Exhibit 4.1
2003 AMENDED AND RESTATED
WARRANT AGREEMENT
Dated as of
March 11, 2003
between
WASHINGTON MUTUAL, INC.
and
MELLON INVESTOR SERVICES LLC,
as the Warrant Agent
TABLE OF CONTENTS
Page
ARTICLE I Defined Terms............................................................................................1
1.1 Definitions......................................................................................1
1.2 Other Definitions................................................................................4
ARTICLE II Warrant Certificates....................................................................................5
2.1 Issuance of Warrant Certificates.................................................................5
2.2 Form and Dating..................................................................................5
2.3 Execution and Countersignature...................................................................6
2.4 Certificate Register.............................................................................6
2.5 Transfer and Exchange............................................................................7
2.6 ReplacementCertificates..........................................................................9
2.7 Cancellation.....................................................................................9
2.8 Purchase of Warrants by the Company..............................................................9
ARTICLE III Exercise Terms.........................................................................................9
3.1 Number of Warrant Shares; Exercise Price.........................................................9
3.2 Exercise Period..................................................................................10
3.3 Expiration.......................................................................................10
3.4 Manner of Exercise...............................................................................11
3.5 Issuance of Warrant Shares.......................................................................11
3.6 Fractional Warrant Shares........................................................................12
3.7 Reservation of Warrant Shares....................................................................12
3.8 Compliance with Law..............................................................................12
3.9 Holders Not Entitled to Interest.................................................................13
ARTICLE IV Adjustments............................................................................................13
4.1 Reclassifications, Redesignations or Reorganizations of Common Stock.............................13
4.2 Combination......................................................................................13
4.3 Exercise Price Adjustment........................................................................14
4.4 Other Events.....................................................................................14
4.5 Notice of Certain Transactions...................................................................14
4.6 Adjustment to Warrant Certificate................................................................15
ARTICLE V Warrant Agent............................................................................................15
5.1 Nature of Duties and Responsibilities Assumed....................................................15
5.2 Right to Consult Counsel.........................................................................17
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5.3 Compensation and Reimbursement...................................................................17
5.4 Indemnification..................................................................................17
5.5 Warrant Agent May Hold Company Securities........................................................17
5.6 Change of Warrant Agent..........................................................................18
5.7 Merger or Consolidation or Change of Name of Warrant Agent.......................................18
ARTICLE VI Rights of Holders.......................................................................................19
6.1 Holders not Stockholders.........................................................................19
6.2 Claims by Holders................................................................................19
6.3 Control of Litigation............................................................................19
6.4 Determination of Values..........................................................................20
ARTICLE VII Miscellaneous..........................................................................................20
7.1 Information......................................................................................20
7.2 Amendment........................................................................................20
7.3 Notices..........................................................................................20
7.4 Governing Law....................................................................................21
7.5 Waiver of Jury Trial.............................................................................21
7.6 Entire Agreement, Etc............................................................................21
7.7 Counterparts and Facsimile.......................................................................22
7.8 Captions.........................................................................................22
7.9 Severability.....................................................................................22
7.10 No Third-Party Beneficiaries.....................................................................22
7.11 Successors.......................................................................................22
EXHIBIT A Form of Warrant Certificate
EXHIBIT B Form of Election to Purchase Warrant Shares
EXHIBIT C Certificate for Exchange of Global Warrant Certificate
EXHIBIT D Fee Schedule (not included with this exhibit)
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THIS 2003 AMENDED AND RESTATED WARRANT AGREEMENT, dated as of
March 11, 2003 (this "Agreement"), between Washington Mutual, Inc (the
"Company"), successor by merger to DIME BANCORP, INC., a Delaware corporation
("Dime") and Mellon Investor Services LLC, a New Jersey limited liability
company (the "Warrant Agent"), successor to EQUISERVE TRUST COMPANY, N.A. and
EQUISERVE LIMITED PARTNERSHIP, as Warrant Agent ("Equiserve"), amends and
restates the Warrant Agreement, dated as of December 21, 2000, between Dime and
Equiserve, as previously amended and restated by the parties hereto.
RECITALS
A. The Board of Directors of Dime authorized a
distribution of one Litigation Tracking Warrant(TM) (a "Warrant") for each share
of Dime's common stock, par value $0.01 per share (the "Dime Common Stock"),
outstanding as of the Close of Business (as defined below) on the Record Date
(as defined below). Each Warrant represents the right to purchase shares or a
portion of a share of Dime's common stock (subject to adjustment as provided
herein), upon the terms and subject to the conditions herein set forth.
B. The Board of Directors of Dime also authorized the
issuance of Warrants to holders of outstanding Dime Convertible Securities (as
defined herein) who exercise or convert such Dime Convertible Securities at any
time and from time to time before the occurrence of the Trigger (as defined
herein).
C. On January 4, 2002, Dime merged with and into the
Company (the "Merger") and the Company succeeded to Dime's rights and
obligations with respect to the Warrants. As a result of the Merger, Warrant
holders will be entitled to receive, if and when the Warrants are exercised and
in accordance with the terms of this Agreement, for each Warrant they hold,
shares of Washington Mutual common stock (the "Common Stock").
D. In order to issue Warrants to holders of options to
purchase Common Stock, which options were previously Dime Convertible Securities
prior to the Merger, who exercise or convert such options at any time and from
time to time before the occurrence of the Trigger, and to set forth the terms of
the Warrants following the Merger, the Company has determined to enter into this
Agreement with the Warrant Agent.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the parties agree as follows:
ARTICLE I
Defined Terms
1.1 Definitions. As used in this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
"Adjusted Litigation Recovery" means an amount equal to 85% of
the amount obtained from the following equation: (a) the Amount Recovered minus
(b) the sum of the following: (i) the total of all expenses incurred by or on
behalf of the Bank and the Company in pursuing the Litigation and obtaining the
Amount Recovered (whether incurred before or after the date hereof), including,
without limitation, fees and expenses of counsel, witnesses, experts and
consultants, (ii) the total of all expenses incurred by the Company in
connection with the creation, issuance and trading of the Warrants, including,
without limitation, legal, financial advisory and accounting fees, the fees and
expenses of the Warrant Agent and printing and registration costs (whether
incurred before or after the date hereof) and (iii) an amount equal to the
Amount Recovered, less the expenses described in the preceding clauses (i) and
(ii), multiplied by the combined highest federal, New York State and New York
City income tax rates applicable to financial institutions in the year (or
years) in which the amount of the damages (in whole or in part) is fixed or
determinable (after taking into account the effect of the deductibility of such
taxes for federal and state income tax purposes).
"Adjusted Stock Price" means the average of the daily Closing
Prices of a share of Common Stock for the thirty consecutive Trading Days ending
on and including the Determination Date; provided, that if the context in which
this defined term is used is with respect to securities other than shares of
Common Stock, then "Adjusted Stock Price" means the average of the daily Closing
Prices of a unit of such securities for the thirty consecutive Trading Days
ending on and including the Determination Date minus the Exercise Price
determined for such securities in the manner described in Section 4.3; and
provided, further that if the context in which this defined term is used is with
respect to property other than publicly traded securities, then "Adjusted Stock
Price" means the Fair Market Value of the amount of such property distributable
in respect of one share of Common Stock.
"Amount Recovered" means the aggregate amount of any cash
payment and the Fair Market Value of any property or assets actually received by
the Bank pursuant to a final, nonappealable judgment in or final settlement of
the Litigation (including any post-judgment interest actually received by the
Bank on any Amount Recovered).
"Assistant Secretary" means any assistant secretary or person
of similar title of the Company.
"Bank" means Washington Mutual Bank, FA, a federal association
or any successor thereto.
"Board" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in the State of New York or the State of
Washington are authorized or required by law to close.
"Close of Business" on any given date means 5:00 P.M., Western
time, on such date; provided, however, that if such date is not a Business Day
it will mean 5:00 P.M., Western time, on the next succeeding Business Day.
"Closing Price" on any day means the closing sale price
regular way (with any relevant due bills attached) of a share of Common Stock on
such day, or in case no such sale takes place on such day, the average of the
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reported closing bid and asked prices regular way (with any relevant due bills
attached) of a share of Common Stock, in each case on the NYSE Composite Tape
(or any successor composite tape reporting transactions on national securities
exchanges), or, if the Common Stock is not listed or admitted to trading on the
NYSE, on the principal national securities exchange on which the Common Stock is
listed or admitted to trading (which will be the national securities exchange on
which the greatest number of shares of Common Stock has been traded during the
five consecutive Trading Days ending on and including the Determination Date),
or, if not listed or admitted to trading on any national securities exchange,
the average of the closing bid and asked prices regular way (with any relevant
due bills attached) of a share of Common Stock on the over-the-counter market on
the day in question as reported by NASDAQ, or a similar generally accepted
reporting service, or if not so available as determined in good faith by the
Board, on the basis of such relevant factors as it in good faith considers
appropriate.
"Combination" means an event in which the Company consolidates
with, merges with or into, or sells all or substantially all its property and
assets to another Person.
"Determination Date" means the 30th calendar day before the
date on which the Bank receives the total amount of the Amount Recovered unless
such date is not a Trading Day, in which case the Determination Date will be the
next succeeding Trading Day. If the Amount Recovered is payable by the United
States Government in installments, the Determination Date will be the 30th
calendar day before the date on which the Bank receives the last installment of
the Amount Recovered unless such date is not a Trading Day, in which case the
Determination Date will be the next succeeding Trading Day.
"Dime Exchange Ratio" means 1.1232, which is the "Exchange
Ratio" as defined and calculated in accordance with Section 2.5(b) of the
Agreement and Plan of Merger, dated as of June 25, 2001, by and between the
Company and Dime.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means the fair market value of the
relevant property on the Determination Date as determined in good faith by the
Board, on the basis of such factors as it in good faith considers appropriate.
"Holder" means the duly registered holder of a Warrant under
the terms of this Agreement.
"Litigation" means the Bank's case against the United States
Government in the United States Court of Federal Claims entitled Anchor Savings
Bank, FSB v. United States, No. 95-39C, filed on January 13, 1995.
"NASDAQ" means the stock market and automated quotation system
operated by the National Association of Securities Dealers, Inc.
"NYSE" means the stock exchange operated by The New York Stock
Exchange, Inc.
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"Officer" means the Chief Executive Officer, the President,
any Senior Executive Vice President or any Executive Vice President of the
Company.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Record Date" means December 22, 2000.
"SEC" means the Securities and Exchange Commission.
"Secretary" means the secretary of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"Trading Day" means a date on which the NYSE or NASDAQ (or any
successor thereto) is open for the transaction of business.
"Trigger" means the occurrence of all of the following events:
(a) receipt by the Bank of the Amount Recovered in full, (b) determination by
the Bank of the amount of the Adjusted Litigation Recovery and (c) receipt of
all regulatory approvals necessary to issue the shares of Common Stock to be
issued upon the exercise of the Warrants, including without limitation, the
effectiveness of a registration statement relating to the issuance of the
Warrant Shares under the Securities Act.
"Warrant Shares" means the shares of Common Stock of the
Company issued and received upon exercise of the Warrants.
1.2 Other Definitions.
Defined in
Term Section
"Agent Members"..................................................2.2(c)
"Certificate Register"...........................................2.4
"Certificated Warrants"..........................................2.2(a)
"Common Stock"...................................................Recitals
"Company"........................................................Recitals
"Dime"...........................................................Recitals
"Dime Common Stock"..............................................Recitals
"Dime Convertible Securities"....................................2.1(a)
"DTC"............................................................2.2(b)
"Exercise Notice"................................................3.2
"Exercise Price".................................................3.1
"Global Warrant".................................................2.2(b)
"Maximum Number of Warrants".....................................2.1(b)
"Merger".........................................................Recitals
"Number of Shortfall Shares".....................................3.7(b)
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"Registrar"......................................................3.7(a)
"Successor Company"..............................................4.2(b)
"Successor Warrant Agent"........................................5.6
"Termination Date"...............................................3.3
"Termination Notice".............................................3.3
"Transfer Agent".................................................3.5
"Warrant"........................................................Recitals
"Warrant Agent"..................................................Recitals
"Warrant Certificate"............................................2.1(a)
"Warrant Exercise Period"........................................3.2(b)
ARTICLE II
Warrant Certificates
2.1 Issuance of Warrant Certificates. (a) At any time and from
time to time before the Trigger occurs, the Company may instruct the Warrant
Agent in writing to issue, in accordance with its instructions and the
provisions of this Article 2, one or more Warrant Certificates, in substantially
the form of Exhibit A hereto (a "Warrant Certificate"), evidencing Warrants to
holders of stock options of the Company that were outstanding on the Record Date
as options to purchase Dime Common Stock (all options to purchase Dime Common
Stock outstanding as of the Record Date, the "Dime Convertible Securities") to
such holders who exercise or convert such Dime Convertible Securities into
shares of Common Stock and Warrants in accordance with the terms and conditions
of such Dime Convertible Securities.
(b) The maximum number of Warrants (the "Maximum Number
of Warrants") that may be issued hereunder is equal to 112,975,597 (the sum of
(i) the number of shares of Dime Common Stock that were outstanding on the
Record Date plus (ii) the number of Warrants issuable to holders of Dime
Convertible Securities had all Dime Convertible Securities been exercised
immediately before the Record Date).
2.2 Form and Dating. The Warrant Certificates will be
substantially in the form of Exhibit A, hereto. The Warrants may have such
notations, legends or endorsements as the Company may deem appropriate, which do
not affect the rights, duties or responsibilities of the Warrant Agent, and as
are not inconsistent with the provisions hereof or as may be required by law,
stock exchange or stock market rule, agreements to which the Company is subject,
if any, or usage (provided that any such notation, legend or endorsement is in a
form acceptable to the Company). Each Warrant will be dated the date of its
countersignature.
(a) Certificated Warrants. The Warrants may be issued in
definitive form represented by a physical Warrant Certificate (such certificate
and all other certificates representing physical delivery of Warrants in
definitive form being called "Certificated Warrants").
(b) Global Warrant. The Warrants may be issued in the
form of one or more fully registered global certificates with the global
securities legend set forth in Exhibit A hereto (the "Global Warrant"), which
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will be registered on the records of the Warrant Agent on behalf of beneficial
owners of Warrants and in the name of the Depository Trust Company ("DTC") or a
nominee of DTC, duly executed by the Company and countersigned by the Warrant
Agent as hereinafter provided. The number of Warrants represented by Global
Warrants may from time to time be increased or decreased by adjustments made on
the records of the Warrant Agent and DTC or its nominee as hereinafter provided.
Except as provided in Section 2.5, owners of beneficial interests in a Global
Warrant will not be entitled to receive physical delivery of Certificated
Warrants.
(c) Book-Entry Provisions. Members of, or participants
in, DTC ("Agent Members") will have no rights under this Agreement with respect
to any Global Warrant held on their behalf with DTC or by the Warrant Agent or
under such Global Warrant, and DTC may be treated by the Company, the Warrant
Agent and any agent of the Company or the Warrant Agent as the absolute owner of
such Global Warrant for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein will prevent the Company, the Warrant Agent or any agent of the
Company or the Warrant Agent from giving effect to any written certification,
proxy or other authorization furnished by DTC or impair, as between DTC and its
Agent Members, the operation of customary practices of DTC governing the
exercise of the rights of a holder of a beneficial interest in any Global
Warrant.
2.3 Execution and Countersignature. (a) With respect to any
Global Warrant to be issued hereunder, one Officer will sign, and the Secretary
or any Assistant Secretary will attest, such Global Warrant. The Warrant Agent,
upon the written instruction of the Company signed by an Officer, will
countersign any Global Warrant certificate by manual or facsimile signature, and
such Global Warrant will be registered in accordance with Section 2.2(b) hereof.
(b) With respect to all other Warrants, an Officer will
sign, and the Company's Secretary or any of its Assistant Secretaries will
attest, the Warrant Certificates for the Company by manual or facsimile
signature. The Warrant Agent will countersign and deliver the Warrant
Certificates for original issue, in each case upon a written instruction of the
Company signed by an Officer of the Company. Such instruction will specify (in
addition to the number of Warrants) the date on which the original issue of
Warrants is to be countersigned.
(c) If an Officer whose signature is on a Warrant
Certificate no longer holds that office at the time the Warrant Agent
countersigns the Warrant Certificate, the Warrant will be valid nevertheless. A
Warrant will not be valid until an authorized signatory of the Warrant Agent
manually countersigns the Warrant Certificate. The signature will be conclusive
evidence that the Warrant Certificate has been countersigned under this
Agreement.
(d) The Warrant Agent may appoint an agent reasonably
acceptable to the Company to countersign the Warrant Certificates. Unless
limited by the terms of such appointment, such agent may countersign Warrant
Certificates whenever the Warrant Agent may do so. Each reference in this
Agreement to countersignature by the Warrant Agent includes countersignature by
such agent. Such agent will have the same rights as the Warrant Agent for
service of notices and demands.
2.4 Certificate Register. The Warrant Agent will keep a
register (the "Certificate Register") of the Warrant Certificates and of their
6
transfer and exchange which the Company may examine upon reasonable written
notice. The Certificate Register will show the names and addresses of the
respective Holders and the date and number of Warrants evidenced on the face of
each of the Warrant Certificates. The Company and the Warrant Agent may deem and
treat the Person in whose name a Warrant Certificate is registered as the
absolute owner of such Warrant Certificate and neither the Company nor the
Warrant Agent will be affected by any notice to the contrary.
2.5 Transfer and Exchange.
(a) Transfer and Exchange of Certificated Warrants. When
Certificated Warrants are presented to the Warrant Agent with a request to
register the transfer or exchange of such Certificated Warrants, the Warrant
Agent will register the transfer or make the exchange as requested; provided,
that the Certificated Warrants surrendered for transfer or exchange have been
duly endorsed or accompanied by a written instrument of transfer in form
reasonably satisfactory to the Company and the Warrant Agent, duly executed by
the Holder thereof or its attorney duly authorized in writing.
(b) Restrictions on Transfer of Certificated Warrants for
a Beneficial Interest in a Global Warrant. Certificated Warrants may not be
exchanged for a beneficial interest in a Global Warrant except upon satisfaction
of the requirements set forth below. Upon receipt by the Warrant Agent of
Certificated Warrants, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Warrant Agent, together with written
instructions directing the Warrant Agent to make, or to direct DTC to make, an
adjustment on its books and records with respect to such Global Warrants to
reflect an increase in the number of Warrants represented by the Global Warrant,
then the Warrant Agent will, and is hereby instructed to, cancel such
Certificated Warrants and cause, or direct DTC to cause, the number of Warrants
represented by the Global Warrant to be increased accordingly.
(c) Transfer and Exchange of Global Warrants. The
transfer and exchange of beneficial interests in a Global Warrant will be
effected through DTC, in accordance with this Agreement and the procedures of
DTC.
(d) Restrictions on Transfer and Exchange of the Global
Warrant. Notwithstanding any other provisions of this Agreement, Global Warrants
may not be transferred as a whole except by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or any such nominee to
a successor depositary or a nominee of such successor depositary.
(e) Authentication and Distribution of Certificated Warrants.
If at any time:
(i) DTC notifies the Company that DTC is unwilling or
unable to continue as depositary for Global Warrants
and a successor depositary for Global Warrants is not
appointed by the Company within 90 calendar days
after delivery of such notice;
(ii) DTC ceases to be a clearing agency registered
under the Exchange Act; or
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(iii) the Company, in its sole discretion, notifies
the Warrant Agent in writing that it elects to cause
the issuance of Certificated Warrants under this
Agreement;
then, the Company will execute, and the Warrant Agent, upon receipt of a written
order of the Company signed by an Officer requesting the delivery of
Certificated Warrants to the holders of beneficial interests in the Global
Warrant, will countersign and deliver Certificated Warrants equal to the number
of Warrants represented by Global Warrants, in exchange for such Global
Warrants. Certificated Warrants issued in exchange for a beneficial interest in
a Global Warrant will be registered in such names and in such authorized
denominations as DTC, pursuant to instructions from its direct or indirect
participants or otherwise, will instruct the Warrant Agent in writing. The
Warrant Agent is hereby instructed to deliver such Certificated Warrants to the
Persons in whose names such Warrants are so registered in accordance with the
written instructions of DTC.
(f) Cancellation or Adjustment of Global Warrants. At
such time as all beneficial interests in Global Warrants have either been
exchanged for Certificated Warrants, redeemed, repurchased or canceled, such
Global Warrant will be returned to DTC for cancellation or retained and canceled
by the Warrant Agent. At any time before such cancellation, if any beneficial
interest in a Global Warrant is exchanged for Certificated Warrants, redeemed,
repurchased or canceled, the number of Warrants represented by such Global
Warrant will be reduced and an adjustment will be made on the books and records
of the Warrant Agent with respect to such Global Warrant, by the Warrant Agent
or DTC, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges
of Warrants.
(i) To permit registrations of transfers and
exchanges, the Company will execute and the Warrant
Agent will countersign Certificated Warrants and
Global Warrants as required pursuant to the
provisions of this Section 2.5.
(ii) All Certificated Warrants and Global Warrants
issued upon any registration of transfer or exchange
of Certificated Warrants will be the valid
obligations of the Company, entitled to the same
benefits under this Agreement as the Certificated
Warrants or Global Warrants surrendered upon such
registration of transfer or exchange.
(iii) Before due presentment for registration of
transfer of any Warrant, the Warrant Agent and the
Company may deem and treat the Person in whose name
any Warrant is registered as the absolute owner of
such Warrant and neither the Warrant Agent nor the
Company will be affected by any notice to the
contrary.
(iv) No service charge will be made to a Holder for
any registration of transfer or exchange upon
surrender of any Warrant Certificate at the office of
the Warrant Agent maintained for that purpose. The
Company may require payment of a sum sufficient to
8
cover any tax or other governmental charge that may
be imposed in connection with any registration of
transfer or exchange of Warrant Certificates. The
Warrant Agent shall have no duty or obligation under
this Section 25 unless and until it is satisfied tat
all such taxes and/or changes have been paid in full.
2.6 Replacement Certificates. If a mutilated Warrant
Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company will issue and the Warrant Agent will countersign
a replacement Warrant Certificate. If required by the Warrant Agent or the
Company, such Holder will furnish an indemnity bond or other instrument
sufficient in the judgment of the Company and the Warrant Agent to protect the
Company and the Warrant Agent from any loss which either of them may suffer if a
Warrant Certificate is replaced. The Company and the Warrant Agent may charge
the Holder for their expenses in replacing a Warrant Certificate.
2.7 Cancellation. (a) In the event the Company will purchase
or otherwise acquire Certificated Warrants, the same will thereupon be delivered
to the Warrant Agent for cancellation.
(b) The Warrant Agent and no one else will cancel and destroy
all Warrant Certificates surrendered for transfer, exchange, replacement,
exercise or cancellation and deliver a certificate of such destruction to the
Company unless the Company directs the Warrant Agent to deliver canceled Warrant
Certificates to the Company. The Company may not issue new Warrant Certificates
to replace Warrant Certificates to the extent they evidence Warrants that have
been exercised or Warrants that the Company has purchased or otherwise acquired.
2.8 Purchase of Warrants by the Company. The Company will have
the right, except as limited by law or other agreement, to purchase or otherwise
acquire Warrants at such times, in such manner and for such consideration as it
may deem appropriate.
ARTICLE III
Exercise Terms
3.1 Number of Warrant Shares; Exercise Price. Each Warrant
will, upon exercise thereof and subject to adjustment as provided herein,
entitle the Holder thereof to purchase the number of shares of Common Stock
equal to the quotient of (a) the quotient of (i) the Adjusted Litigation
Recovery divided by (ii) the Maximum Number of Warrants (112,975,597), divided
by (b) the product of (x) the Adjusted Stock Price, and (y) the Dime Exchange
Ratio (1.1232), upon surrender or cancellation of the Warrant and payment of an
exercise price per Warrant equal to the number of shares of Common Stock for
which the Warrant is exercisable multiplied by the Exercise Price (as defined
below). All calculations made pursuant to this Section 3.1 will be performed by
the Company (with written notice of any such calculation to the Warrant Agent)
and shall be rounded to the nearest ten-thousandth. As of the date of this
Agreement, the "Exercise Price" is zero dollars and zero cents ($0.00) per each
whole share of Common Stock, but shall be subject to adjustment as provided in
this Agreement. The Warrant Agent shall not be deemed to have knowledge of any
9
such calculations made pursuant to this Section 3.1 unless and until it has
received written notice thereof, and the Warrant Agent shall have no duty or
obligation to inquire as to whether any such calculation is accurate.
3.2 Exercise Period. (a) The Company will provide written
notice, as described below (the "Exercise Notice") to each Holder and the
Warrant Agent, of the occurrence of the Trigger not more than 15 calendar days
after the occurrence thereof. If the Amount Recovered is payable by the United
States government in installments, the Trigger will not be deemed to have
occurred until the Bank receives the last installment of the Amount Recovered.
The Exercise Notice will be dated the date it is first sent to Holders and the
Warrant Agent and will be provided by means of a press release to one or more
national news services and by mailing such notice first class, postage prepaid,
to each Holder at such Holder's address as it appears on the Certificate
Register; provided, however, that neither the failure to give such notice by
mail to any particular Holder or the Warrant Agent nor any defect therein will
affect the validity of the Exercise Notice or the expiration of all Warrants on
the Close of Business on the last day of the Warrant Exercise Period with
respect to the other Holders. The Exercise Notice will contain the following
information:
(i) that the Trigger has occurred,
(ii) the total number of shares for which the Warrants are
exercisable,
(iii) the number of shares of Common Stock for which one
Warrant is exercisable,
(iv) the Exercise Price (if any) per Warrant,
(v) the manner in which the Warrants are exercisable, and
(vi) the date on which the Warrants will no longer be
exercisable.
(b) Subject to the terms and conditions set forth herein, each
Warrant will be exercisable at any time or from time to time during the 60-day
period commencing on the date on which the Exercise Notice is first sent to
Holders and the Warrant Agent pursuant to Section 3.2(a) (the "Warrant Exercise
Period").
(c) No Warrant will be exercisable after the Close of
Business on the last day of the Warrant Exercise Period.
3.3 Expiration. A Warrant will terminate and become void as of
the earlier of (a) the Close of Business on the last day of the Warrant Exercise
Period, (b) the Close of Business on the date the Litigation has been disposed
of in a manner such that no shares of Common Stock or other securities or
property will be issuable under the terms of the Warrants (and the Agent shall
receive prompt written notice thereof)(the "Termination Date") or (c) the time
and date such Warrant is exercised. The Company will provide notice, as
described below (the "Termination Notice"), of the occurrence of the Termination
Date or the expiration of the Warrant Exercise Period not more than 60 calendar
days after the occurrence thereof to the Holders and the Warrant Agent. The
Termination Notice will be dated the date it is first sent to Holders and the
Warrant Agent and will be provided by means of a press release to one or more
10
national news services and by mailing such notice first class, postage prepaid,
to each Holder at such Holder's address as it appears on the Certificate
Register. The Termination Notice will state the following:
(i) that the Termination Date has occurred or the Warrant
Exercise Period has expired, as the case may be, and
(ii) that all outstanding Warrants have terminated and become
void.
The Warrants will terminate and become void as provided herein notwithstanding
the Company's failure to give the Termination Notice. The Warrant Agent shall
not be deemed to have knowledge the Termination Date has occurred , the Warrant
Exercise Period has expired or the outstanding Warrants have terminated unless
and until it shall have received written notice thereof.
3.4 Manner of Exercise. Warrants may be exercised upon (i)
surrender to the Warrant Agent of the Warrant Certificates, together with the
form of election to purchase Common Stock on the reverse thereof properly
completed and validly executed by the Holder thereof and (ii) payment to the
Warrant Agent, for the account of the Company, of the total Exercise Price (if
any) for the number of Warrants being exercised. Such payment will be made by
certified or official bank check or personal check payable to the order of the
Company. Subject to Sections 3.2 and 3.3, the Warrants will be exercisable at
the election of the Holders thereof either in full at any time or from time to
time in part. In the event that a Warrant Certificate is surrendered for
exercise in respect of less than all the Warrant Shares purchasable on such
exercise at any time before the expiration of the Warrant Exercise Period a new
Warrant Certificate exercisable for the remaining Warrant Shares will be issued
and its exercise will also be subject to Sections 3.2 and 3.3. The Warrant Agent
will countersign and deliver the required new Warrant Certificates, and the
Company, at the Warrant Agent's request, will supply the Warrant Agent with
Warrant Certificates duly signed on behalf of the Company for such purpose. The
Warrant Agent will account promptly to the Company with respect to all Warrants
exercised and concurrently pay to the Company all moneys received by the Warrant
Agent for the purchase of shares of Common Stock through the exercise of such
Warrants.
3.5 Issuance of Warrant Shares. Subject to Section 3.6, upon
the surrender of Warrant Certificates and payment of the Exercise Price in
accordance with Section 3.4, the Company will issue and cause the Warrant Agent
or, if appointed, a transfer agent for the Common Stock ("Transfer Agent") to
countersign and deliver to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate or certificates for the
number of full Warrant Shares so purchased upon the exercise of such Warrants or
such other securities or property to which it is entitled, to the Person or
Persons entitled to receive the same, together with the payment of cash by the
Company as provided in Section 3.6 in respect of any fractional Warrant Shares.
Such certificate or certificates will be deemed to have been issued and any
Person so designated to be named therein will be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the Exercise Price.
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3.6 Fractional Warrant Shares. The Company will not issue
fractional Warrant Shares. If any fraction of a Warrant Share would, except for
this Section 3.6, be issuable, the Company will pay an amount in cash equal to
(a) the sum of (i) the Adjusted Stock Price and (ii) the Exercise Price (if any)
per whole Warrant Share that would have been received), multiplied by (b) such
fraction. Such cash amount will be rounded to the nearest whole cent.
3.7 Reservation of Warrant Shares. (a) The Company will use
its best efforts to at all times keep reserved and available out of its
authorized and unissued shares of Common Stock or shares of Common Stock held in
its treasury a number of shares of Common Stock sufficient to provide for the
exercise in full of all Warrants then outstanding or reserved for issuance
pursuant to Section 2.1. The registrar for the Common Stock (the "Registrar")
will at all times until the Termination Date, or the time at which all Warrants
have been exercised or canceled, reserve such number of authorized shares as
will be required for such purpose. The Company will keep a copy of this
Agreement on file with the Registrar. The Company will supply such Registrar
with duly executed stock certificates for such purpose and will itself provide
or otherwise make available any cash which may be payable as provided in Section
3.6. The Company will furnish to such Registrar a copy of all notices of
adjustments and certificates related thereto transmitted to each Holder.
(b) If, upon the Trigger, the number of shares of Common
Stock authorized but not issued plus the number of shares of Common Stock held
in the Company's treasury is less than the number of shares of Common Stock
necessary to permit the exercise in full of the Warrants then outstanding or
reserved for issuance pursuant to Section 2.1 (the number of shares of Common
Stock comprising such deficiency being the "Number of Shortfall Shares"), then
the Company will either (i) to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, commence a
tender offer or buyback for the aggregate number of shares of Common Stock at
least equal to the Number of Shortfall Shares or (ii) call a special meeting of
the holders of Common Stock for the purpose of increasing the number of
authorized shares of Common Stock in an amount at least equal to the Number of
Shortfall Shares. In such an event, the Warrant Exercise Period will be
automatically extended to 60 calendar days after (A) the date on which the
tender offer or buyback referred to in clause (i) above is successfully
completed or (B) the effective date of the increase in the number of authorized
shares of Common Stock referred to in clause (ii) above.
(c) The Company covenants that all shares of Common Stock
that may be issued upon exercise of Warrants will, upon issue, be fully paid,
nonassessable, free of preemptive rights, free from all taxes, liens, charges
and security interests, created by or through the Company, with respect to the
issue thereof.
3.8 Compliance with Law. (a) Notwithstanding anything in this
Agreement to the contrary, in no event will a Holder be entitled to exercise a
Warrant unless (i) a registration statement filed under the Securities Act in
respect of the issuance of the Warrant Shares is then effective or (ii) an
exemption from such registration requirements is available to all Holders under
the Securities Act at the time of such exercise.
(b) If any shares of Common Stock required to be reserved
for purposes of exercise of Warrants require, under any other Federal or state
12
law or applicable governing rule or regulation of any national securities
exchange or stock market, registration with or approval of any governmental
authority, or listing on any such national securities exchange or stock market
before such shares may be issued upon exercise, the Company will cause such
shares to be duly registered or approved by such governmental authority or
listed on the relevant national securities exchange or stock market.
3.9 Holders Not Entitled to Interest. Notwithstanding anything
to the contrary, Holders will not be entitled to receive any interest or
additional shares of our common stock for any period, including, without
limitation, the period of time between the date on which the Bank receives the
Amount Recovered (in full or in part) and the date on which the Warrants become
exercisable.
ARTICLE IV
Adjustments
4.1 Reclassifications, Redesignations or Reorganizations of
Common Stock. (a) In the event that at any time or from time to time after the
date hereof the Company will issue by reclassification, redesignation or
reorganization of the shares of Common Stock any shares of capital stock of the
Company then, in any such event, the Holders will have the right to receive upon
exercise of each Warrant the number of shares of such capital stock of the
Company equal to the Adjusted Litigation Recovery divided by the Maximum Number
of Warrants divided by the aggregate Adjusted Stock Price of the capital stock
of the Company that 1.1232 shares of Common Stock were exchanged for or
converted into as a result of such reclassification, redesignation or
reorganization.
(b) The proportion and type of capital stock of the
Company that the Holders will have the right to receive in the circumstance set
forth in Section 4.1(a) will be in the same proportion and type as one share of
Common Stock was exchanged for or converted into as a result of such
reclassification, redesignation or reorganization. Such adjustment will become
effective immediately after the effective date of such reclassification,
redesignation or reorganization. In the event of the occurrence of more than one
of the foregoing, such adjustments will be made successively.
4.2 Combination. (a) Except as provided in Section 4.2(c), in
the event of a Combination, the Holders will have the right to receive upon
exercise of each Warrant the number of shares of capital stock or other
securities or an amount of property equal to the Adjusted Litigation Recovery
divided by the Maximum Number of Warrants divided by the aggregate Adjusted
Stock Price of the capital stock, other securities or property that 1.1232
shares of Common Stock were exchanged for or converted into as a result of such
Combination.
(b) The proportion and type of capital stock, other
securities or property that the Holders will have the right to receive in the
circumstance set forth in Section 4.2(a) will be in the same proportion and type
as one share of Common Stock was exchanged for or converted into as a result of
such Combination. The provisions of this Section 4.2 will similarly apply to
successive Combinations involving the surviving or acquiring Person (the
"Successor Company") in any Combination.
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(c) In the event of a Combination where consideration is
payable to holders of Common Stock in exchange for their shares solely in cash,
the Holders will have the right to receive upon exercise of each Warrant cash in
an amount equal to the Adjusted Litigation Recovery divided by the Maximum
Number of Warrants, less the Exercise Price (if any). In case of any Combination
described in this Section 4.2(c), the surviving or acquiring Person will
promptly after the occurrence of the Trigger deposit with the Warrant Agent the
funds necessary to pay to the Holders of the Warrants the amounts to which they
are entitled as described above. After such funds and the surrendered Warrant
Certificates are received, the Warrant Agent is hereby instructed to make
payment to the Holders by delivering a check in such amount as is appropriate to
such Person or Persons as it may be directed in writing by the Holders
surrendering such Warrants. No interest will accrue to the Holders or the
surviving or acquiring Person on such funds.
(d) The Company hereby represents and warrants that any
Successor Company will enter into, and the Company will provide, an agreement
with the Warrant Agent confirming the Holders' rights pursuant to this Section
4.2 and providing for adjustments, which will be as nearly equivalent as may be
practicable to the adjustments provided for in this Article IV.
4.3 Exercise Price Adjustment. In case of any
reclassification, redesignation or reorganization described in Section 4.1 or
any Combination described in Section 4.2, the Exercise Price of one Warrant
after such reclassification, redesignation, reorganization or Combination will
equal (i) if the Warrants are exercisable into stock only or stock and any cash
or property other than cash which is received instead of any fractional share of
stock, the per share par value (if any) of such stock multiplied by the number
of shares of such stock into which one Warrant is exercisable and (ii) if the
Warrants are exercisable for cash or property only, $0.01. The Exercise Price
may be adjusted, to the extent permitted by law, in such manner, if any, and at
such time, as the Board may determine in good faith to be equitable in the
circumstances. The Warrant Agent shall not be deemed to have knowledge of any
such adjustment of the Exercise Price unless and until it has received written
notice thereof.
4.4 Other Events. If any event occurs as to which the
foregoing provisions of this Article IV are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board, fairly
and adequately protect the purchase rights of the Holders of the Warrants in
accordance with the essential intent and principles of such provisions, then the
Board may make, without the consent of the Holders, such adjustments to the
terms of this Article IV, in accordance with such essential intent and
principles, as will be reasonably necessary, in the good faith opinion of such
Board, to protect such purchase rights as aforesaid.
4.5 Notice of Certain Transactions. In the event that the
Company will publicly announce a plan (a) to effect any reclassification,
redesignation or reorganization of its shares of Common Stock, (b) to effect any
capital reorganization, consolidation or merger or (c) to effect the voluntary
or involuntary dissolution, liquidation or winding-up of the Company, the
Company will within 5 calendar days after such public announcement send to the
Warrant Agent and the Warrant Agent will within 5 Business Days after receipt of
such notice thereof and the form of notice of action, send the Holders a notice
(in such form as will be furnished to the Warrant Agent by the Company) of such
proposed action, such notice to be mailed by the Warrant Agent to the Holders at
their addresses as they appear in the Certificate Register, which notice will
14
specify the expected date that such issuance or event is to take place and the
expected date of participation therein by the holders of Common Stock and will
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 securities or property, if
any, and the number of shares of Common Stock and other securities or property,
if any, purchasable upon exercise of each Warrant and the Exercise Price after
giving effect to any adjustment which will be required as a result of such
action.
4.6 Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article IV, and Warrant Certificates issued after such adjustment may have the
same terms and conditions as are stated in any Warrant Certificates issued prior
to the adjustment. The Company, however, may at any time in its sole discretion
make any change in the form of Warrant Certificate that it may deem appropriate
to give effect to such adjustments, which do not affect the rights, duties or
responsibilities of the Warrant Agent and that does not affect the substance of
the Warrant Certificate, and any Warrant Certificate thereafter issued or
countersigned, whether in exchange or substitution for an outstanding Warrant
Certificate or otherwise, may be in the form as so changed.
ARTICLE V
Warrant Agent
5.1 Nature of Duties and Responsibilities Assumed.
(a) Appointment. The Company hereby appoints the Warrant
Agent to act as agent of the Company as expressly set forth in this Agreement.
The Warrant Agent hereby accepts the appointment as agent of the Company and
agrees to perform that agency upon the express terms and conditions herein set
forth (and no implied duties or obligations), by all of which the Company and
the Warrant Holders, by their acceptance thereof, will be bound.
(b) Authorization. Whenever in the performance of its
duties under this Agreement, the Warrant Agent will deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
an Officer and delivered to the Warrant Agent; and such certificate will be full
authorization to the Warrant Agent and the Warrant Agent shall incur no
liability for or in respect of any action taken, suffered or omitted in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) Liability of Warrant Agent. The Warrant Agent will be
liable hereunder only for its own gross negligence, bad faith or willful
misconduct, as each is finally determined by a court of competent jurisdiction.
The Warrant Agent will not be liable for or by reason of any of the statements
of fact or recitals contained in this Agreement or in the Warrant Certificates
or be required to verify the same, but all such statements and recitals are and
will be deemed to have been made by the Company only. The Warrant Agent will not
15
have any liability or responsibility in respect of the legality, validity or
enforceability of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant Certificate (except its countersignature thereof); nor
will it be responsible or liable for any breach by the Company of any covenant
or condition contained in this Agreement or in any Warrant Certificate; nor will
it be responsible or liable for the making of any change in the number of shares
of Common Stock required under the provisions of Article IV or responsible for
the manner, method or amount of any such change or the ascertaining of the
existence of any facts that would require any such adjustment or change; nor
will it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any shares of Common Stock to be issued
pursuant to this Agreement or any Warrant Certificate or as to whether any
shares of Common Stock will, when issued, be validly issued, fully paid and
nonassessable. The Warrant Agent will not be responsible or liable for any
failure of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the Company. The
Warrant Agent will not incur any liability or responsibility to the Company or
to any Warrant Holder for any action taken, suffered or omitted, in reliance on
any notice, resolution, waiver, consent, order, instruction, certificate, or
other paper, document or instrument reasonably believed by the Warrant Agent to
be genuine and to have been signed, sent or presented by the proper party or
parties. Anything to the contrary notwithstanding, in no event shall the Warrant
Agent be liable for special, punitive, indirect, consequential or incidental
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Warrant Agent has been advised of the likelihood of such
loss or damage. Any liability of the Warrant Agent under this Agreement will be
limited to the amount of fees paid by the Company to the Warrant Agent. The
provisions provided in this Section shall survive to termination of this
Agreement and the resignation or removal of the Warrant Agent hereunder.
(d) Litigation. The Warrant Agent will be under no
obligation to institute any action, suit or legal proceeding or take any other
action likely to involve expense unless the Company or one or more Holders of
Warrants will furnish the Warrant Agent with security and indemnity satisfactory
to the Warrant Agent for any costs and expenses which may be incurred. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrants or
the production thereof at any trial or other proceeding relative thereto, and
any such action, suit or proceeding instituted by the Warrant Agent will be
brought in its name as Warrant Agent and any recovery of judgment, except for
judgments relating to claims of indemnification and compensation due the Warrant
Agent hereunder, will be for the ratable benefit of the Holders of the Warrants,
as their respective rights or interests may appear. The Warrant Agent will
promptly notify the Company in writing of any claim made or action, suit or
proceeding instituted against it arising out of or in connection with this
Agreement.
(e) Instructions from the Company. The Warrant Agent is
hereby authorized and directed to accept written instructions, orders or other
communications, with respect to the performance of its duties hereunder from an
Officer, and to apply to any such Officer for advice or instructions in
connection with the Warrant Agent's duties, and it will not be liable for or in
respect of any action taken, suffered or omitted by it in good faith in
accordance with the instructions of any such Officer.
16
(f) Agents. The Warrant Agent may execute and exercise
any of the rights and powers hereby vested in it or perform any of its duty or
obligation hereunder either itself or by or through its attorneys or agents and
the Warrant Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agent or for any loss to the
Company, any Holder, or any other Person, resulting from such act, default,
neglect or misconduct, absent gross negligence or willful misconduct, as each is
finally determined b a court of competent jurisdiction, in the selection and in
the continued employment of any such attorney or agent.
(g) Other Acts. The Company will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further acts, instruments and assurances as may reasonably be
required by the Warrant Agent in order to enable it to carry out or perform its
duties under this Agreement.
(h) Agreement as Source of Duties. The Warrant Agent will
act hereunder solely as agent of the Company in a ministerial capacity, and its
duties will be determined solely by the expressed provisions hereof.
5.2 Right to Consult Counsel. The Warrant Agent may at any
time consult with legal counsel satisfactory to it (who may be legal counsel for
the Company) and the advice or opinion of such counsel will be full and complete
authorization and protection to the Warrant Agent as to any action taken,
suffered or omitted by it in good faith in accordance with such advice or
opinion.
5.3 Compensation and Reimbursement. The Company agrees to pay
to the Warrant Agent from time to time compensation for all services rendered by
it hereunder as set forth in the attached Exhibit D, and to reimburse the
Warrant Agent for reasonable expenses and disbursements incurred in connection
with the preparation, delivery, execution, amendment and administration of this
Agreement (including the reasonable compensation and expenses of its counsel).
The provisions of this Section 5.3 shall survive the termination of this
Agreement and the resignation or removal of the Warrant Agent. The costs and
expenses incurred in enforcing this right of compensation shall be paid by the
Company.
5.4 Indemnification. The Company agrees to indemnify the
Warrant Agent for, and to hold it harmless against, any loss, liability, damage,
judgment, fine, penalty, claim, demand, settlement, cost or expenses incurred
without gross negligence, bad faith or willful misconduct on its part (as each
is finally determined by a court of competent jurisdiction) for any action
taken, suffered or omitted by the Warrant Agent in connection with the
acceptance and administration of this Agreement or the exercise or performance
of its duties hereunder, including, without limitation, the costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The indemnity
provided herein shall survive the termination of this Agreement and the
resignation or removal of the Warrant Agent. The costs and expenses incurred in
enforcing this right of indemnification shall be paid by the Company.
5.5 Warrant Agent May Hold Company Securities. The Warrant
Agent and any stockholder, director, officer affiliate or employee of the
17
Warrant Agent may buy, sell or deal in any of the Warrants or other securities
of the Company or its affiliates or have a pecuniary interest in any transaction
in which the Company or its affiliates may be interested, or contract with or
lend money to the Company or its affiliates or otherwise act as fully and freely
as though it were not the Warrant Agent under this Agreement. Nothing herein
will preclude the Company and its affiliates from engaging the Warrant Agent in
any other capacity.
5.6 Change of Warrant Agent. The Warrant Agent may resign and
be discharged from its duties under this Agreement upon 30 calendar days' prior
notice in writing mailed, by registered or certified mail, to the Company. The
Company may remove the Warrant Agent or any successor warrant agent upon 60
calendar days' prior notice in writing, mailed to the Warrant Agent or successor
warrant agent, as the case may be, by registered or certified mail.
Notwithstanding the foregoing, if the Warrant Agent becomes incapable of acting
or is adjudged a bankrupt or insolvent or a receiver of the Warrant Agent or its
property is appointed or any public officer takes control of the Warrant Agent
or its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Company may remove the Warrant Agent immediately. If the
Warrant Agent resigns or is removed or otherwise becomes incapable of acting,
the Company will appoint a successor to the Warrant Agent (the "Successor
Warrant Agent") and will, within 30 calendar days following such appointment,
give notice thereof in writing to each registered Holder of the Warrant
Certificates. If the Company fails to make such appointment within a period of
30 calendar days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent, then the Company agrees to perform the duties of
the Warrant Agent hereunder until a Successor Warrant Agent is appointed. After
appointment, the Successor Warrant Agent will be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the former Warrant Agent will
deliver and transfer to the Successor Warrant Agent any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for this purpose. Failure to give any notice provided for
in this Section, however, or any defect therein will not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the Successor Warrant Agent, as the case may be.
5.7 Merger or Consolidation or Change of Name of Warrant
Agent. Any Person into which the Warrant Agent or any Successor Warrant Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Warrant Agent or any Successor Warrant
Agent shall be a party, or any Person succeeding to the business of the Warrant
Agent or any Successor Warrant Agent, shall be the successor to the Warrant
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case at the time such
Successor Warrant Agent shall succeed to the agency created by this Agreement,
any of the Warrant Certificates shall have been countersigned but not delivered,
any such Successor Warrant Agent may adopt the countersignature of the
predecessor Warrant Agent and deliver such Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, any Successor Warrant Agent may countersign such
Warrant Certificates either in the name of the predecessor Warrant Agent or in
the name of the Successor Warrant Agent; and in all such cases such Warrant
Certificates shall have the full force provided in the Warrant Certificates and
in this Agreement.
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ARTICLE VI
Rights of Holders
6.1 Holders not Stockholders. No Holder, as such, will be
entitled to vote or to receive dividends or otherwise will be deemed to be the
holder of shares of Common Stock for any purpose, nor will anything contained
herein or in any Warrant Certificate be construed to confer upon any Holder, as
such, any of the rights of a stockholder of the Company or any right to vote
upon or give or withhold consent to any action of the Company (whether upon any
reorganization, issuance of securities, reclassification or conversion of Common
Stock, consolidation, merger, sale, lease, conveyance or otherwise), receive
notice of meetings or other action affecting stockholders (except for notices
expressly provided for in this Agreement) or receive dividends or subscription
rights, unless and until such Warrant Certificate will have been surrendered for
exercise as provided in this Agreement, payment in respect of such exercise will
have been received by the Warrant Agent, and shares of Common Stock will have
become issuable thereunder and such person will have been deemed to have become
a holder of record of such shares. No Holder will, upon the exercise of
Warrants, be entitled to any dividends if the record date with respect to
payment of such dividends will be a date prior to the date such shares of Common
Stock became issuable upon the exercise of such Warrants.
6.2 Claims by Holders. All rights of action in respect of the
Warrants will be vested in the respective Holders; provided, however, that no
Holder will have the right to enforce, institute or maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, the
Warrants, unless (a) such Holder has previously given written notice to the
Company of the substance of such dispute, and the Holders of at least 25% of the
issued and outstanding Warrants have given written notice to the Company of
their support for the institution of such proceeding to resolve such dispute,
(b) such Holder has previously given written notice to the Warrant Agent of the
substance of such dispute and of the support for the institution of such
proceeding and (c) the Warrant Agent has not instituted appropriate proceedings
with respect to such dispute within 30 days following the date of such written
notice to the Warrant Agent, it being understood and intended that the Warrant
Agent has no obligation to institute proceedings and that no one or more Holders
will have the right in any manner whatsoever to affect, disturb or prejudice the
rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any rights of the Holders,
except in the manner described in this Section 6.2 for the equal and ratable
benefit of all Holders. Except as described above, no Holder will have the right
to enforce, institute or maintain any suit, action or proceeding to enforce, or
otherwise act in respect of, the Warrants.
6.3 Control of Litigation. The Bank will retain sole and
exclusive control of the Litigation and will retain 100% of any recovery from
the Litigation. The Holders will not have any right to control or manage the
course or disposition of the Litigation or the proceeds of any recovery
therefrom or any rights against the Company for any decision regarding the
conduct of the Litigation or disposition of the Litigation for an amount less
than the amount claimed in damages in the Litigation, regardless of the effect
on the value of the Warrants.
19
6.4 Determination of Values. The determination of the Board of
the Adjusted Litigation Recovery, the number of shares of Common Stock issuable
upon exercise of a Warrant and the Exercise Price will be final, conclusive and
binding upon the Holders.
ARTICLE VII
Miscellaneous
7.1 Information. So long as any Warrant remains outstanding,
the Company will deliver to the Warrant Agent and the Holders its annual report
to stockholders and any other documents that the Company, in its discretion,
deems appropriate.
7.2 Amendment. This Agreement may be amended by the parties
hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or making any other provisions with respect to matters or
questions arising under this Agreement as the Company and the Warrant Agent may
deem necessary or desirable; provided, however, that such action will not affect
adversely the rights of the Holders. Any amendment or supplement to this
Agreement that has an adverse effect on the interests of the Holders will
require the written consent of the Holders of a majority of the then outstanding
Warrants. The consent of each Holder affected will be required for any amendment
pursuant to which the Exercise Price would be increased or the number of Warrant
Shares purchasable upon exercise of Warrants would be decreased (other than
pursuant to adjustments provided for herein). In determining whether the Holders
of the required number of Warrants have concurred in any direction, waiver or
consent, Warrants owned by the Company or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company will be disregarded and deemed not to be outstanding, except that, for
the purpose of determining whether the Warrant Agent will be protected in
relying on any such direction, waiver or consent, only Warrants which the
Warrant Agent knows are so owned will be so disregarded. Also, subject to the
foregoing, only Warrants outstanding at the time will be considered in any such
determination. Prior to executing any amendment or supplement to this Agreement,
an Officer of the Company shall deliver to the Warrant Agent a certificate that
states that the proposed supplement or amendment is in compliance with the terms
of this Section 7.2.
7.3 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the other will be in writing and
will be deemed to have been duly given (a) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt, (b)
on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the third Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder will be delivered as set forth
below, or pursuant to such other instructions as may be designated in writing by
the party to receive such notice.
20
(a) If to the Company:
▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Executive Vice President
Washington Mutual, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Warrant Agent:
Mellon Investor Services LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: U. ▇▇▇▇▇ ▇▇▇
Any notice or communication mailed to a Holder will be mailed to the Holder at
the Holder's address as it appears on the Certificate Register and will be
sufficiently given if so mailed within the time prescribed. Failure to mail a
notice or communication to a Holder or any defect in it will not affect its
sufficiency with respect to other Holders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the
addressee receives it.
7.4 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
7.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
7.6 Entire Agreement, Etc. (a) This Agreement constitutes the
entire agreement, and supersedes all other prior agreements, understandings,
representations and warranties, both written and oral, between the parties, with
respect to the subject matter hereof, and (b) this Agreement will not be
assignable by operation of law or otherwise, except as provided herein with
respect to any Successor Company or Successor Warrant Agent (any such other
attempted assignment in contravention hereof being null and void).
21
7.7 Counterparts and Facsimile. For the convenience of the
parties hereto, this Agreement may be executed in any number of separate
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts will together constitute the same agreement. Executed
signature pages to this Agreement may be delivered by facsimile and such
facsimiles will be deemed as sufficient as if actual signature pages had been
delivered.
7.8 Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and will not be deemed to limit or otherwise affect any of the
provisions hereof.
7.9 Severability. If any provision of this Agreement or the
application thereof to any person (including, without limitation, the officers
and directors of the Warrant Agent and the Company) or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it has been
held invalid or unenforceable, will remain in full force and effect and will in
no way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination, the parties
will negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.
7.10 No Third-Party Beneficiaries. Nothing contained in this
Agreement, expressed or implied, is intended to confer upon any Person other
than the parties hereto, any benefit, right or remedies.
7.11 Successors. All agreements of the Company in this
Agreement and the Warrant Certificates will bind its successors. All agreements
of the Warrant Agent in this Agreement will bind its successors.
[Remainder of Page intentionally left blank]
22
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
WASHINGTON MUTUAL, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________________
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Executive Vice President
MELLON INVESTOR SERVICES LLC,
as Warrant Agent,
By: /s/ U. ▇▇▇▇▇ ▇▇▇
______________________________________
Name: U. ▇▇▇▇▇ ▇▇▇
Title: Assistant Vice President
23
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
[Unless and until it is exchanged in whole or in part for Warrants in definitive
form, this Warrant may not be transferred except as a whole by the depositary to
a nominee of the depositary or 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. The Depository
Trust Company ("DTC") (55 ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇) will act as the
depositary until a successor will be appointed by the Company and the Warrant
Agent. Unless this certificate is presented by an authorized representative of
DTC to the issuer or its agent for registration of transfer, exchange or Amount
Recovered, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of DTC (and any
Amount Recovered is made to Cede & Co. or 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.]*
WASHINGTON MUTUAL, INC.
LITIGATION TRACKING WARRANT
No. _____
Certificate for ________ Litigation Tracking Warrants to
Purchase Shares of Common Stock
of Washington Mutual, Inc.
THIS CERTIFIES THAT, _________, or registered assigns, is the registered holder
of the number of Litigation Tracking Warrants set forth above (the "Warrants").
Each Warrant entitles the holder thereof (the "Holder"), at its option and
subject to the provisions contained herein and in the Warrant Agreement referred
to below, to purchase from Washington Mutual, Inc. (the "Company"), successor by
merger to DIME BANCORP, INC., a Delaware corporation ("Dime"), the number of
shares of Common Stock ("Warrant Shares"), no par value per share, of the
Company (the "Common Stock") equal to the Adjusted Litigation Recovery divided
by the product of (1) the Adjusted Stock Price, multiplied by (2) the Maximum
Number of Warrants, multiplied by (3) the Dime Exchange Ratio (1.1232), at an
exercise price per Warrant equal to the number of shares of Common Stock for
which one Warrant is exercisable multiplied by the Exercise Price, if any. This
Warrant Certificate will terminate and become void on the earliest of (i) the
Close of Business on the last day of the Warrant Exercise Period, (ii) the Close
of Business on the date the Litigation has been disposed of in a manner such
that no shares of Common Stock or other securities or property will be issuable
under the terms of the Warrants and (iii) the time and date such Warrant is
exercised.
_____________________
* To be included only if the Warrant is in global form.
A-1
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions
contained in a 2003 Amended and Restated Warrant Agreement dated as of March 11,
2003 as such agreement may be amended from time to time (the "Warrant
Agreement"), between the Company, as successor to Dime, and Mellon Investor
Services LLC, as successor to EquiServe Trust Company, N.A. and EquiServe
Limited Partnership, as warrant agent (in such capacity, the "Warrant Agent",
which term includes any successor Warrant Agent under the Warrant Agreement), to
all of which terms and provisions the Holder of this Warrant Certificate
consents by acceptance hereof. The Warrant Agreement is hereby incorporated
herein by reference and made a part hereof. Reference is hereby made to the
Warrant Agreement for a full statement of the respective rights, limitations of
rights, duties and obligations of the Company, the Warrant Agent and the Holders
of the Warrants. Capitalized terms used but not defined herein will have the
meanings ascribed thereto in the Warrant Agreement. A copy of the Warrant
Agreement may be obtained for inspection by the Holder hereof upon written
request to the Warrant Agent.
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part by surrender of this Warrant Certificate with the
form of election to purchase Warrant Shares attached hereto duly executed and
with the simultaneous payment of the Exercise Price in cash (subject to
adjustment) to the Warrant Agent for the account of the Company at the office of
the Warrant Agent. Payment of the Exercise Price will be made by certified or
official bank check or personal check payable to the order of the Company or by
wire transfer of funds to an account designated by the Company for such purpose.
No fractional Warrant Shares will be issued upon the exercise of any Warrant,
but the Company will pay cash in lieu of a fractional share as provided in the
Warrant Agreement.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, each Warrant will be exercisable at any time from
and from time to time during the Warrant Exercise Period only and will not be
exercisable after the expiration of the Warrant Exercise Period.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrant Shares may be, subject to certain conditions,
adjusted.
The Company may require payment of a sum sufficient to pay all taxes
and other governmental charges in connection with the transfer or exchange of
the Warrant Certificates.
The holder in whose name the Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner of
the Warrant Certificate for all purposes whatsoever and neither the Company nor
the Warrant Agent will be affected by any notice to the contrary.
The Warrants represent a contingent right to purchase shares of Common
Stock with an aggregate value based on a portion of any proceeds that may be
received by the Bank from the Litigation. There can be no assurance as to when
the Litigation will be resolved or the amount of proceeds, if any, the Bank or
the Company will receive therefrom. The Holders will not have any right to
control or manage the course or disposition of the Litigation or the proceeds of
any recovery therefrom.
A-2
The Warrants do not entitle any holder hereof to any of the rights of a
holder of any Common Stock or Preferred Stock of the Company.
This Warrant Certificate will not be valid or obligatory for any
purpose until it will have been countersigned by the Warrant Agent.
WASHINGTON MUTUAL, INC.
By ___________________________________
[SEAL]
Attest: _____________________________
Secretary
DATED:
Countersigned:
[_______________]
as Warrant Agent,
by ____________________________________
Authorized Signatory
A-3
EXHIBIT B
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
WASHINGTON MUTUAL, INC.
The undersigned hereby irrevocably elects to exercise [ ] Warrants at an
exercise price per Warrant of $[ ] to acquire [ ] shares of Common Stock, no par
value per share, of Washington Mutual, Inc. (the "Company"), on the terms and
conditions specified in the within Warrant Certificate and the Warrant Agreement
therein referred to, surrenders this Warrant Certificate and all right, title
and interest therein to the Company, and directs that the shares of Common Stock
deliverable upon the exercise of such Warrants be registered and delivered in
the name and at the address specified below and delivered thereto.
Date: ________________, ____
__________________________
(Signature of Owner)*
__________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
__________________________
(City) (State) (Zip Code)
__________________________
Signature Guaranteed by:
______________________
* The signature must correspond with the name as written upon the face
of the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a national bank or
trust company or by a member firm of any national securities exchange.
B-1
Securities and/or check to be issued to:
Name:__________________________________________________________________________
Social security or Federal tax identification number:__________________________
Street Address:________________________________________________________________
City, State and Zip Code:______________________________________________________
Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:
Name:__________________________________________________________________________
Social security or Federal tax identification number:__________________________
Street Address:________________________________________________________________
City, State and Zip Code:______________________________________________________
B-2
EXHIBIT C
The following exchanges of a part of this Global Warrant for definitive Warrants
have been made:
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of Washington
Mutual, Inc. (the "Company")
This Certificate relates to ____________ Warrants held in definitive
form by ____________ (the "Transferor").
The Transferor has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants. The Warrant Agent and the
Company are entitled to rely upon this Certificate and are irrevocably
authorized to produce this Certificate or a copy hereof to any interested party
in any administrative or legal proceedings or official inquiry with respect to
the matters covered hereby.
[INSERT NAME OF TRANSFEROR]
by ____________________________________
Date: ________________________________
C-1