exchange
prior to (X) the date which is two years (or such shorter period
as may be prescribed by Rule 144(k) (or any successor provision
thereto)) after the later of the date of original issuance of the
Preference Warrants and the last date on which the Company or any
affiliate of the Company was the owner of such Preference
Warrants, or any predecessor thereto, and (Y) such later date, if
any, as may be required by any subsequent change in applicable
law (the "RESALE RESTRICTION TERMINATION DATE"), such Preference
Warrants shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Preference Warrants are being delivered to the
Preference Warrant Agent by a holder for registration in the
name of such holder, without transfer, a certification from
such holder to that effect (in substantially the form of
EXHIBIT C hereto); or
(B) if such Preference Warrants are being transferred to a
qualified institutional buyer as such term is defined in
Rule 144A under the Securities Act (a "QIB") in accordance
with Rule 144A under the Securities Act, a certification
from the transferor to that effect (in substantially the
form of EXHIBIT C hereto); or
(C) if such Preference Warrants are being transferred in
reliance on Rule 144 under the Securities Act, delivery by
the transferor of (i) a certification from the transferor to
that effect (in substantially the form of EXHIBIT C hereto),
and (ii) an opinion of counsel reasonably satisfactory to
the Company to the effect that such transfer is in
compliance with the Securities Act; or
(D) if such Preference Warrants are being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification from the
transferor to that effect (in substantially the form of
EXHIBIT C hereto) and an opinion of counsel reasonably
satisfactory to the Company to the effect that such transfer
is in compliance with the Securities Act; PROVIDED that the
Company may, based upon the views of its own counsel,
instruct the Preference Warrant Agent not to register such
transfer in any case where the proposed transferee is not a
QIB.
(b) RESTRICTIONS ON TRANSFER OF A CERTIFICATED PREFERENCE
WARRANT FOR A BENEFICIAL INTEREST IN A GLOBAL PREFERENCE WARRANT. A
Certificated Preference Warrant may not be transferred by a holder for a
beneficial interest in a Global Preference Warrant except upon satisfaction
of the requirements set forth below. Upon receipt by the Preference
Warrant Agent of a Certificated Preference Warrant, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to
the Preference Warrant Agent, together with:
(A) certification from such holder (in substantially the form of
EXHIBIT C hereto) that such Certificated Preference Warrant
is being transferred to a QIB in accordance with Rule 144A
under the Securities Act; and
(B) written instructions directing the Preference Warrant Agent
to make, or to direct the Depositary to make, an endorsement
on the Global Preference Warrant to reflect an increase in
the aggregate amount of the Preference Warrants represented
by the Global Preference Warrant,
then the Preference Warrant Agent shall cancel such Certificated Preference
Warrant and cause, or direct the Depositary to cause, in accordance with
the standing instructions and procedures existing between the Depositary
and the Preference Warrant Agent, the number of Preference Warrant Shares
represented by the Global Preference Warrant to be increased accordingly.
If no Global Preference Warrant is then outstanding, the Company shall
issue, and the Preference Warrant Agent shall upon written instructions
from the Company authenticate, a new Global Preference Warrant in the
appropriate amount.
(c) TRANSFER OR EXCHANGE OF GLOBAL PREFERENCE WARRANTS. The
transfer or exchange of Global Preference Warrants or beneficial interests
therein shall be effected through the Depositary, in accordance with this
Section 1.06, the Private Placement Legend (as defined below), this
Agreement (including those restrictions on transfer set forth herein) and
the procedures of the Depositary therefor.
(d) TRANSFER OR EXCHANGE OF A BENEFICIAL INTEREST IN A GLOBAL
PREFERENCE WARRANT FOR A CERTIFICATED PREFERENCE WARRANT.
(i) Any person having a beneficial interest in a Global Preference
Warrant may transfer or exchange such beneficial interest for a
Certificated Preference Warrant upon receipt by the Preference
Warrant Agent of written instructions (or such other form of
instructions as is customary for the Depositary) from the
Depositary or its nominee on behalf of any person having a
beneficial interest in a Global Preference Warrant, including a
written order containing registration instructions and, in the
case of any such transfer or exchange prior to the Resale
Restriction Termination Date, the following additional
information and documents:
(A) if such beneficial interest is being transferred to the
person designated by the Depositary as being the beneficial
owner, a certification from such person to that effect (in
substantially the form of EXHIBIT C hereto); or
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a
certification from the transferor to that effect (in
substantially the form of EXHIBIT C hereto); or
(C) if such beneficial interest is being transferred in reliance
on Rule 144 under the Securities Act, delivery by the
transferor of (i) a certification to that effect (in
substantially the form of EXHIBIT C hereto) and (ii) an
opinion of counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act; or
(D) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of
the Securities Act, a certification from the transferor to
that effect (in substantially the form of EXHIBIT C hereto)
and an opinion of counsel reasonably satisfactory to the
Company to the effect that such transfer is in compliance
with the Securities Act; PROVIDED that the Company may
instruct the Preference Warrant Agent not to register such
transfer in any case where the proposed transferee is not a
QIB;
then, upon receipt of such written instructions and additional
information and documents, the Preference Warrant Agent will
cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Preference
Warrant Agent, the aggregate amount of the Global Preference
Warrant to be reduced and, following such reduction, the Company
will execute and, upon receipt of an authentication order in the
form of an officers' certificate (a certificate signed by the
chairman or a co-chairman of the board, the president, the chief
executive officer, the chief financial officer, any executive
vice president or any senior vice president of the Company
signing alone, or by any vice president signing together with the
secretary, any assistant secretary, the treasurer, or any
assistant treasurer of the Company) (an "OFFICERS' CERTIFICATE"),
the Preference Warrant Agent will authenticate and deliver to the
transferee a Certificated Preference Warrant.
(ii) Certificated Preference Warrants issued in exchange for a
beneficial interest in a Global Preference Warrant pursuant to
this Section 1.06(d) shall be registered in such names and in
such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct the Preference Warrant Agent in
writing. The Preference Warrant Agent shall deliver such
Certificated Preference Warrants to the persons in whose names
such Preference Warrants are so registered and adjust the Global
Preference Warrant pursuant to paragraph (h) of this Section
1.06.
(e) RESTRICTIONS ON TRANSFER OR EXCHANGE OF GLOBAL PREFERENCE
WARRANTS. Notwithstanding any other provisions of this Agreement (other
than the provisions set forth in subsection (f) of this Section 1.06), a
Global Preference Warrant may not be transferred or exchanged as a whole
except by the Depositary to a nominee of the Depositary; by a nominee of
the Depositary to the Depositary or another nominee of the Depositary; or
by the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
(f) AUTHENTICATION OF CERTIFICATED PREFERENCE WARRANTS IN
ABSENCE OF DEPOSITARY. If at any time:
(i) the Depositary for the Global Preference Warrants notifies the
Company that the Depositary is unwilling or unable to continue as
Depositary for the Global Preference Warrant and a successor
Depositary for the Global Preference Warrant is not appointed by
the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Preference
Warrant Agent in writing that it elects to cause the issuance of
Certificated Preference Warrants for all Global Preference
Warrants under this Agreement,
then the Company will execute, and the Preference Warrant Agent will, upon
receipt of an Officers' Certificate requesting the authentication and
delivery of Certificated Preference Warrants, authenticate and deliver
Certificated Preference Warrants, in an aggregate number equal to the
aggregate number of Preference Warrants represented by the Global
Preference Warrant, in exchange for such Global Preference Warrant.
(g) PRIVATE PLACEMENT LEGEND. Upon the transfer or exchange of
Preference Warrant Certificates not bearing the legend set forth in the
first paragraph of EXHIBIT A attached hereto (the "PRIVATE PLACEMENT
LEGEND"), the Preference Warrant Agent shall deliver Preference Warrant
Certificates that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Preference Warrant Certificates
bearing the Private Placement Legend, the Preference Warrant Agent shall
deliver Preference Warrant Certificates that bear the Private Placement
Legend unless, and the Preference Warrant Agent is hereby authorized to
deliver Preference Warrant Certificates without the Private Placement
Legend if, (i) there is delivered to the Preference Warrant Agent an
opinion of counsel reasonably satisfactory to the Company to the effect
that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the
Securities Act or (ii) there is delivered to the Preference Warrant Agent
an Officers' Certificate stating that the Preference Warrants to be
transferred or exchanged represented by such Preference Warrant
Certificates are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act.
(h) CANCELLATION OR ADJUSTMENT OF A GLOBAL PREFERENCE WARRANT.
At such time as all beneficial interests in a Global Preference Warrant
have either been exchanged for Certificated Preference Warrants, redeemed,
repurchased or canceled, such Global Preference Warrant shall be returned
to the Company or, upon written order to the Preference Warrant Agent in
the form of an Officers' Certificate from the Company, retained and
canceled by the Preference Warrant Agent. At any time prior to such
cancellation, if any beneficial interest in a Global Preference Warrant is
exchanged for Certificated Preference Warrants, redeemed, repurchased or
canceled, the number of Preference Warrants represented by such Global
Preference Warrant shall be reduced and an endorsement shall be made on
such Global Preference Warrant by the Preference Warrant Agent to reflect
such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS OR EXCHANGES OF
CERTIFICATED PREFERENCE WARRANTS.
(i) To permit registrations of transfers or exchanges completed in
accordance with the provisions hereof, the Company shall execute,
at the Preference Warrant Agent's request, and the Preference
Warrant Agent shall authenticate, Certificated Preference
Warrants and Global Preference Warrants.
(ii) All Certificated Preference Warrants and Global Preference
Warrants issued upon any registration of transfer or exchange of
Certificated Preference Warrants or Global Preference Warrants,
as the case may be, completed in accordance with the provisions
hereof, shall be the valid obligations of the Company, entitled
to the same benefits under this Preference Warrant Agreement as
the Certificated Preference Warrants or Global Preference
Warrants surrendered upon the registration of transfer or
exchange.
(iii)Prior to due presentment for registration of transfer of any
Preference Warrant, the Preference Warrant Agent and the Company
may deem and treat the person in whose name any Preference
Warrant is registered as the absolute owner of such Preference
Warrant, and neither the Preference Warrant Agent nor the Company
shall be affected by notice to the contrary.
SECTION 1.07. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED
PREFERENCE WARRANT CERTIFICATES. Upon receipt by the Company and the
Preference Warrant Agent (or any agent of the Company or the Preference
Warrant Agent, if requested by the Company) of evidence satisfactory to
them of the loss, theft, destruction, defacement, or mutilation of any
Preference Warrant Certificate and of indemnity satisfactory to them and,
in the case of mutilation or defacement, upon surrender thereof to the
Preference Warrant Agent for cancellation, then, in the absence of notice
to the Company or the Preference Warrant Agent that such Preference Warrant
Certificate has been acquired by a BONA FIDE purchaser or holder in due
course, the Company shall execute, and an authorized signatory of the
Preference Warrant Agent shall manually authenticate and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced or
mutilated Preference Warrant Certificate, a new Preference Warrant
Certificate representing a like number of Preference Warrants, bearing a
number or other distinguishing symbol not contemporaneously outstanding.
Prior to the issuance of any new Preference Warrant Certificate under this
Section in a name other than the prior registered holder of the lost,
stolen, destroyed, defaced or mutilated Preference Warrant Certificate, the
Company may require the payment from the holder of such Preference Warrant
Certificate of a sum sufficient to cover any tax, stamp tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Preference Warrant Agent
and the Preference Registrar or any agent thereof) in connection therewith.
Every substitute Preference Warrant Certificate executed and delivered
pursuant to this Section 1.07 in lieu of any lost, stolen or destroyed
Preference Warrant Certificate shall constitute an additional contractual
obligation of the Company, whether or not the lost, stolen or destroyed
Preference Warrant Certificate shall be at any time enforceable by anyone,
and shall be entitled to the benefits of (but shall be subject to all the
limitations of rights set forth in) this Agreement equally and
proportionately with any and all other Preference Warrant Certificates duly
executed and delivered hereunder. The provisions of this Section 1.07 are
exclusive with respect to the replacement of lost, stolen, destroyed,
defaced or mutilated Preference Warrant Certificates and shall preclude (to
the extent lawful) any and all other rights or remedies notwithstanding any
law or statute existing or hereafter enacted to the contrary with respect
to the replacement of lost, stolen, destroyed, defaced or mutilated
Preference Warrant Certificates.
The Preference Warrant Agent is hereby authorized to authenticate
in accordance with the provisions of this Agreement and deliver the new
Preference Warrant Certificates required pursuant to the provisions of this
Section 1.07.
SECTION 1.08. OFFICES FOR EXERCISE, ETC. So long as any of the
Preference Warrants remain outstanding, the Company will designate and
maintain in the Borough of Manhattan, The City of New York: (a) an office
or agency where the Preference Warrant Certificates may be presented for
exercise (each a "PREFERENCE WARRANT EXERCISE OFFICE"), (b) an office or
agency where the Preference Warrant Certificates may be presented for
registration of transfer and for exchange, and (c) an office or agency
where notices and demands to or upon the Company in respect of the
Preference Warrants or of this Agreement may be served. The Company may
from time to time change or rescind such designation, as it may deem
desirable or expedient; PROVIDED, HOWEVER, that an office or agency shall
at all times be maintained in the Borough of Manhattan, The City of New
York, as provided in the first sentence of this Section. In addition to
such office or offices or agency or agencies, the Company may from time to
time designate and maintain one or more additional offices or agencies
within or outside The City of New York, where Preference Warrant
Certificates may be presented for exercise or for registration of transfer
or for exchange, and the Company may from time to time change or rescind
such designation, as it may deem desirable or expedient. The Company will
give to the Preference Warrant Agent written notice of the location of any
such office or agency and of any change of location thereof. The Company
hereby designates the Preference Warrant Agent at its principal corporate
trust office identified in Section 7.03 in the Borough of Manhattan, The
City of New York (the "PREFERENCE WARRANT AGENT OFFICE"), as the initial
agency maintained for each such purpose. In case the Company shall fail to
maintain any such office or agency or shall fail to give such notice of the
location or of any change in the location thereof, presentations and
demands may be made and notice may be served at the Preference Warrant
Agent Office and the Company appoints the Preference Warrant Agent as its
agent to receive all such presentations, surrenders, notices and demands.
ARTICLE II
DURATION, EXERCISE OF PREFERENCE WARRANTS; EXERCISE PRICE
AND REPURCHASE OF PREFERENCE WARRANTS
SECTION 2.01. DURATION OF PREFERENCE WARRANTS. Subject to the
terms and conditions established herein, the Preference Warrants shall
expire at 5:00 p.m., New York City time, on February 1, 2010. The
applicable date of expiration of a particular Preference Warrant is
referred to herein as the "PREFERENCE EXPIRATION DATE" of such Preference
Warrant. Each Preference Warrant may be exercised as set forth in Section
2.02. The Company will give notice of expiration to then registered
holders of Preference Warrants not less than 90 nor more than 120 days
prior to the Preference Expiration Date. Failure to give such notice
however, will not prevent the Preference Warrants from expiring and
becoming void on the Preference Expiration Date.
Any Preference Warrant not exercised before 5:00 p.m., New York
City time, on the Preference Expiration Date shall become void, and all
rights of the holder under the Preference Warrant Certificate evidencing
such Preference Warrant and under this Agreement shall cease.
"BUSINESS DAY" shall mean any day on which (i) banks in The City
of New York, (ii) the principal U.S. securities exchange or market, if any,
on which any Common Stock is listed or admitted to trading and (iii) the
principal U.S. securities exchange or market, if any, on which the
Preference Warrants are listed or admitted to trading, are open for
business.
SECTION 2.02. EXERCISE, EXERCISE PRICE, SETTLEMENT AND DELIVERY.
(a) Subject to the provisions of this Agreement, each Preference Warrant
shall entitle the registered holder thereof to purchase from the Company on
any Business Day during the period beginning on the Preference Exercise
Date and ending at 5:00 p.m., New York City time, on the Preference
Expiration Date 110 fully paid, registered and non-assessable Preference
Warrant Shares (and any other securities purchasable or deliverable upon
exercise of such Preference Warrant as provided in Article V), subject to
adjustment in accordance with Article V hereof, at the purchase price of
$10.00 for each share purchased (the "PREFERENCE EXERCISE PRICE"). The
number and amount of Preference Warrant Shares issuable upon exercise of a
Preference Warrant (the "PREFERENCE EXERCISE RATE") at the Preference
Exercise Price shall be subject to adjustment from time to time as set
forth in Article V hereof.
"PREFERENCE EXERCISE DATE" means any date after the Issue Date on
which the Preference Warrants are exercised and Preference Warrant Shares
issued in connection with such exercise.
(b) Preference Warrants may be exercised on or after the date
they are exercisable hereunder by (i) surrendering at any Preference
Warrant Exercise Office the Preference Warrant Certificate evidencing such
Preference Warrants with the form of election to purchase Preference
Warrant Shares set forth on the reverse side of the Preference Warrant
Certificate (the "ELECTION TO EXERCISE") duly completed and signed by the
registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney, and in the case of
a transfer, such signature shall be guaranteed by an eligible guarantor
institution, and (ii) paying in full the Preference Exercise Price for each
such Preference Warrant exercised. Each Preference Warrant may be
exercised only in whole. The Preference Warrants may be exercised in whole
or in part prior to the Preference Expiration Date.
(c) Simultaneously with the exercise of each Preference Warrant,
payment in full of the aggregate Preference Exercise Price may be made, at
the option of the holder, (i) in cash or by certified or official bank
check, (ii) by a Cashless Exercise (as defined below) or (iii) by any
combination of (i) and (ii), to the office or agency where the Preference
Warrant Certificate is being surrendered. For purposes of this Agreement,
a "CASHLESS EXERCISE" shall mean an exercise of a Preference Warrant in
accordance with the immediately following two sentences. To effect a
Cashless Exercise, the holder may exercise a Preference Warrant or
Preference Warrants without payment of the Preference Exercise Price in
cash by surrendering such Preference Warrant or Preference Warrants
(represented by one or more Preference Warrant Certificates) and, in
exchange therefor, receiving such number of shares of Common Stock equal to
the product of (1) that number of shares of Common Stock for which such
Preference Warrant or Preference Warrants are exercisable and which would
be issuable in the event of an exercise with payment in cash of the
Preference Exercise Price and (2) the Cashless Exercise Ratio (as defined
below). The "CASHLESS EXERCISE RATIO" shall equal a fraction, the
numerator of which is the excess of the Current Market Value (calculated as
set forth in this Agreement) per share of Common Stock on the date of
exercise over the Preference Exercise Price per share of Common Stock as of
the date of exercise and the denominator of which is the Current Market
Value per share of Common Stock on the date of exercise. Upon surrender of
a Preference Warrant Certificate representing more than one Preference
Warrant in connection with a holder's option to elect a Cashless Exercise,
such holder must specify the number of Preference Warrants for which such
Preference Warrant Certificate is to be exercised (without giving effect to
such Cashless Exercise). All provisions of this Agreement shall be
applicable with respect to a Cashless Exercise of a Preference Warrant
Certificate for less than the full number of Preference Warrants
represented thereby. No payment or adjustment shall be made on account of
any distributions of dividends on the Common Stock issuable upon exercise
of a Preference Warrant. If the Company has not effected the registration
under the Securities Act of the offer and sale of the Preference Warrant
Shares by the Company to the holders of the Preference Warrants on or prior
to the Effective Preference Exercise Date (as defined below), the Company
may elect to require that the holders of the Warrants effect the exercise
thereof solely pursuant to the Cashless Exercise option and may also amend
the Preference Warrants to eliminate the requirement for payment of the
Preference Exercise Price with respect to such Cashless Exercise option.
The Preference Warrant Agent shall have no obligation under this section to
calculate the Cashless Exercise Ratio.
(d) Upon surrender of a Preference Warrant Certificate and
payment and collection of the Preference Exercise Price at any Preference
Warrant Exercise Office (other than any Preference Warrant Exercise Office
that also is an office of the Preference Warrant Agent), such Preference
Warrant Certificate and payment shall be promptly delivered to the
Preference Warrant Agent. The "EFFECTIVE PREFERENCE EXERCISE DATE" for a
Preference Warrant shall be the date when all of the items referred to in
the first sentence of paragraphs (b) and (c) of this Section 2.02 are
received by the Preference Warrant Agent at or prior to 11:00 a.m., New
York City time, on a Business Day and the exercise of the Preference
Warrants will be effective as of such Effective Preference Exercise Date.
If any items referred to in the first sentence of paragraphs (b) and (c)
are received after 11:00 a.m., New York City time, on a Business Day, the
exercise of the Preference Warrants to which such item relates will be
effective on the next succeeding Business Day. Notwithstanding the
foregoing, in the case of an exercise of Preference Warrants on the
Preference Expiration Date, if all of the items referred to in the first
sentence of paragraphs (b) and (c) are received by the Preference Warrant
Agent at or prior to 5:00 p.m., New York City time, on the Preference
Expiration Date, the exercise of the Preference Warrants to which such
items relate will be effective on the Preference Expiration Date.
(e) Upon the exercise of a Preference Warrant in accordance with
the terms hereof, the receipt of a Preference Warrant Certificate and
payment of the Preference Exercise Price (or election of the Cashless
Exercise option), the Preference Warrant Agent shall: (i) except to the
extent exercise of the Preference Warrant has been effected through a
Cashless Exercise, cause an amount equal to the aggregate Preference
Exercise Price to be paid to the Company by crediting such amount in
immediately available funds to the account designated by the Company in
writing to the Preference Warrant Agent for that purpose; (ii) advise the
Company immediately by telephone of the amount so deposited to the
Company's account and promptly confirm such telephonic advice in writing;
and (iii) as soon as practicable, advise the Company in writing of the
number of Preference Warrants exercised in accordance with the terms and
conditions of this Agreement and the Preference Warrant Certificates, the
instructions of each exercising holder of the Preference Warrant
Certificates with respect to delivery of the Preference Warrant Shares to
which such holder is entitled upon such exercise, and such other
information as the Company shall reasonably request.
(f) Subject to Section 5.02 hereof, as soon as practicable after
the exercise of any Preference Warrant or Preference Warrants in accordance
with the terms hereof, the Company shall issue or cause to be issued to or
upon the written order of the registered holder of the Preference Warrant
Certificate evidencing such exercised Preference Warrant or Preference
Warrants, a certificate or certificates evidencing the Preference Warrant
Shares to which such holder is entitled, in fully registered form,
registered in such name or names as may be directed by such holder pursuant
to the Election to Exercise, as set forth on the reverse of the Preference
Warrant Certificate. Such certificate or certificates evidencing the
Preference Warrant Shares shall be deemed to have been issued and any
persons who are designated to be named therein shall be deemed to have
become the holders of record of such Preference Warrant Shares as of the
close of business on the Effective Exercise Date; the Preference Warrant
Shares may initially be issued in Global form (the "GLOBAL PREFERENCE
SHARES"). Such Global Preference Shares shall represent such of the
outstanding Preference Warrant Shares as shall be specified therein and
each Global Preference Share shall provide that it represents the aggregate
amount of outstanding Preference Warrant Shares from time to time endorsed
thereon and that the aggregate amount of outstanding Preference Warrant
Shares represented thereby may from time to time be reduced or increased,
as appropriate. Any endorsement of a Global Preference Share to reflect
any increase or decrease in the amount of outstanding Preference Warrant
Shares represented thereby shall be made by the registrar for the
Preference Warrant Shares and the Depositary (referred to below) in
accordance with instructions given by the holder thereof. The Depository
Trust Company shall (if possible) act as the Depositary with respect to the
Global Preference Shares until a successor shall be appointed by the
Company and the registrar for the Preference Warrant Shares. After
exercise of any Preference Warrant or Preference Warrant Shares, the
Company shall also issue or cause to be issued to or upon the written order
of the registered holder of such Preference Warrant Certificate, a new
Preference Warrant Certificate, countersigned by the Preference Warrant
Agent pursuant to written instruction, evidencing the number of Preference
Warrants, if any, remaining unexercised unless such Preference Warrants
shall have expired.
(g) The Holders of the Preference Warrants have agreed with the
Company that while they may exercise their Preference Warrants at any time,
in whole or in part, prior to the Preference Expiration Date, such Holders
of the Preference Warrants will not be allowed to sell or otherwise dispose
of any Preference Warrant Shares prior to one year from the date hereof.
SECTION 2.03. CANCELLATION OF PREFERENCE WARRANT CERTIFICATES.
In the event the Company shall purchase or otherwise acquire Preference
Warrants, the Preference Warrant Certificates evidencing such Preference
Warrants may thereupon be delivered to the Preference Warrant Agent, and if
so delivered, shall at the Company's written instruction be canceled by it
and retired. The Preference Warrant Agent shall cancel all Preference
Warrant Certificates properly surrendered for exchange, substitution,
transfer or exercise. Upon the Company's written request, the Preference
Warrant Agent shall deliver such canceled Preference Warrant Certificates
to the Company.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF PREFERENCE WARRANTS
SECTION 3.01. ENFORCEMENT OF RIGHTS. (a) Notwithstanding any
of the provisions of this Agreement, any holder of any Preference Warrant
Certificate, without the consent of the Preference Warrant Agent, the
holder of any Preference Warrant Shares or the holder of any other
Preference Warrant Certificate, may, in and for his own behalf enforce, and
may institute and maintain any suit, action or proceeding against the
Company suitable to enforce, his right to exercise the Preference Warrant
or Preference Warrants evidenced by his Preference Warrant Certificate in
the manner provided in such Preference Warrant Certificate and in this
Agreement.
(b) Neither the Preference Warrants nor any Preference Warrant
Certificate shall entitle the holders thereof to any of the rights of
shareholders of the Company, including, without limitation, the right to
vote or to receive any dividends or other payments or to consent or to
exercise any preemptive rights (except as provided in Section 4.04 hereof)
or to receive notice as stockholders in respect of the meetings of
stockholders or for the election of directors of the Company or any other
matter, or any rights whatsoever as stockholders of the Company.
SECTION 3.02. OBTAINING STOCK EXCHANGE LISTINGS. The Company
will use its best efforts from time to time to list the Preference Warrant
Shares, immediately upon their issuance upon the exercise of Preference
Warrants, on the Nasdaq National Market.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Preference
Warrants and of the Preference Warrant Shares upon the exercise of
Preference Warrants; PROVIDED, HOWEVER, that the Company shall not be
required to pay any tax or other governmental charge which may be payable
in respect of any transfer or exchange of any Preference Warrant
Certificates or any certificates for Preference Warrant Shares in a name
other than the registered holder of a Preference Warrant Certificate
surrendered upon the exercise of a Preference Warrant. In any such case,
no transfer or exchange shall be made unless or until the person or persons
requesting issuance thereof shall have paid to the Company the amount of
such tax or other governmental charge or shall have established to the
satisfaction of the Company that such tax or other governmental charge has
been paid or an exemption is available therefrom.
SECTION 4.02. RULE 144A. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the rules, regulations and policies adopted by the Securities and Exchange
Commission thereunder in a timely manner in accordance with the
requirements of the Securities Act and the Exchange Act and, if at any time
prior to the Preference Expiration Date the Company is not required to file
such reports, it will mail to each owner or beneficial owner of Preference
Warrants upon request such information as is referred to in Rule 144A(d)(4)
under the Securities Act.
SECTION 4.03. SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS. The Company will also agree to comply with all applicable laws,
including the Securities Act and any applicable state securities laws, in
connection with the offer and sale of Common Stock (and other securities
and property deliverable) upon exercise of the Preference Warrants.
SECTION 4.04. GRANT OF RIGHT OF FIRST REFUSAL
(a) The Company hereby grants to each Purchaser the right of
first refusal to purchase, at the same per share price and on the same
terms and conditions, such Purchaser's pro rata share of New
Securities as the Company may, from time to time, sell or issue after
the date of this Agreement; PROVIDED HOWEVER, that this right of first
refusal shall not provide the Purchasers with additional rights to
acquire securities if the provisions of Section 5.01 (c) or (d) of
this Agreement are applicable.
(b) For purposes of this Agreement, each Purchaser's "pro rata
share" is the ratio of the number of Shares of Common Stock that such
Purchaser has the right to acquire pursuant to the Preference Warrants
held by it immediately prior to the issuance of New Securities, to the
total number of shares of Common Stock outstanding immediately prior
to the issuance of New Securities, assuming full conversion of all
outstanding Shares convertible into or exchangeable for Common Stock
and exercise of all outstanding rights, options and warrants for
Common Stock. Any shares of Common Stock acquired by any Purchaser
(including pursuant to the Preference Warrants) and any other rights
to acquire shares of Common Stock acquired by any Purchaser (other
than the Preference Warrants) shall not be included in the "pro rata
share" that such Purchaser may be entitled to purchase.
(c) This right of first refusal shall be subject to the remaining
provisions of this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary,
no adjustment in the number of shares of Common Stock issuable or
issued upon exercise, exchange or conversion of any outstanding
securities convertible into or exchangeable for Common Stock and
exercise for Common Stock of any outstanding right, option or warrant
held by such Person (or which such Person is entitled to hold pursuant
to a right of conversion or exchange on any security) by reason of
original provisions of or relating to such security which provide for
an automatic adjustment upon the occurrence of specified events shall
be deemed an issuance or sale or a proposed issuance or sale of New
Securities, nor shall such adjustment give rise to any rights of first
refusal under this Agreement.
SECTION 4.05. NOTICE OF PROPOSAL TO ISSUE OR SELL
(a) In the event the Company proposes to issue or sell New
Securities, it shall give each Purchaser written notice of the
proposal (a "Section 4.05 Notice"), describing the proposed New
Securities, and the terms (including the cash to be paid for, plus the
fair market value of any other consideration to be given for, the New
Securities) upon which the Company proposes to sell or issue the New
Securities and the proposed buyers, if known.
(b) Each Purchaser shall have 30 days after any Section 4.05
Notice is given to agree to purchase such New Securities upon the
terms specified in the Section 4.05 Notice, and in the event that any
Purchaser wishes to do so it shall give written notice to the Company,
stating therein the quantity of New Securities to be purchased, which
in any event may not exceed such Purchaser's pro rata share thereof.
In the event that any Purchaser fails to give such notice, it shall be
deemed to have waived its right of first refusal under this Agreement.
(c) In the event that any Purchaser exercises its right pursuant
to Section 4.05(b) such Purchaser shall purchase the quantity of New
Securities specified in such Purchaser's notice to the Company on the
terms specified in the Section 4.05 Notice (except that if such terms
include the giving of consideration other than cash, such Purchaser
shall pay the fair market value of such other consideration in lieu
thereof) on a date (other than a date on which banks in The City of
New York City are closed) not more than 210 days after the date of the
Section 4.05 Notice. The Company shall give such Purchaser notice of
the purchase date not less than ten days in advance of the purchase
date.
SECTION 4.06. SALE OR ISSUANCE AFTER NOTICE
(a) From the first day after the first day on which the
Purchasers have (i) exercised their right of first refusal as provided
for in Section 4.05(b), (ii) waived their right of first refusal in
writing, or (iii) been deemed to have waived their right of first
refusal pursuant to the last sentence of Section 4.05(b), the Company
shall have 180 days to sell or issue, or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, not later than 180 days from the date of such
agreement) to sell or issue, all those New Securities covered by the
applicable Section 4.05 Notice, at a price and upon terms no more
favorable to the purchasers thereof than specified in such Section
4.05 Notice.
(b) If the Company does not sell such New Securities within the
time periods specified in Section 4.06(a), the Company shall not be
permitted to issue or sell such New Securities, unless it first offers
such securities to each Purchaser again pursuant to the terms of this
Agreement.
SECTION 4.07. REDEMPTION OF CERTAIN NEW SECURITIES
Any options, warrants, or other rights to purchase Common Stock
that any Purchaser purchases pursuant to this Agreement (collectively,
"Option Rights") shall be subject to redemption by the Company if the
Company does not complete a sale or issuance pursuant to Section 4.05(a) of
the New Securities the proposed sale or issuance of which caused the
Company to give the Section 4.05 Notice that led to such Purchaser's
purchase of such Option Rights.
SECTION 4.08. TERMINATION
Upon the disposition by any Purchaser of all of its Preference
Warrants, such Purchaser shall have no further rights under this Agreement.
SECTION 4.09. ASSIGNMENT. The rights granted by the Company
under Section 4.04 can be assigned by a Purchaser only to a transferee
or assignee of some of all of the Preference Warrant Shares or Preference
Warrants (as adjusted for stock splits and the like) that is owned and
controlled by such Purchaser.
SECTION 4.10. DEFINITIONS. For purposed of this Article IV, the
following terms shall have the following definitions:
"COMMON STOCK" means the commons stock of the Company, par value
$0.01 per share.
"NEW SECURITIES" means any Common Stock, whether now authorized
or not, and any rights, options or warrants to purchase any such Common
Stock, and securities of any type whatsoever that are, or may become,
convertible into Common Stock; provided that the term "New Securities" does
not include:
(i) securities issued in connection with an acquisition by the
Company of another business entity or business segment of such an
entity, whether by merger, purchase of substantially all the stock or
assets, or by other reorganization;
(ii) securities issued to employees, consultants, officers or
directors of the Company either
(x) pursuant to any stock option, stock purchase, stock
bonus or similar plan that is or has been approved by the Board
of Directors of the Company on or before the date of this
Agreement, or
(y) pursuant to any stock option, stock purchase, stock
bonus or similar plan that is approved by the Compensation
Committee of the Board of Directors of the Company, provided that
such securities have an exercise price of no less than the Common
Stock fair market value on the date of the grant;
(iii) securities issued in connection with any stock split, stock
dividend, recapitalization or other reorganization of the Company;
(iv) securities issued upon the exchange, exercise or conversion
of any security that was the subject of a right of first refusal
pursuant to this Agreement;
(v) treasury shares;
(vi) any right, option or warrant to acquire any security
convertible solely into the securities excluded from the definition of
New Securities pursuant to subsections (i) through (v) above;
(vii) any Common Stock, or any rights, options, warrants, or
Shares convertible into or exchangeable for Common Stock, which the
Company was, on or before the date of this Agreement, required to
issue;
(viii) any Common Stock, or any rights, options, warrants or
Shares convertible into or exchangeable for Common Stock which the
Company shall issue on January 27, 1999 in connection with its
offering of certain senior discount notes due 2009; and
(ix) any Common Stock, or any rights, options, warrants or Shares
convertible into or exchangeable for Common Stock, issued or sold to
any Person by the operation of any rights described in this Article IV
or pursuant to any other anti-dilution arrangement with any other
Person (including but not limited to any such rights granted to the
Purchaser).
"PERSON" means any individual, partnership, company, corporation
or other legal entity, as the context requires.
"SHARES" means shares of any class or series of the capital stock
of the Company.
ARTICLE V
ADJUSTMENTS
SECTION 5.01. ADJUSTMENT OF PREFERENCE EXERCISE RATE; NOTICES.
The Preference Exercise Rate is subject to adjustment from time to time as
provided in this Section 5.01.
(a) ADJUSTMENT FOR CHANGES IN COMMON STOCK. In the event that
at any time on or after the Issue Date or from time to time the Company
shall (i) pay a dividend or make a distribution on its Common Stock payable
in shares of its Common Stock or other equity interests of the Company,
(ii) subdivide any of its outstanding shares of Common Stock into a larger
number of shares of Common Stock, (iii) combine any of its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or
(iv) increase or decrease the number of shares of Common Stock outstanding
by reclassification of its Common Stock, then the number of shares of
Common Stock issuable upon exercise of each Preference Warrant immediately
after the happening of such event shall be adjusted to a number determined
by multiplying the number of shares of Common Stock that such holder would
have owned or have been entitled to receive upon exercise had such Warrants
been exercised immediately prior to the happening of the events described
above (or, in the case of a dividend or distribution of Common Stock or
other shares of Capital Stock, immediately prior to the record date
therefor) by a fraction, the numerator of which shall be the total number
of shares of Common Stock outstanding immediately after the happening of
the events described above and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the
happening of the events described above; and subject to Section 5.01(n),
the Preference Exercise Price for each Preference Warrant shall be adjusted
to a number determined by dividing the Preference Exercise Price
immediately prior to such event by the aforementioned fraction. An
adjustment made pursuant to this Section 5.01(a) shall become effective
immediately after the effective date of such event, retroactive to the
record date therefor in the case of a dividend or distribution in shares of
Common Stock or other shares of the Company's capital stock.
(b) ADJUSTMENT FOR CASH DIVIDENDS AND OTHER DISTRIBUTIONS. In
the event that at any time or from time to time the Company shall
distribute to all holders of Common Stock (i) any dividend or other
distribution of cash, evidences of its indebtedness, shares of its capital
stock or any other assets, properties or debt securities or (ii) any
options, warrants or other rights to subscribe for or purchase any of the
foregoing (other than, in each case, (x) any distributions described in
Sections 5.01(a), 5.01(c) or 5.01(d) that result in an adjustment; and (z)
any cash dividends or other cash distributions from current or retained
earnings), then the number of shares of Common Stock issuable upon the
exercise of each Preference Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock issuable
upon the exercise of such Preference Warrant immediately prior to the
record date for any such dividend or distribution by a fraction, the
numerator of which shall be the Current Market Value per share of Common
Stock on the record date for such dividend or distribution and the
denominator of which shall be such Current Market Value per share of Common
Stock on the record date for such dividend or distribution less the sum of
(x) the amount of cash, if any, distributed per share of Common Stock and
(y) the fair value (as determined in good faith by the Board, whose
determination shall be evidenced by a board resolution filed with the
Preference Warrant Agent, a copy of which will be sent to Holders upon
request) of the portion, if any, of the distribution applicable to one
share of Common Stock consisting of evidences of indebtedness, shares of
stock, securities, other assets or property, warrants, options or
subscription or purchase rights; and, subject to Sections 5.01(n) and 5.03,
the Preference Exercise Price shall be adjusted to a number determined by
dividing the Preference Exercise Price immediately prior to such record
date by the aforementioned fraction. Such adjustments shall be made
whenever any distribution is made and shall become effective as of the date
of distribution, retroactive to the record date for any such distribution;
provided, however, that the Company is not required to make an adjustment
pursuant to this Section 5.01(b) if at the time of such distribution the
Company makes the same distribution to Holders of Preference Warrants as it
makes to holders of Common Stock pro rata based on the number of shares of
Common Stock for which such Preference Warrants are exercisable (whether or
not currently exercisable). No adjustment shall be made pursuant to this
Section 5.01(b) which shall have the effect of decreasing the number of
shares of Common Stock issuable upon exercise of each Preference Warrant or
increasing the Preference Exercise Price.
(c) ADJUSTMENT FOR RIGHTS ISSUED TO ALL HOLDERS OF COMMON
STOCK. In the event that at any time or from time to time the Company
shall issue to all holders of Common Stock without any charge, rights,
options or warrants entitling the holders thereof to subscribe for
additional shares of Common Stock, or securities convertible into or
exchangeable or exercisable for additional shares of Common Stock,
entitling such holders to subscribe for or purchase shares of Common Stock
at a price per share that is lower at the record date for such issuance
than the then Current Market Value per share of Common Stock (other than
issuances referred to in Sections 5.01(a), 5.01(b) or 5.01(d)that result in
an adjustment), then the number of shares of Common Stock issuable upon the
exercise of each Preference Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock theretofore
issuable upon exercise of each Preference Warrant by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights, options, warrants or
securities 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 on the date
of issuance of such rights, options, warrants or securities plus the total
number of shares of Common Stock which the aggregate consideration expected
to be received by the Company (assuming the exercise or conversion of all
such rights, options, warrants or securities) would purchase at the then
Current Market Value per share of Common Stock. Subject to Sections
5.01(n) and 5.03, in the event of any such adjustment, the Preference
Exercise Price shall be adjusted to a number determined by dividing the
Preference Exercise Price immediately prior to such date of issuance by the
aforementioned fraction. Such adjustment shall be made immediately after
such rights, options or warrants are issued and shall become effective,
retroactive to the record date for the determination of stockholders
entitled to receive such rights, options, warrants or securities. No
adjustment shall be made pursuant to this Section 5.01(c) which shall have
the effect of decreasing the number of shares of Common Stock purchasable
upon exercise of each Preference Warrant or of increasing the Preference
Exercise Price.
(d) ADJUSTMENT FOR OTHER ISSUANCES OF COMMON STOCK OR RIGHTS.
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) rights,
options or warrants entitling the holder thereof to subscribe for shares of
Common Stock (provided, however, that no adjustment shall be made upon the
exercise of such rights, options or warrants), or (iii) securities
convertible into or exchangeable or exercisable for Common Stock
(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 anti-dilution
adjustments in such securities)), at a price per share at the record date
of such issuance that is less than the then Current Market Value per share
of Common Stock (other than issuances referred to in Sections 5.01(a),
5.01(b) or 5.01(d)that result in an adjustment), then the number of shares
of Common Stock issuable upon the exercise of each Preference Warrant shall
be increased to a number determined by multiplying the number of shares of
Common Stock theretofore issuable upon exercise of each Preference 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 rights, options, warrants
or securities, if any) would purchase at the then Current Market Value per
share of Common Stock, and subject to Sections 5.01(n) and 5.03 the
Preference Exercise Price shall be adjusted to a number determined by
dividing the Preference Exercise Price immediately prior to such date of
issuance by the aforementioned fraction. Such adjustments shall be made
whenever such rights, options or warrants or convertible securities are
issued. No adjustment shall be made pursuant to this Section 5.01(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 Preference
Exercise Price. For purposes of this Section 5.01(d) only, any issuance of
Common Stock, or rights, options or warrants to subscribe for, or other
securities convertible into or exercisable or exchangeable for, Common
Stock, which issuance (or agreement to issue) (A) is in exchange for or
otherwise in connection with the acquisition of the property (excluding any
such exchange exclusively for cash) of any Person and (B) is at a price per
share equal to the Current Market Value at the time of signing a definitive
agreement, shall be deemed to have been made at a price per share equal to
the Current Market Value 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.
(e) NOTICE OF ADJUSTMENT. Whenever the Preference Exercise Price
or the number of shares of Common Stock and other property, if any,
issuable upon exercise of the Preference Warrants is adjusted, as herein
provided, the Company shall deliver to the Preference Warrant Agent and to
the holder of the Preference Warrants a certificate of a firm of
independent accountants selected by the Board (who may be the regular
accountants employed by the Company) setting forth, in reasonable detail,
the event requiring the adjustment and the method by which such adjustment
was calculated (including a description of the basis on which (i) the Board
determined the fair value of any evidences of indebtedness, other
securities or property or warrants, options or other subscription or
purchase rights and (ii) the Current Market Value of the Common Stock was
determined, if either of such determinations were required), and specifying
the Preference Exercise Price and the number of shares of Common Stock
issuable upon exercise of Preference Warrants after giving effect to such
adjustment. The Company shall, by Company Order, promptly cause the
Preference Warrant Agent to mail a copy of such certificate to each Holder
in accordance with Section 5.01(l). The Preference Warrant Agent shall be
entitled to rely on such certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the
same from time to time, to any Holder desiring an inspection thereof during
reasonable business hours. The Preference Warrant Agent shall not at any
time be under any duty or responsibility to any Holder to determine whether
any facts exist which may require any adjustment of the Preference Exercise
Price or the number of shares of Common Stock or other stock issuable on
exercise of the Preference Warrants, or with respect to the nature or
extent of any such adjustment when made, or with respect to the method
employed in making such adjustment or the validity or value of any shares
of Common Stock, evidences of indebtedness, warrants, options, or other
securities or property.
(f) REORGANIZATION OF COMPANY; SPECIAL DISTRIBUTIONS. (i) If
the Company, in a single transaction or through a series of related
transactions, consolidates with or merges with or into any other person or
sells, assigns, transfers, leases, conveys or otherwise disposes of all or
substantially all of its properties and assets to another person or group
of affiliated persons or is a party to a merger or binding share exchange
which reclassifies or changes its outstanding Common Stock (a "FUNDAMENTAL
TRANSACTION"), as a condition to consummating any such transaction the
person formed by or surviving any such consolidation or merger if other
than the Company or the person to whom such transfer has been made (the
"SURVIVING PERSON") shall enter into a supplemental preference warrant
agreement. The supplemental preference warrant agreement shall provide (a)
that the holder of a Preference Warrant then outstanding may exercise it
for the kind and amount of securities, cash or other assets which such
holder would have received immediately after the Fundamental Transaction if
such holder had exercised the Preference Warrant immediately before the
effective date of the transaction (whether or not the Preference Warrants
were then exercisable and without giving effect to the Cashless Exercise
option); it being understood that the Preference Warrants will remain
exercisable only in accordance with their terms so that conditions to
exercise will remain applicable, such as payment of Preference Exercise
Price, assuming (to the extent applicable) that such holder (i) was not a
constituent person or an affiliate of a constituent person to such
transactions, (ii) made no election with respect to the form of
consideration payable in such transaction, and (iii) was treated alike with
the plurality of non-electing holders, and (b) that the Surviving Person
shall succeed to and be substituted to every right and obligation of the
Company in respect of this Agreement and the Preference Warrants. The
supplemental warrant agreement shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for
in this Article V. The Surviving Person shall mail to holders of
Preference Warrants at the addresses appearing on the Preference Warrant
Register a notice briefly describing the supplemental warrant agreement.
If the issuer of securities deliverable upon exercise of Preference
Warrants is an affiliate of the Surviving Person, that issuer shall join in
the supplemental warrant agreement.
(ii) Notwithstanding the foregoing, (a) if the Company enters
into a Fundamental Transaction with another Person (other than a subsidiary
of the Company) and consideration is payable to holders of shares of Common
Stock (or other securities) issuable or, deliverable upon exercise of the
Preference Warrants in connection with such Fundamental Transaction which
consists solely of cash or (b) if there is a dissolution, liquidation or
winding up of the Company, then the holders of Preference Warrants shall be
entitled to receive distributions on the date of such event on an equal
basis with holders of such shares (or other securities issuable upon
exercise of the Preference Warrants) as if the Preference Warrants had been
exercised immediately prior to such event, less the aggregate Preference
Exercise Price therefor. Upon receipt of such payment, if any, the rights
of a holder of such Preference Warrant shall terminate and cease and such
holder's Preference Warrants shall expire.
(iii) If this paragraph (f) applies, it shall supersede the
application of paragraph (a) of this Section 5.01.
(g) COMPANY DETERMINATION FINAL. Any determination that the
Company or the board of directors of the Company must make pursuant to this
Article V shall be conclusive.
(h) PREFERENCE WARRANT AGENT'S ADJUSTMENT DISCLAIMER. The
Preference Warrant Agent shall have no duty to determine when an adjustment
under this Article V should be made, how it should be made or what it
should be. The Preference Warrant Agent shall have no duty to determine
whether a supplemental warrant agreement under paragraph (f) need be
entered into or whether any provisions of any supplemental warrant
agreement are correct. The Preference Warrant Agent shall not be
accountable for and makes no representation as to the validity or value of
any securities or assets issued upon exercise of Preference Warrants. The
Preference Warrant Agent shall not be responsible for the Company's failure
to comply with this Article V.
(i) UNDERLYING PREFERENCE WARRANT SHARES. The Company shall at
all times reserve and keep available, free from preemptive rights (except
as otherwise authorized in this Agreement), out of its authorized but
unissued Common Stock or Common Stock held in the treasury of the Company,
for the purpose of effecting the exercise of Preference Warrants, the full
number of Preference Warrant Shares then deliverable upon the exercise of
all Preference Warrants then outstanding and payment of the exercise price,
and the shares so deliverable shall be fully paid and nonassessable and
free from all liens and security interests.
(j) SPECIFICITY OF ADJUSTMENT. Regardless of any adjustment in
the number or kind of shares purchasable upon the exercise of the
Preference Warrants, Preference Warrant Certificates theretofore or
thereafter issued may continue to express the same number and kind of
Preference Warrant Shares per Preference Warrant as are stated on the
Preference Warrant Certificates initially issuable pursuant to this
Agreement.
(k) NOTICE OF VOLUNTARY ADJUSTMENT. In the event that the
Company shall propose to (a) pay any dividend payable in securities of any
class to the holders of its Common Stock or to make any other non-cash
dividend or distribution to the holders of its Common Stock, (b) offer the
holders of its Common Stock rights to subscribe for or to purchase any
securities convertible into shares of Common Stock or shares of stock of
any class or any other securities, rights or options, (c) issue any (i)
shares of Common Stock, (ii) rights, options or warrants entitling the
holders thereof to subscribe for shares of Common Stock, or (iii)
securities convertible into or exchangeable or exercisable for Common Stock
(in the case of (i), (ii) and (iii), only if such issuance or adjustment
would result in an adjustment hereunder), (d) effect any capital
reorganization, reclassification, consolidation or merger, (e) effect the
voluntary or involuntary dissolution, liquidation or winding-up of the
Company or (f) make a tender offer or exchange offer with respect to the
Common Stock, the Company shall within five (5) days send the Holder and
the Preference Warrant Agent a notice of such proposed action or offer.
Such notice shall be mailed by the Company to the Holders at their
addresses as they appear in the Preference Certificate Register, which
shall specify the record date for the purposes of such dividend,
distribution or rights, or the date such issuance or event is to take place
and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed, and shall briefly indicate the effect of such
action on the Common Stock and on the number and kind of any other shares
of stock and on other property, if any, and the number of shares of Common
Stock and other securities, if any, issuable upon exercise of each
Preference Warrant and the Preference Exercise Price after giving effect to
any adjustment pursuant to Article 5 which will be required as a result of
such action. Such notice shall be given by the Company as promptly as
possible and (x) in the case of any action covered by clause (a) or (b)
above, at least 10 days prior to the record date for determining holders of
the Common Stock for purposes of such action or (y) in the case of any
other such action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of
Common Stock, whichever shall be the earlier.
(l) MULTIPLE ADJUSTMENTS. After an adjustment to the Exercise
Rate for outstanding Preference Warrants under this Article V, any
subsequent event requiring an adjustment under this Article V shall cause
an adjustment to the Exercise Rate for outstanding Preference Warrants as
so adjusted.
(m) DEFINITIONS.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, partnership interests, participations, rights in or
other equivalents (however designated and whether voting or non-voting) of,
such person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock whether outstanding on the Issue Date
(as defined below) or issued after the Issue Date.
"CURRENT MARKET VALUE" per share of Common Stock of the Company
or any other security at any date shall mean (i) if the security is not
registered under the Exchange Act, (a) the value of the security,
determined in good faith by the board of directors of the Company and
certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a person other than an
affiliate of the Company and the closing of which occurs on such date or
shall have occurred within the six-month period preceding such date, or (b)
if no such transaction shall have occurred on such date or within such six-
month period, the fair market value of the security as determined by a
nationally or regionally recognized Independent Financial Expert (as
defined herein) (PROVIDED that in the case of the calculation of Current
Market Value for determining the cash value of fractional shares, any such
determination within six months that is, in the good faith judgment of the
Board, a reasonable determination of value, may be utilized) or (ii)(a) if
the security is registered under the Exchange Act, the average of the daily
closing sales prices of the securities for the 20 consecutive trading days
immediately preceding such date, or (b) if the security has been registered
under the Exchange Act for less than 20 consecutive trading days before
such date, then the average of the daily closing sales prices for all of
the trading days before such date for which closing sales prices are
available, in the case of each of (ii)(a) and (ii)(b), as certified by the
president, the chief executive officer, any vice president or the chief
financial officer of the Company in a writing delivered to the Preference
Warrant Agent. The closing sales price for each such trading day shall be:
(A) in the case of a security listed or admitted to trading on any U.S.
national securities exchange or quotation system, the closing sales price,
regular way, on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) in the case of
a security not then listed or admitted to trading on any U.S. national
securities exchange or quotation system, the last reported sale price on
such day, or if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reputable quotation
source designated by the Company, (C) in the case of a security not then
listed or admitted to trading on any U.S. national securities exchange or
quotation system and as to which no such reported sale price or bid and
asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or
a newspaper of general circulation in the Borough of Manhattan, The City
and State of New York customarily published on each Business Day,
designated by the Company, or, if there shall be no bid and asked prices on
such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported and (D) if there are not
bid and asked prices reported during the 30 days prior to the date in
question, the Current Market Value shall be determined as if the securities
were not registered under the Exchange Act.
"INDEPENDENT FINANCIAL EXPERT" means a U.S. investment banking
firm of national standing in the United States (i) which does not, and
whose directors, officers and employees or affiliates do not have a direct
or indirect material financial interest for its proprietary account in the
Company or any of its affiliates and (ii) which, in the judgment of the
board of directors of the Company, is otherwise independent with respect to
the Company and its affiliates and qualified to perform the task for which
it is to be engaged.
"ISSUE DATE" means January 27, 1999.
"PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof or any other entity, including any predecessor of any
such entity.
(n) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. The adjustments
required by the preceding Sections of this Article V shall be made whenever
and as often as any specified event requiring an adjustment shall occur,
except that no adjustment of the Preference Exercise Price or the number of
shares of Common Stock issuable upon exercise of Preference Warrants that
would otherwise be required shall be made unless and until such adjustment
either by itself or with other adjustments not previously made increases or
decreases by at least 1% the Preference Exercise Price or the number of
shares of Common Stock issuable upon exercise of Preference Warrants
immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount shall be carried
forward and made as soon as such adjustment, together with other
adjustments required by this Article V and not previously made, would
result in a minimum adjustment. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business
on the date of its occurrence. In computing adjustments under this Article
V, fractional interests in Common Stock shall be taken into account to the
nearest one-thousandth of a share.
(o) ADJUSTMENT OF EXERCISE PRICE. In addition, notwithstanding
any other provisions of this Article V, the Company may reduce the
Preference Exercise Price (to an amount not less than the par value of the
Common Stock) for a period of time not less then 20 business days as deemed
appropriate and determined in good faith by the Board.
SECTION 5.02. FRACTIONAL PREFERENCE WARRANT SHARES. The Company
shall not be required to issue fractional Preference Warrant Shares upon
exercise of the Preference Warrants or distribute Preference Warrant
Certificates that evidence fractional shares of Common Stock. In addition,
in no event shall any holder of Preference Warrants be required to make any
payment of a fractional cent. In lieu of fractional Preference Warrant
Shares, there shall be paid to the registered holders of Preference Warrant
Certificates at the time Preference Warrants evidenced thereby are
exercised as herein provided an amount in cash equal to the same fraction
of the Current Market Value per Warrant Share on the Business Day preceding
the date the Preference Warrant Certificates evidencing such Preference
Warrants are surrendered for exercise. Such payments shall be made by
check or by transfer to an account maintained by such registered holder
with a bank in The City of New York. If any holder surrenders for exercise
more than one Preference Warrant Certificate, the number of Preference
Warrant Shares deliverable to such holder may, at the option of the
Company, be computed on the basis of the aggregate amount of all the
Preference Warrants exercised by such holder.
SECTION 5.03. EXCEPTIONS TO ANTIDILUTION PROVISIONS. Without
limiting any other exception contained in this Agreement, including in
particular, without limiting any preemptive rights identified in Section
4.04 of this Agreement, and in addition thereto, no adjustment need be made
for:
(i) grants or exercises of rights granted to employees of the
Company or any of its subsidiaries of shares of Common Stock issued or
granted to such employees under any stock incentive plan or otherwise,
whether or not upon the exercise, exchange or conversion of any such
rights, issued in good faith and, except for Section 5.01(c) and (d),
at fair market value (as determined in good faith by the Board of
Directors of the Company);
(ii) grants or exercises of rights granted to employees of the
Company or any of its subsidiaries of shares of Common Stock issued or
granted to such employees under any employee stock purchase plan or
otherwise, whether or not upon the exercise, exchange or conversion of
any such rights, issued in good faith (as determined in good faith by
the Board of Directors of the Company);
(iii) options, warrants or other agreements or rights to purchase
capital stock of the Company entered into prior to the date of the
issuance of the Preference Warrants and any issuance of shares of
Common Stock in connection therewith;
(iv) rights to purchase shares of Common Stock pursuant to a
Company plan for reinvestment of dividends or interest;
(v) a change in the par value of shares of Common Stock
(including a change from par value to no par value or VICE VERSA); and
(vi) bona fide public offerings or private placements pursuant to
Section 4(2) of the Securities Act, Rule 144A, Regulation D or
Regulation S thereunder of any security trading on any national
securities exchange or in the over the counter market, or of a
security directly or indirectly convertible or exchangeable for any
such security, involving at least one investment bank of national
reputation.
ARTICLE VI
CONCERNING THE PREFERENCE WARRANT AGENT
SECTION 6.01. PREFERENCE WARRANT AGENT. The Company hereby
appoints Bankers Trust Company as Preference Warrant Agent of the Company
in respect of the Preference Warrants and the Preference Warrant
Certificates upon the terms and subject to the conditions set forth herein
and in the Preference Warrant Certificates; and Bankers Trust Company
hereby accepts such appointment. The Preference Warrant Agent shall have
the powers and authority specifically granted to and conferred upon it in
the Preference Warrant Certificates and hereby and such further powers and
authority to act on behalf of the Company as the Company may hereafter
grant to or confer upon it and it shall accept in writing. All of the
terms and provisions with respect to such powers and authority contained in
the Preference Warrant Certificates are subject to and governed by the
terms and provisions hereof. The Preference Warrant Agent may act through
agents and shall not be responsible for the misconduct or negligence of any
such agent appointed with due care.
SECTION 6.02. CONDITIONS OF PREFERENCE WARRANT AGENT'S
OBLIGATIONS. The Preference Warrant Agent accepts its obligations herein
set forth upon the terms and conditions hereof and in the Preference
Warrant Certificates, including the following, to all of which the Company
agrees and to all of which the rights hereunder of the holders from time to
time of the Preference Warrant Certificates shall be subject:
(a) The Preference Warrant Agent shall be entitled to
compensation to be agreed upon with the Company in writing for all
services rendered by it and the Company agrees promptly to pay such
compensation and to reimburse the Preference Warrant Agent for its
reasonable out-of-pocket expenses (including reasonable fees and
expenses of counsel) incurred without gross negligence or willful
misconduct on its part in connection with the services rendered by it
hereunder. The Company also agrees to indemnify the Preference
Warrant Agent and any predecessor Preference Warrant Agent, their
directors, officers, affiliates, agents and employees for, and to hold
them and their directors, officers, affiliates, agents and employees
harmless against, any loss, liability or expense of any nature
whatsoever (including, without limitation, reasonable fees and
expenses of counsel) incurred without gross negligence or willful
misconduct on the part of the Preference Warrant Agent, arising out of
or in connection with its acting as such Preference Warrant Agent
hereunder and its exercise of its rights and performance of its
obligations hereunder. The obligations of the Company under this
Section 6.02 shall survive the exercise and the expiration of the
Preference Warrant Certificates and the resignation and removal of the
Preference Warrant Agent.
(b) In acting under this Agreement and in connection with the
Preference Warrant Certificates, the Preference Warrant Agent is
acting solely as agent of the Company and does not assume any
obligation or relationship of agency or trust for or with any of the
owners or holders of the Preference Warrant Certificates.
(c) The Preference Warrant Agent may consult with counsel of its
selection and any advice or written opinion of such counsel shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion.
(d) The Preference Warrant Agent shall be fully protected and
shall incur no liability for or in respect of any action taken or
omitted to be taken or thing suffered by it in reliance upon any
Preference Warrant Certificate, notice, direction, consent,
certificate, affidavit, opinion of counsel, instruction, statement or
other paper or document reasonably believed by it to be genuine and to
have been presented or signed by the proper parties.
(e) The Preference Warrant Agent, and its officers, directors,
affiliates and employees ("RELATED PARTIES"), may become the owners
of, or acquire any interest in, Preference Warrant Certificates,
shares or other obligations of the Company with the same rights that
it or they would have if it were not the Preference Warrant Agent
hereunder and, to the extent permitted by applicable law including,
but not limited to, the Trust Indenture Act of 1939, it or they may
engage or be interested in any financial or other transaction with the
Company and may act on, or as depositary, trustee or agent for, any
committee or body of holders of shares or other obligations of the
Company as freely as if it were not the Preference Warrant Agent
hereunder. Nothing in this Agreement shall be deemed to prevent the
Preference Warrant Agent or such Related Parties from acting in any
other capacity for the Company.
(f) The Preference Warrant Agent shall not be under any liability
for interest on, and shall not be required to invest, any monies at
any time received by it pursuant to any of the provisions of this
Agreement or of the Preference Warrant Certificates.
(g) The Preference Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement (or any
term or provision hereof) or the execution and delivery hereof (except
the due execution and delivery hereof by the Preference Warrant Agent)
or in respect of the validity or execution of any Preference Warrant
Certificate (except its authentication thereof).
(h) The recitals and other statements contained herein and in the
Preference Warrant Certificates (except as to the Preference Warrant
Agent's authentication thereon) shall be taken as the statements of
the Company and the Preference Warrant Agent assumes no responsibility
for the correctness of the same. The Preference Warrant Agent does
not make any representation as to the validity or sufficiency of this
Agreement or the Preference Warrant Certificates, except for its due
execution and delivery of this Agreement; PROVIDED, HOWEVER, that the
Preference Warrant Agent shall not be relieved of its duty to
authenticate the Preference Warrant Certificates as authorized by this
Agreement. The Preference Warrant Agent shall not be accountable for
the use or application by the Company of the proceeds of the exercise
of any Preference Warrant.
(i) Before the Preference Warrant Agent acts or refrains from
acting with respect to any matter contemplated by this Preference
Warrant Agreement, it may require and may conclusively rely on:
(1) an Officers' Certificate (as defined in the Indenture)
stating on behalf of the Company that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Preference Warrant Agreement relating to the proposed action have
been complied with; and
(2) an opinion of counsel for the Company stating that, in
the opinion of such counsel, all such conditions precedent have
been complied with, PROVIDED that such matter is one customarily
opined upon by counsel.
Each Officers' Certificate or, if requested, an opinion of
counsel with respect to compliance with a condition or covenant
provided for in this Preference Warrant Agreement shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or
she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
(j) The Preference Warrant Agent shall be obligated to perform
such duties as are specifically set forth herein and in the Preference
Warrant Certificates, and no implied duties or obligations shall be
read into this Agreement or the Preference Warrant Certificates
against the Preference Warrant Agent. The Preference Warrant Agent
shall not be accountable or under any duty or responsibility for the
use by the Company of any of the Preference Warrant Certificates duly
authenticated by the Preference Warrant Agent and delivered by it to
the Company pursuant to this Agreement. The Preference Warrant Agent
shall have no duty or responsibility in case of any default by the
Company in the performance of its covenants or agreements contained in
the Warrant Certificates or in the case of the receipt of any written
demand from a holder of a Preference Warrant Certificate with respect
to such default, including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or attempt to
initiate any proceedings at law or otherwise or, except as provided in
Section 7.02 hereof, to make any demand upon the Company.
(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from
the Company made or given under any provision of this Agreement shall
be sufficient if signed by the chairman or a co-chairman of the board,
the chief executive officer, the president, the chief financial
officer, any executive vice president or any senior vice president of
the Company signing alone, or by any vice president signing together
with the secretary, any assistant secretary, the treasurer, or any
assistant treasurer of the Company.
(l) The Preference Warrant Agent shall have no responsibility in
respect of any adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute, acknowledge
and deliver, or cause to be performed, executed, acknowledged and
delivered, all such further and other acts, instruments and assurances
as may reasonably be required by the Preference Warrant Agent for the
carrying out or performing by the Preference Warrant Agent of the
provisions of this Agreement.
(n) The Preference Warrant Agent is hereby authorized and
directed to accept written instructions with respect to the
performance of its duties hereunder from any one of the chairman or a
co-chairman of the board, the president, the chief executive officer,
the chief financial officer, any executive vice president or any
senior vice president alone, or any vice president together with the
secretary, assistant secretary, the treasurer or any assistant
treasurer, of the Company or any other officer or official of the
Company reasonably believed to be authorized to give such instructions
and to apply to such officers or officials for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance
with instructions with respect to any matter arising in connection
with the Preference Warrant Agent's duties and obligations arising
under this Agreement. Such application by the Preference Warrant
Agent for written instructions from the Company may, at the option of
the Preference Warrant Agent, set forth in writing any action proposed
to be taken or omitted by the Preference Warrant Agent with respect to
its duties or obligations under this Agreement and the date on or
after which such action shall be taken and the Preference Warrant
Agent shall not be liable for any action taken or omitted in
accordance with a proposal included in any such application on or
after the date specified therein (which date shall be not less than 10
Business Days after the Company receives such application unless the
Company consents to a shorter period); PROVIDED that (i) such
application includes a statement to the effect that it is being made
pursuant to this paragraph (n) and that unless objected to prior to
such date specified in the application, the Preference Warrant Agent
will not be liable for any such action or omission to the extent set
forth in such paragraph (n) and (ii) prior to taking or omitting any
such action, the Preference Warrant Agent has not received written
instructions objecting to such proposed action or omission.
(o) Whenever in the performance of its duties under this
Agreement the Preference Warrant Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed on behalf of the Company by any
one of the chairman of the board of directors, the president, the
chief executive officer, the treasurer, the controller, any vice
president or the secretary or assistant secretary of the Company or
any other officer or official of the Company reasonably believed to be
authorized to give such instructions and delivered to the Preference
Warrant Agent; and such certificate shall be full authorization to the
Preference Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon
such certificate.
(p) The Preference Warrant Agent shall not be required to risk or
expend its own funds in the performance of its obligations and duties
hereunder.
SECTION 6.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR. (a)
The Company agrees, for the benefit of the holders from time to time of the
Preference Warrant Certificates, that there shall at all times be a
Preference Warrant Agent hereunder.
(b) The Preference Warrant Agent may at any time resign as
Preference Warrant Agent by giving written notice to the Company of such
intention on its part, specifying the date on which its desired resignation
shall become effective; PROVIDED, HOWEVER, that such date shall be at least
60 days after the date on which such notice is given unless the Company
agrees to accept less notice. Upon receiving such notice of resignation,
the Company shall promptly appoint a successor Preference Warrant Agent,
qualified as provided in Section 6.03(d) hereof, by written instrument in
duplicate signed on behalf of the Company, one copy of which shall be
delivered to the resigning Preference Warrant Agent and one copy to the
successor Preference Warrant Agent. As provided in Section 6.03(d) hereof,
such resignation shall become effective upon the earlier of (x) the
acceptance of the appointment by the successor Preference Warrant Agent or
(y) 60 days after receipt by the Company of notice of such resignation.
The Company may, at any time and for any reason, and shall, upon any event
set forth in the next succeeding sentence, remove the Preference Warrant
Agent and appoint a successor Preference Warrant Agent by written
instrument in duplicate, specifying such removal and the date on which it
is intended to become effective, signed on behalf of the Company, one copy
of which shall be delivered to the Preference Warrant Agent being removed
and one copy to the successor Preference Warrant Agent. The Preference
Warrant Agent shall be removed as aforesaid if it shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Preference Warrant Agent or of its property shall be appointed, or any
public officer shall take charge or control of it or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation.
Any removal of the Preference Warrant Agent and any appointment of a
successor Preference Warrant Agent shall become effective upon acceptance
of appointment by the successor Preference Warrant Agent as provided in
Section 6.03(d). As soon as practicable after appointment of the successor
Preference Warrant Agent, the Company shall cause written notice of the
change in the Preference Warrant Agent to be given to each of the
registered holders of the Warrants in the manner provided for in Section
7.04 hereof.
(c) Upon resignation or removal of the Preference Warrant Agent,
if the Company shall fail to appoint a successor Preference Warrant Agent
within a period of 60 days after receipt of such notice of resignation or
removal, then the holder of any Warrant Certificate or the retiring
Preference Warrant Agent may apply to a court of competent jurisdiction for
the appointment of a successor to the Preference Warrant Agent. Pending
appointment of a successor to the Preference Warrant Agent, either by the
Company or by such a court, the duties of the Preference Warrant Agent
shall be carried out by the Company.
(d) Any successor Preference Warrant Agent, whether appointed by
the Company or by a court, shall be a bank or trust company in good
standing, incorporated under the laws of the United States of America or
any State thereof and having, at the time of its appointment, a combined
capital surplus of at least $50 million. Such successor Preference Warrant
Agent shall execute and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder and all the provisions of
this Agreement, and thereupon such successor Preference Warrant Agent,
without any further act, deed or conveyance, shall become vested with all
the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Preference Warrant Agent
hereunder, and such predecessor shall thereupon become obligated to (i)
transfer and deliver, and such successor Preference Warrant Agent shall be
entitled to receive, all securities, records or other property on deposit
with or held by such predecessor as Preference Warrant Agent hereunder and
(ii) upon payment of the amounts then due it pursuant to Section 6.02(a)
hereof, pay over, and such successor Preference Warrant Agent shall be
entitled to receive, all monies deposited with or held by any predecessor
Preference Warrant Agent hereunder.
(e) Any corporation or bank into which the Preference Warrant
Agent hereunder may be merged or converted, or any corporation or bank with
which the Preference Warrant Agent may be consolidated, or any corporation
or bank resulting from any merger, conversion or consolidation to which the
Preference Warrant Agent shall be a party, or any corporation or bank to
which the Preference Warrant Agent shall sell or otherwise transfer all or
substantially all of its corporate trust business, shall be the successor
to the Preference Warrant Agent under this Agreement (PROVIDED that such
corporation or bank shall be qualified as aforesaid) without the execution
or filing of any document or any further act on the part of any of the
parties hereto.
(f) No Preference Warrant Agent under this Preference Warrant
Agreement shall be personally liable for any action or omission of any
successor Preference Warrant Agent.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENT. This Agreement and the terms of the
Preference Warrants may be amended by the Company, the Purchasers and the
Preference Warrant Agent, without the consent of any other holder of any
Preference Warrant Certificate, for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective or inconsistent
provision contained herein or therein, or to effect any assumptions of the
Company's obligations hereunder and thereunder by a successor corporation
under certain circumstances or in any other manner which the Company may
deem necessary or desirable and which shall not adversely affect the
interests of the holders of the Preference Warrant Certificates.
The Company and the Preference Warrant Agent may amend, modify or
supplement this Agreement and the terms of the Preference Warrants, and
waivers to departures from the terms hereof and thereof may be given, with
the consent of the Requisite Preference Warrant Holders (as defined below)
for the purpose of adding any provision to or changing in any manner or
eliminating any of the provisions of this Agreement or modifying in any
manner the rights of the holders of the outstanding Preference Warrants.
"REQUISITE PREFERENCE WARRANT HOLDERS" means (i) in the case of any
amendment, modification, supplement or waiver affecting only Preference
Warrant Holders as such holders of a majority in number of the outstanding
Preference Warrants, voting separately as a class, or (ii) in the case of
any amendment, modification, supplement or waiver affecting Preference
Warrant Shares, a majority in number of Preference Warrant Shares
represented by the Preference Warrants that would be issuable assuming
exercise thereof at the time such amendment, modification, supplement or
waiver is voted upon. Notwithstanding any other provision of this
Agreement, the Preference Warrant Agent's consent must be obtained
regarding any supplement or amendment which alters the Preference Warrant
Agent's rights or duties (it being expressly understood that the foregoing
shall not be in derogation of the right of the Company to remove the
Preference Warrant Agent in accordance with Section 6.03 hereof). For
purposes of any amendment, modification or waiver hereunder, Preference
Warrants held by the Company or any of its Affiliates (other than the
Purchasers) shall be disregarded.
Any modification or amendment made in accordance with this
Agreement will be conclusive and binding on all present and future holders
of Warrant Certificates whether or not they have consented to such
modification or amendment or waiver and whether or not notation of such
modification or amendment is made upon such Warrant Certificates. Any
instrument given by or on behalf of any holder of a Warrant Certificate in
connection with any consent to any modification or amendment will be
conclusive and binding on all subsequent holders of such Warrant
Certificate.
SECTION 7.02. NOTICES AND DEMANDS TO THE COMPANY AND PREFERENCE
WARRANT AGENT. If the Preference Warrant Agent shall receive any notice or
demand addressed to the Company by the holder of a Preference Warrant
Certificate pursuant to the provisions hereof or of the Preference Warrant
Certificates, the Preference Warrant Agent shall promptly forward such
notice or demand to the Company.
SECTION 7.03. ADDRESSES FOR NOTICES TO PARTIES AND FOR
TRANSMISSION OF DOCUMENTS. All notices hereunder to the parties hereto
shall be deemed to have been given when sent by certified or registered
mail, postage prepaid, or by facsimile transmission, confirmed by first
class mail, postage prepaid, addressed to any party hereto as follows:
To the Company:
@Entertainment, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: 00 1 860 549 1674
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
with copies to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
To the Preference Warrant Agent:
Bankers Trust Company
Corporate Trust ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Manager
or at any other address of which either of the foregoing shall have
notified the other in writing.
SECTION 7.04. NOTICES TO HOLDERS. Notices to holders of
Preference Warrants shall be mailed to such holders at the addresses of
such holders as they appear in the Preference Warrant Register. Any such
notice shall be sufficiently given if sent by first-class mail, postage
prepaid to the address of such holder.
SECTION 7.05. APPLICABLE LAW. THIS AGREEMENT AND EACH
PREFERENCE WARRANT CERTIFICATE ISSUED HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.06. PERSONS HAVING RIGHTS UNDER AGREEMENT. Nothing in
this Agreement expressed or implied and nothing that may be inferred from
any of the provisions hereof is intended, or shall be construed, to confer
upon, or give to, any person or corporation other than the Company, the
Preference Warrant Agent and the holders of the Preference Warrant
Certificates and, with respect to Sections 4.03 and 4.04, the holders of
Preference Warrant Shares issued pursuant to Preference Warrants, any
right, remedy or claim under or by reason of this Agreement or of any
covenant, condition, stipulation, promise or agreement hereof; and all
covenants (except for Section 4.03 which shall be for the benefit of all
holders of Preference Warrant Shares issued pursuant to Preference
Warrants), conditions, stipulations, promises and agreements in this
Agreement contained shall be for the sole and exclusive benefit of the
Company and the Preference Warrant Agent and their successors and of the
holders of the Preference Warrant Certificates.
SECTION 7.07. HEADINGS. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 7.08. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be
an original; but such counterparts shall together constitute but one and
the same instrument.
SECTION 7.09. INSPECTION OF AGREEMENT. A copy of this Agreement
shall be available during regular business hours at the principal corporate
trust office of the Preference Warrant Agent, for inspection by the holder
of any Preference Warrant Certificate. The Preference Warrant Agent may
require such holder to submit his Preference Warrant Certificate for
inspection by it.
SECTION 7.10. AVAILABILITY OF EQUITABLE REMEDIES. Since a
breach of the provisions of this Agreement could not adequately be
compensated by money damages, holders of Preference Warrants shall be
entitled, in addition to any other right or remedy available to them, to an
injunction restraining such breach or a threatened breach and to specific
performance of any such provision of this Agreement, and in either case no
bond or other security shall be required in connection therewith, and the
parties hereby consent to such injunction and to the ordering of specific
performance.
SECTION 7.11. OBTAINING OF GOVERNMENTAL APPROVALS. The Company
will from time to time take all action required to be taken by it which may
be necessary to obtain and keep effective any and all permits, consents and
approvals of governmental agencies and authorities and securities acts
filings under U.S. federal and state laws, and the rules and regulations of
all stock exchanges on which the Preference Warrant Shares may become
listed which may be or become requisite in connection with the issuance,
sale, transfer and delivery of the Preference Warrant Shares issued upon
exercise of the Preference Warrants.
[Signature Page Follows]
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
@ENTERTAINMENT, INC.
By: /S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
---------------------------------
Name:
Title:
By: /S/▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
Preference Warrant Agent
By: /S/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: ASSISTANT VICE PRESIDENT
EXHIBIT A
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
ACCREDITED INVESTORS (AS DEFINED IN REGULATION D UNDER THE SECURITIES ACT),
(2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR
SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE 144(K) (OR ANY SUCCESSOR
PROVISION THEREOF) UNDER THE SECURITIES ACT) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE
LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY AND (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE
RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER OR ITS SUBSIDIARY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THESE SECURITIES WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
PREFERENCE WARRANT AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
CUSIP No. 045920 15 4
No. 1 45,000 Preference Warrants
PREFERENCE WARRANT CERTIFICATE
@ENTERTAINMENT, INC.
This Preference Warrant Certificate certifies that Cede & Co., or
its registered assigns, is the registered holder of 45,000 Preference
Warrants (the "PREFERENCE WARRANTS") to purchase an aggregate of 4,950,000
shares of Common Stock, par value $0.01 per share, issuable upon exercise
of the Preference Warrants (the "PREFERENCE WARRANT SHARES") of
@ENTERTAINMENT, INC., a Delaware corporation (the "COMPANY," which term
includes its successors and assigns). Each Preference Warrant entitles the
holder to purchase from the Company at any time from 9:00 a.m. New York
City time on or after the Exercise Date until 5:00 p.m., New York City
time, on February 1, 2010 (the "PREFERENCE EXPIRATION DATE"), 110 fully
paid, registered and non-assessable Preference Warrant Shares, subject to
adjustment as provided in Article V of the Preference Warrant Agreement, at
a preference exercise price of $10.00 for each share purchased (the
"PREFERENCE EXERCISE PRICE"); upon surrender of this Preference Warrant
Certificate and payment of the Preference Exercise Price (i) in cash or by
certified or official bank check, (ii) by a Cashless Exercise or (iii) by
any combination of (i) and (ii), at any office or agency maintained for
that purpose by the Company (the "PREFERENCE WARRANT EXERCISE OFFICE"),
subject to the conditions set forth herein and in the Preference Warrant
Agreement. For purposes of this Warrant, a "CASHLESS EXERCISE" shall mean
an exercise of a Preference Warrant in accordance with the immediately
following two sentences. To effect a Cashless Exercise, the holder may
exercise a Preference Warrant or Preference Warrants without payment of the
Preference Exercise Price in cash by surrendering such Preference Warrant
or Preference Warrants (represented by one or more Preference Warrant
Certificates) and in exchange therefor, receiving such number of shares of
Common Stock equal to the product of (1) that number of shares of Common
Stock for which such Preference Warrant or Preference Warrants are
exercisable and which would be issuable in the event of an exercise with
payment of the Preference Exercise Price and (2) the Cashless Exercise
Ratio. The "CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator
of which is the excess of the Current Market Value (calculated as set forth
in this Preference Warrant) per share of Common Stock on the date of
exercise over the Preference Exercise Price per share of Common Stock as of
the date of exercise and the denominator of which is the Current Market
Value per share of Common Stock on the date of exercise. Upon surrender of
a Preference Warrant Certificate representing more than one Preference
Warrant in connection with the holder's option to elect a Cashless
Exercise, the holder must specify the number of Preference Warrants for
which such Preference Warrant Certificate is to be exercised (without
giving effect to the Cashless Exercise). All provisions of the Preference
Warrant Agreement shall be applicable with respect to a Cashless Exercise
of a Preference Warrant Certificate for less than the full number of
Preference Warrants represented thereby. Capitalized terms used herein
without being defined herein shall have the definitions ascribed to such
terms in the Preference Warrant Agreement.
"CURRENT MARKET VALUE" per share of Common Stock of the Company
or any other security at any date shall mean (i) if the security is not
registered under the Exchange Act, (a) the value of the security,
determined in good faith by the board of directors of the Company and
certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a person other than an
affiliate of the Company and the closing of which occurs on such date or
shall have occurred within the six-month period preceding such date, or (b)
if no such transaction shall have occurred on such date or within such six-
month period, the fair market value of the security as determined by a
nationally or regionally recognized Independent Financial Expert (as
defined herein) (PROVIDED that in the case of the calculation of Current
Market Value for determining the cash value of fractional shares, any such
determination within six months that is, in the good faith judgment of the
Board, a reasonable determination of value, may be utilized) or (ii)(a) if
the security is registered under the Exchange Act, the average of the daily
closing sales prices of the securities for the 20 consecutive trading days
immediately preceding such date, or (b) if the security has been registered
under the Exchange Act for less than 20 consecutive trading days before
such date, then the average of the daily closing sales prices for all of
the trading days before such date for which closing sales prices are
available, in the case of each of (ii)(a) and (ii)(b), as certified by the
president, the chief executive officer, any vice president or the chief
financial officer of the Company in a writing delivered to the Preference
Warrant Agent. The closing sales price for each such trading day shall be:
(A) in the case of a security listed or admitted to trading on any U.S.
national securities exchange or quotation system, the closing sales price,
regular way, on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) in the case of
a security not then listed or admitted to trading on any U.S. national
securities exchange or quotation system, the last reported sale price on
such day, or if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reputable quotation
source designated by the Company, (C) in the case of a security not then
listed or admitted to trading on any U.S. national securities exchange or
quotation system and as to which no such reported sale price or bid and
asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or
a newspaper of general circulation in the Borough of Manhattan, The City
and State of New York customarily published on each Business Day,
designated by the Company, or, if there shall be no bid and asked prices on
such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported and (D) if there are not
bid and asked prices reported during the 30 days prior to the date in
question, the Current Market Value shall be determined as if the securities
were not registered under the Exchange Act.
"INDEPENDENT FINANCIAL EXPERT" means a U.S. investment banking
firm of national standing in the United States, (i) which does not, and
whose directors, officers and employees or affiliates do not have a direct
or indirect material financial interest for its proprietary account in the
Company or any of its affiliates and (ii) which, in the judgment of the
board of directors of the Company, is otherwise independent with respect to
the Company and its affiliates and qualified to perform the task for which
it is to be engaged.
"PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof or any other entity, including any predecessor of any
such entity.
The Company has initially designated the principal corporate
trust office of the Preference Warrant Agent in the Borough of Manhattan,
The City of New York, as the initial Preference Warrant Agent Office. The
number of shares of Common Stock issuable upon exercise of the Preference
Warrants ("EXERCISE RATE") is subject to adjustment upon the occurrence of
certain events set forth in the Preference Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York
City time, on February 1, 2010 shall thereafter be void.
If the Company in a single transaction or through a series of
related transactions, consolidates with or merges with or into any other
person or sells, assigns, transfers, leases, conveys or otherwise disposes
of all or substantially all of its properties and assets to another person
or group of affiliated persons or is a party to a merger or binding share
exchange which reclassifies or changes its outstanding Common Stock (a
"Fundamental Transaction"), as a condition to consummating any such
transaction the person formed by or surviving any such consolidation or
merger if other than the Company or the person to whom such transfer has
been made (the "Surviving Person") shall enter into a supplemental
preference warrant agreement. The supplemental preference warrant
agreement shall provide (a) that the holder of a Preference Warrant then
outstanding may exercise it for the kind and amount of securities, cash or
other assets which such holder would have received immediately after the
Fundamental Transaction if such holder had exercised the Preference Warrant
immediately before the effective date of the transaction (regardless of
whether the Preference Warrants were then exercisable and without giving
effect to the Cashless Exercise option), assuming (to the extent
applicable) that such holder (i) made no election with respect to the form
of consideration payable in such transaction and (ii) was treated alike
with the plurality of non-electing holders, and (b) that the Surviving
Person shall succeed to and be substituted for every right and obligation
of the Company in respect of the Preference Warrant Agreement and the
Preference Warrants. The Surviving Person shall mail to holders of
Preference Warrants at the addresses appearing on the Warrant Register a
notice briefly describing the supplemental warrant agreement. If the
issuer of securities deliverable upon exercise of Preference Warrants is an
affiliate of the Surviving Person, that company shall join in the
supplemental warrant agreement.
Notwithstanding the foregoing, (i) if the Company enters into a
Fundamental Transaction and the consideration payable to holders of the
Common Stock (or other securities) issuable or deliverable upon exercise of
the Preference Warrants in connection with such Fundamental Transaction
consists solely of cash or (ii) there is a dissolution, liquidation or
winding up of the issuer, then the holders of Preference Warrants shall be
entitled to receive distributions on the date of such event on an equal
basis with holders of Common Stock (or other securities issuable or
delivered upon exercise of the Preference Warrants) as if the Preference
Warrants had been exercised immediately prior to such event, less the
Exercise Price therefor. Upon receipt of such payment, if any, the rights
of a holder of a Preference Warrant shall terminate and cease and such
holder's Preference Warrants shall expire.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Preference Warrant Certificate shall not be valid unless
authenticated by the Preference Warrant Agent, as such term is used in the
Preference Warrant Agreement.
The Holders of Preference Warrants have agreed with the Company
that while they may exercise their Preference Warrants at any time, in
whole or in part, prior to the Preference Expiration Date, such Holder of
Preference Warrants will not be allowed to sell or otherwise dispose of the
Preference Warrant Shares prior to one year from the date hereof.
THIS PREFERENCE WARRANT CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
WITNESS the facsimile seal of the Company and facsimile
signatures of its duly authorized officers.
Dated: January 27, 1999
@ENTERTAINMENT, INC.
By:______________________________________
Name:
Title:
By:______________________________________
Name:
Title:
Certificate of Authentication:
This is one of the Preference Warrants
referred to in the within
mentioned Preference Warrant Agreement:
BANKERS TRUST COMPANY,
Preference Warrant Agent
By:__________________________________
Authorized Signatory
@ENTERTAINMENT, INC.
The Preference Warrants evidenced by this Preference Warrant
Certificate are part of a duly authorized issue of Preference Warrants
expiring at 5:00 p.m., New York City time, on February 1, 2010 (the
"PREFERENCE EXPIRATION DATE"). Each Preference Warrant initially
represents the right to purchase at any time on or after the Preference
Exercise Date (as defined in the Preference Warrant Agreement) and on or
prior to the Preference Expiration Date 110 Preference Warrant Shares,
subject to adjustment as set forth in the Preference Warrant Agreement.
The Preference Warrants are issued pursuant to a Preference Warrant
Agreement dated as of January 27, 1999 (the "PREFERENCE WARRANT
AGREEMENT"), duly executed and delivered by the Company to Bankers Trust
Company, as Preference Warrant Agent (the "PREFERENCE WARRANT AGENT"),
which Preference Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Preference Warrant Agent, the Company and the
holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Preference Warrants.
Preference Warrants may be exercised by (i) surrendering at any
Preference Warrant Exercise Office this Preference Warrant Certificate with
the form of Election to Exercise set forth hereon duly completed and
executed and (ii) to the extent such exercise is not being effected through
a Cashless Exercise by paying in full, in cash or by certificated or
official bank check, the Warrant Preference Exercise Price for each such
Preference Warrant exercised and any other amounts required to be paid
pursuant to the Preference Warrant Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Preference Warrant Agent at or
prior to 11:00 a.m., New York City time, on a Business Day, the exercise of
the Preference Warrant to which such items relate will be effective on such
Business Day. If any items referred to in the last sentence of the
preceding paragraph are received after 11:00 a.m., New York City time, on a
Business Day, the exercise of the Preference Warrants to which such item
relates will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Preference
Warrants on February 1, 2010, if all of the items referred to in the last
sentence of the preceding paragraph are received by the Preference Warrant
Agent at or prior to 5:00 p.m., New York City time, on such Preference
Expiration Date, the exercise of the Preference Warrants to which such
items relate will be effective on the Preference Expiration Date.
As soon as practicable after the exercise of any Preference
Warrant or Preference Warrants, the Company shall issue or cause to be
issued to or upon the written order of the registered holder of this
Preference Warrant Certificate, a certificate or certificates evidencing
such Preference Warrant Share or Preference Warrant Shares to which such
holder is entitled, in fully registered form, registered in such name or
names as may be directed by such holder pursuant to the Election to
Exercise, as set forth on the reverse of this Preference Warrant
Certificate. Such certificate or certificates evidencing the Preference
Warrant Share or Preference Warrant Shares shall be deemed to have been
issued and any persons who are designated to be named therein shall be
deemed to have become the holder of record of such Preference Warrant Share
or Preference Warrant Shares as of the close of business on the date upon
which the exercise of this Preference Warrant was deemed to be effective as
provided in the preceding paragraph.
The Company shall not be required to issue fractional Preference
Warrant Shares upon exercise of the Preference Warrants or distribute
Preference Warrant Certificates that evidence fractional Preference Warrant
Shares. In lieu of fractional Preference Warrant Shares, there shall be
paid to the registered Holder of this Preference Warrant Certificate at the
time such Preference Warrant Certificate is exercised an amount in cash
equal to the same fraction of the Current Market Value per share of Common
Stock on the Business Day preceding the date this Preference Warrant
Certificate is surrendered for exercise.
Preference Warrant Certificates, when surrendered at any office
or agency maintained by the Company for that purpose by the registered
holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged for a new Preference Warrant
Certificate or new Preference Warrant Certificates evidencing in the
aggregate a like number of Preference Warrants, in the manner and subject
to the limitations provided in the Preference Warrant Agreement, without
charge except for any tax or other governmental charge imposed in
connection therewith.
Upon due presentment for registration of transfer of this
Preference Warrant Certificate at any office or agency maintained by the
Company for that purpose, a new Preference Warrant Certificate evidencing
in the aggregate a like number of Preference Warrants shall be issued to
the transferee in exchange for this Preference Warrant Certificate, subject
to the limitations provided in the Preference Warrant Agreement, without
charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Preference Warrant Agent may deem and treat
the registered holder hereof as the absolute owner of this Preference
Warrant Certificate (notwithstanding any notation of ownership or other
writing hereon made by anyone) for the purpose of any exercise hereof and
for all other purposes, and neither the Company nor the Preference Warrant
Agent shall be affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in
The City of New York, (ii) the principal U.S. securities exchange or
market, if any, on which any Common Stock is listed or admitted to trading
and (iii) the principal U.S. securities exchange or market, if any, on
which the Preference Warrants are listed or admitted to trading, are open
for business.
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
ACCREDITED INVESTORS (AS DEFINED IN REGULATION D UNDER THE SECURITIES ACT),
(2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR
SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE 144(K) (OR ANY SUCCESSOR
PROVISION THEREOF) UNDER THE SECURITIES ACT) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE
LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY AND (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE
RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER OR ITS SUBSIDIARY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THESE SECURITIES WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
PREFERENCE WARRANT AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
CUSIP No.
No. Preference Warrants
FORM OF
PREFERENCE WARRANT CERTIFICATE
@ENTERTAINMENT, INC.
This Preference Warrant Certificate certifies that Cede & Co., or
its registered assigns, is the registered holder of _______ Preference
Warrants (the "PREFERENCE WARRANTS") to purchase an aggregate of _________
shares of Common Stock, par value $0.01 per share, issuable upon exercise
of the Preference Warrants (the "PREFERENCE WARRANT SHARES") of
@ENTERTAINMENT, INC., a Delaware corporation (the "COMPANY," which term
includes its successors and assigns). Each Preference Warrant initially
entitles the holder to purchase from the Company at any time from 9:00 a.m.
New York City time on or after the Exercise Date until 5:00 p.m., New York
City time, on February 1, 2010 (the "PREFERENCE EXPIRATION DATE"), 110
fully paid, registered and non-assessable Preference Warrant Shares,
subject to adjustment as provided in Article V of the Preference Warrant
Agreement, at an exercise price of $10.00 for each share purchased (the
"PREFERENCE EXERCISE PRICE"); upon surrender of this Preference Warrant
Certificate and payment of the Preference Exercise Price (i) in cash or by
certified or official bank check, (ii) by a Cashless Exercise or (iii) by
any combination of (i) and (ii), at any office or agency maintained for
that purpose by the Company (the "PREFERENCE WARRANT EXERCISE OFFICE"),
subject to the conditions set forth herein and in the Preference Warrant
Agreement. For purposes of this Warrant, a "CASHLESS EXERCISE" shall mean
an exercise of a Preference Warrant in accordance with the immediately
following two sentences. To effect a Cashless Exercise, the holder may
exercise a Preference Warrant or Preference Warrants without payment of the
Preference Exercise Price in cash by surrendering such Preference Warrant
or Preference Warrants (represented by one or more Preference Warrant
Certificates) and in exchange therefor, receiving such number of shares of
Common Stock equal to the product of (1) that number of shares of Common
Stock for which such Preference Warrant or Preference Warrants are
exercisable and which would be issuable in the event of an exercise with
payment of the Preference Exercise Price and (2) the Cashless Exercise
Ratio. The "CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator
of which is the excess of the Current Market Value (calculated as set forth
in this Preference Warrant) per share of Common Stock on the date of
exercise over the Preference Exercise Price per share of Common Stock as of
the date of exercise and the denominator of which is the Current Market
Value per share of Common Stock on the date of exercise. Upon surrender of
a Preference Warrant Certificate representing more than one Preference
Warrant in connection with the holder's option to elect a Cashless
Exercise, the holder must specify the number of Preference Warrants for
which such Preference Warrant Certificate is to be exercised (without
giving effect to the Cashless Exercise). All provisions of the Preference
Warrant Agreement shall be applicable with respect to a Cashless Exercise
of a Preference Warrant Certificate for less than the full number of
Preference Warrants represented thereby. Capitalized terms used herein
without being defined herein shall have the definitions ascribed to such
terms in the Preference Warrant Agreement.
"CURRENT MARKET VALUE" per share of Common Stock of the Company
or any other security at any date shall mean (i) if the security is not
registered under the Exchange Act, (a) the value of the security,
determined in good faith by the board of directors of the Company and
certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a person other than an
affiliate of the Company and the closing of which occurs on such date or
shall have occurred within the six-month period preceding such date, or (b)
if no such transaction shall have occurred on such date or within such six-
month period, the fair market value of the security as determined by a
nationally or regionally recognized Independent Financial Expert (as
defined herein) (PROVIDED that in the case of the calculation of Current
Market Value for determining the cash value of fractional shares, any such
determination within six months that is, in the good faith judgment of the
Board, a reasonable determination of value, may be utilized) or (ii)(a) if
the security is registered under the Exchange Act, the average of the daily
closing sales prices of the securities for the 20 consecutive trading days
immediately preceding such date, or (b) if the security has been registered
under the Exchange Act for less than 20 consecutive trading days before
such date, then the average of the daily closing sales prices for all of
the trading days before such date for which closing sales prices are
available, in the case of each of (ii)(a) and (ii)(b), as certified by the
president, the chief executive officer, any vice president or the chief
financial officer of the Company in a writing delivered to the Preference
Warrant Agent. The closing sales price for each such trading day shall be:
(A) in the case of a security listed or admitted to trading on any U.S.
national securities exchange or quotation system, the closing sales price,
regular way, on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) in the case of
a security not then listed or admitted to trading on any U.S. national
securities exchange or quotation system, the last reported sale price on
such day, or if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reputable quotation
source designated by the Company, (C) in the case of a security not then
listed or admitted to trading on any U.S. national securities exchange or
quotation system and as to which no such reported sale price or bid and
asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or
a newspaper of general circulation in the Borough of Manhattan, The City
and State of New York customarily published on each Business Day,
designated by the Company, or, if there shall be no bid and asked prices on
such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported and (D) if there are not
bid and asked prices reported during the 30 days prior to the date in
question, the Current Market Value shall be determined as if the securities
were not registered under the Exchange Act.
"INDEPENDENT FINANCIAL EXPERT" means a U.S. investment banking
firm of national standing in the United States, (i) which does not, and
whose directors, officers and employees or affiliates do not have a direct
or indirect material financial interest for its proprietary account in the
Company or any of its affiliates and (ii) which, in the judgment of the
board of directors of the Company, is otherwise independent with respect to
the Company and its affiliates and qualified to perform the task for which
it is to be engaged.
"PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof or any other entity, including any predecessor of any
such entity.
The Company has initially designated the principal corporate
trust office of the Preference Warrant Agent in the Borough of Manhattan,
The City of New York, as the initial Preference Warrant Agent Office. The
number of shares of Common Stock issuable upon exercise of the Preference
Warrants ("EXERCISE RATE") is subject to adjustment upon the occurrence of
certain events set forth in the Preference Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York
City time, on February 1, 2010 shall thereafter be void.
If the Company in a single transaction or through a series of
related transactions, consolidates with or merges with or into any other
person or sells, assigns, transfers, leases, conveys or otherwise disposes
of all or substantially all of its properties and assets to another person
or group of affiliated persons or is a party to a merger or binding share
exchange which reclassifies or changes its outstanding Common Stock (a
"Fundamental Transaction"), as a condition to consummating any such
transaction the person formed by or surviving any such consolidation or
merger if other than the Company or the person to whom such transfer has
been made (the "Surviving Person") shall enter into a supplemental
preference warrant agreement. The supplemental preference warrant
agreement shall provide (a) that the holder of a Preference Warrant then
outstanding may exercise it for the kind and amount of securities, cash or
other assets which such holder would have received immediately after the
Fundamental Transaction if such holder had exercised the Preference Warrant
immediately before the effective date of the transaction (regardless of
whether the Preference Warrants were then exercisable and without giving
effect to the Cashless Exercise option), assuming (to the extent
applicable) that such holder (i) made no election with respect to the form
of consideration payable in such transaction and (ii) was treated alike
with the plurality of non-electing holders, and (b) that the Surviving
Person shall succeed to and be substituted for every right and obligation
of the Company in respect of the Preference Warrant Agreement and the
Preference Warrants. The Surviving Person shall mail to holders of
Preference Warrants at the addresses appearing on the Warrant Register a
notice briefly describing the supplemental warrant agreement. If the
issuer of securities deliverable upon exercise of Preference Warrants is an
affiliate of the Surviving Person, that company shall join in the
supplemental warrant agreement.
Notwithstanding the foregoing, (i) if the Company enters into a
Fundamental Transaction and the consideration payable to holders of the
Common Stock (or other securities) issuable or deliverable upon exercise of
the Preference Warrants in connection with such Fundamental Transaction
consists solely of cash or (ii) there is a dissolution, liquidation or
winding up of the issuer, then the holders of Preference Warrants shall be
entitled to receive distributions on the date of such event on an equal
basis with holders of Common Stock (or other securities issuable or
delivered upon exercise of the Preference Warrants) as if the Preference
Warrants had been exercised immediately prior to such event, less the
Exercise Price therefor. Upon receipt of such payment, if any, the rights
of a holder of a Preference Warrant shall terminate and cease and such
holder's Preference Warrants shall expire.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Preference Warrant Certificate shall not be valid unless
authenticated by the Preference Warrant Agent, as such term is used in the
Preference Warrant Agreement.
The Holders of Preference Warrants have agreed with the Company
that while they may exercise their Preference Warrants at any time, in
whole or in part, prior to the Preference Expiration Date, such Holders of
Preference Warrants will not be allowed to sell or otherwise dispose of the
Preference Warrant Shares prior to one year from the date hereof.
THIS PREFERENCE WARRANT CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
WITNESS the facsimile seal of the Company and facsimile
signatures of its duly authorized officers.
Dated: January 27, 1999
@ENTERTAINMENT, INC.
By:______________________________________
Name:
Title:
By:______________________________________
Name:
Title:
Certificate of Authentication:
This is one of the Preference Warrants
referred to in the within
mentioned Preference Warrant Agreement:
BANKERS TRUST COMPANY,
Preference Warrant Agent
By:__________________________________
Authorized Signatory
@ENTERTAINMENT, INC.
The Preference Warrants evidenced by this Preference Warrant
Certificate are part of a duly authorized issue of Preference Warrants
expiring at 5:00 p.m., New York City time, on February 1, 2010 (the
"PREFERENCE EXPIRATION DATE"). Each Preference Warrant initially
represents the right to purchase at any time on or after the Preference
Exercise Date (as defined in the Preference Warrant Agreement) and on or
prior to the Preference Expiration Date 110 Preference Warrant Shares,
subject to adjustment as set forth in the Preference Warrant Agreement.
The Preference Warrants are issued pursuant to a Preference Warrant
Agreement dated as of January 27, 1999 (the "PREFERENCE WARRANT
AGREEMENT"), duly executed and delivered by the Company to Bankers Trust
Company, as Preference Warrant Agent (the "PREFERENCE WARRANT AGENT"),
which Preference Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Preference Warrant Agent, the Company and the
holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Preference Warrants.
Preference Warrants may be exercised by (i) surrendering at any
Preference Warrant Exercise Office this Preference Warrant Certificate with
the form of Election to Exercise set forth hereon duly completed and
executed and (ii) to the extent such exercise is not being effected through
a Cashless Exercise by paying in full, in cash or by certificated or
official bank check, the Warrant Preference Exercise Price for each such
Preference Warrant exercised and any other amounts required to be paid
pursuant to the Preference Warrant Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Preference Warrant Agent at or
prior to 11:00 a.m., New York City time, on a Business Day, the exercise of
the Preference Warrant to which such items relate will be effective on such
Business Day. If any items referred to in the last sentence of the
preceding paragraph are received after 11:00 a.m., New York City time, on a
Business Day, the exercise of the Preference Warrants to which such item
relates will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Preference
Warrants on February 1, 2010, if all of the items referred to in the last
sentence of the preceding paragraph are received by the Preference Warrant
Agent at or prior to 5:00 p.m., New York City time, on such Preference
Expiration Date, the exercise of the Preference Warrants to which such
items relate will be effective on the Preference Expiration Date.
As soon as practicable after the exercise of any Preference
Warrant or Preference Warrants, the Company shall issue or cause to be
issued to or upon the written order of the registered holder of this
Preference Warrant Certificate, a certificate or certificates evidencing
such Preference Warrant Share or Preference Warrant Shares to which such
holder is entitled, in fully registered form, registered in such name or
names as may be directed by such holder pursuant to the Election to
Exercise, as set forth on the reverse of this Preference Warrant
Certificate. Such certificate or certificates evidencing the Preference
Warrant Share or Preference Warrant Shares shall be deemed to have been
issued and any persons who are designated to be named therein shall be
deemed to have become the holder of record of such Preference Warrant Share
or Preference Warrant Shares as of the close of business on the date upon
which the exercise of this Preference Warrant was deemed to be effective as
provided in the preceding paragraph.
The Company shall not be required to issue fractional Preference
Warrant Shares upon exercise of the Preference Warrants or distribute
Preference Warrant Certificates that evidence fractional Preference Warrant
Shares. In lieu of fractional Preference Warrant Shares, there shall be
paid to the registered Holder of this Preference Warrant Certificate at the
time such Preference Warrant Certificate is exercised an amount in cash
equal to the same fraction of the Current Market Value per share of Common
Stock on the Business Day preceding the date this Preference Warrant
Certificate is surrendered for exercise.
Preference Warrant Certificates, when surrendered at any office
or agency maintained by the Company for that purpose by the registered
holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged for a new Preference Warrant
Certificate or new Preference Warrant Certificates evidencing in the
aggregate a like number of Preference Warrants, in the manner and subject
to the limitations provided in the Preference Warrant Agreement, without
charge except for any tax or other governmental charge imposed in
connection therewith.
Upon due presentment for registration of transfer of this
Preference Warrant Certificate at any office or agency maintained by the
Company for that purpose, a new Preference Warrant Certificate evidencing
in the aggregate a like number of Preference Warrants shall be issued to
the transferee in exchange for this Preference Warrant Certificate, subject
to the limitations provided in the Preference Warrant Agreement, without
charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Preference Warrant Agent may deem and treat
the registered holder hereof as the absolute owner of this Preference
Warrant Certificate (notwithstanding any notation of ownership or other
writing hereon made by anyone) for the purpose of any exercise hereof and
for all other purposes, and neither the Company nor the Preference Warrant
Agent shall be affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in
The City of New York, (ii) the principal U.S. securities exchange or
market, if any, on which any Common Stock is listed or admitted to trading
and (iii) the principal U.S. securities exchange or market, if any, on
which the Preference Warrants are listed or admitted to trading, are open
for business.
[FORM OF ELECTION TO EXERCISE]
(To be executed upon exercise of Preference Warrants on the Effective
Preference Exercise Date)
The undersigned hereby irrevocably elects to exercise [
] of the Preference Warrants represented by this Preference Warrant
Certificate and purchase the whole number of Preference Warrant Shares
issuable upon the exercise of such Preference Warrants and herewith tenders
payment for such Preference Warrant Shares as follows:
$ in cash or by certified or official bank check; or by
surrender of Preference Warrants pursuant to a Cashless Exercise (as
defined in the Preference Warrant Agreement) for [ ] shares of
Common Stock at the current Cashless Exercise Ratio.
The undersigned requests that a certificate representing such
Preference Warrant Shares be registered in the name of whose address is
____________________ and that such shares be delivered to whose
address is . Any cash payments to be paid in lieu of a
fractional share of Common Stock should be delivered to whose address is
and the check representing payment thereof should be delivered to whose
address is .
Dated ___________, ____
Name of holder of
Preference Warrant
Certificate:_________________________________________________
(Please Print)
Tax Identification or
Social Security Number:____________________________
Address: __________________________________________
__________________________________________
Signature:____________________________________________________________
Note: The above signature must correspond with the name
as written upon the face of this Preference
Warrant Certificate in every particular, without
alteration or enlargement or any change whatever
and if the certificate representing the Preference
Warrant Shares or any Preference Warrant
Certificate representing Preference Warrants not
exercised is to be registered in a name other than
that in which this Preference Warrant Certificate
is registered, or if any cash payment to be paid
in lieu of a fractional share is to be made to a
person other than the registered holder of this
Preference Warrant Certificate, the signature of
the holder hereof must be guaranteed as provided
in the Preference Warrant Agreement.
Dated ______________, ____
Signature:____________________________________________________________
Note: The above signature must correspond with the name
as written upon the face of this Preference Warrant
Certificate in every particular, without alteration
or enlargement or any change whatever.
Signature Guaranteed: ________________________________
[FORM OF ASSIGNMENT]
For value received __________________________ hereby sells,
assigns and transfers unto _____________________________ the within
Preference Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint ____________
attorney, to transfer said Preference Warrant Certificate on the books of the
within-named Company, with full power of substitution in the premises.
Dated ________________, ____
Signature:____________________________________________________________
Note: The above signature must correspond with the name as
written upon the face of this Preference Warrant
Certificate in every particular, without alteration
or enlargement or any change whatever.
Signature Guaranteed: ________________________________________________
SCHEDULE OF EXCHANGES OF CERTIFICATED PREFERENCE WARRANTS
The following exchanges of a part of this Global Preference Warrant for
Certificated Preference Warrants have been made:
Number of
Amount of decrease Amount of increase Preference
in Number of in Number of Warrants of this Signature of
Preference Warrants Preference Warrants Global Preference authorized officer
Date of of this Global of this Global Warrant following of Preference
Exchange Preference Warrant Preference Warrant such decrease (or Warrant Agent
increase)
--------------------------------------------------------------------------------------------------------------
EXHIBIT B
FORM OF LEGEND FOR GLOBAL PREFERENCE WARRANT
Any Global Preference Warrant authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL PREFERENCE WARRANT WITHIN THE MEANING
OF THE PREFERENCE WARRANT AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY.
THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PREFERENCE WARRANT
AGREEMENT, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PREFERENCE WARRANT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Preference Warrants to Purchase Common Stock (the "PREFERENCE
WARRANTS") of @ENTERTAINMENT, INC.
This Certificate relates to ____ Preference Warrants held in{*}
___ book-entry or{*} _______ Certificated Preference form by ______ (the
"TRANSFEROR").
The Transferor:{*}
/ / has requested the Preference Warrant Agent by written order to
deliver in exchange for its beneficial interest in the Global Preference
Warrant held by the Depositary a Preference Warrant or Preference Warrants
in definitive, registered form of authorized denominations and an aggregate
number equal to its beneficial interest in such Global Preference Warrant
(or the portion thereof indicated above); or
/ / has requested the Preference Warrant Agent by written order to
exchange or register the transfer of a Preference Warrant or Preference
Warrants.
In connection with such request and in respect of each such
Preference Warrant, the Transferor does hereby certify that the Transferor
is familiar with the Preference Warrant Agreement relating to the above
captioned Preference Warrants and the restrictions on transfers thereof as
provided in Section 1.07 of such Preference Warrant Agreement, and that the
transfer of this Preference Warrant does not require registration under the
Securities Act of 1933, as amended (the "ACT") because{*}:
/ / Such Preference Warrant is being acquired for the Transferor's
own account, without transfer (in satisfaction of Section 1.07 (a)(y)(A) or
Section 1.07 (d)(i)(A) of the Preference Warrant Agreement).
/ / Such Preference Warrant is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Act), in reliance on
Rule 144A.
{*} Check applicable box.
/ / Such Preference Warrant is being transferred in accordance with
Rule 144 under the Act.
/ / Such Preference Warrant is being transferred in reliance on and
in compliance with an exemption from the registration requirements of the
Act.
____________________________________
[INSERT NAME OF TRANSFEROR]
By:__________________________________
Date:_____________________