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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): February 20, 1996
The Bear Stearns Companies Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8989 13-3286161
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(Commission File Number) (I.R.S. Employer
Identification No.)
245 Park Avenue, New York, New York 10167
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(Address of Principal Executive Offices) (Zip Code)
(212) 272-2000
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibits are incorporated by reference into
the Registration Statement on Form S-3 (Registration No. 33-63561) as
exhibits to such Registration Statement:
4(c)(10) --Form of Warrant Agreement relating to the
Vantage Point Portfolio Call Warrants.
8 --Opinion of Weil, Gotshal & Manges as to tax
matters.
23(c) --Consent of Weil, Gotshal & Manges (included in
Exhibit 8 hereto).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
THE BEAR STEARNS COMPANIES INC.
Date: February 21, 1996 By:/s/ Samuel L. Molinaro, Jr.
--------------------------------
Samuel L. Molinaro, Jr.
Senior Vice President - Finance
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EXHIBIT INDEX
Exhibit No.: Description: Page No.:
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4(c)(10) Form of Warrant Agreement -
relating to the Vantage Point
Portfolio Call Warrants
8 Opinion of Weil, Gotshal & -
Manges as to tax matters.
23(c) Consent of Weil, Gotshal & -
Manges (included in Exhibit
8 hereto).
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THE BEAR STEARNS COMPANIES INC.
and
CHEMICAL BANK, Warrant Agent
and
BEAR, STEARNS & CO. INC., Determination Agent
_________________
WARRANT AGREEMENT
dated as of February 23, 1996
Vantage Point Portfolio Call Warrants
Expiring August 20, 1997
=================================================================
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TABLE OF CONTENTS
Page
----
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
ISSUANCE OF WARRANTS AND FORM,
EXECUTION, DELIVERY AND REGISTRATION
OF WARRANT CERTIFICATES AND
GLOBAL WARRANT CERTIFICATE
SECTION 1.01. Issuance of Warrants . . . . . . . . . . . . . 1
SECTION 1.02. Form, Execution and Delivery of Warrant
Certificates . . . . . . . . . . . . . . . . . 2
SECTION 1.03. Warrant Certificates . . . . . . . . . . . . . 3
SECTION 1.04. Registration of Transfers and Exchanges . . . 3
SECTION 1.05. Mutilated or Missing Warrant Certificates . . 4
SECTION 1.06. Registered Holders . . . . . . . . . . . . . . 5
SECTION 1.07. Conversion Option . . . . . . . . . . . . . . 5
SECTION 1.08. Global Warrant Certificate . . . . . . . . . . 7
ARTICLE II
DURATION AND EXERCISE OF WARRANTS
SECTION 2.01. Duration of Warrants; Minimum Exercise Amounts;
Exercise Notice . . . . . . . . . . . . . . . 9
SECTION 2.02. Exercise, Valuation and Delivery of
Warrants . . . . . . . . . . . . . . . . . . . 11
SECTION 2.03. Automatic Exercise of Warrants; Exercise upon an
Extension Event, an Extraordinary Event or an
Exercise Limitation Event . . . . . . . . . . 25
SECTION 2.04. Limitation of Number of Exercisable Warrants . 33
SECTION 2.05. Covenant of the Company . . . . . . . . . . . 34
SECTION 2.06. Return of Money Held Unclaimed for Two Years . 34
SECTION 2.07. Return of Global Warrant Certificate . . . . . 34
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF WARRANTHOLDERS
SECTION 3.01. Warrantholder May Enforce Rights . . . . . . . 35
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ARTICLE IV
WARRANTS ACQUIRED BY THE COMPANY;
PAYMENT OF TAXES
SECTION 4.01. Warrants Acquired by the Company . . . . . . . 35
SECTION 4.02. Payment of Taxes . . . . . . . . . . . . . . . 35
ARTICLE V
CONCERNING THE WARRANT AGENT
SECTION 5.01. Warrant Agent . . . . . . . . . . . . . . . . 36
SECTION 5.02. Conditions of Warrant Agent's Obligations . . 36
SECTION 5.03. Resignation and Appointment of Successor . . . 38
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendment . . . . . . . . . . . . . . . . . . 40
SECTION 6.02. Notices and Demands to the Company,
the Warrant Agent and the Determination
Agent . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.03. Addresses for Notices . . . . . . . . . . . . 41
SECTION 6.04. Notices to Holders . . . . . . . . . . . . . . 41
SECTION 6.05. Obtaining of Approvals . . . . . . . . . . . . 41
SECTION 6.06. Persons Having Rights Under This Agreement . . 41
SECTION 6.07. Inspection of Agreement . . . . . . . . . . . 41
SECTION 6.08. Headings . . . . . . . . . . . . . . . . . . . 42
SECTION 6.09. Counterparts . . . . . . . . . . . . . . . . . 42
SECTION 6.10. Applicable Law . . . . . . . . . . . . . . . . 42
EXHIBIT A - Form of Warrant Certificate
EXHIBIT A-1 - Form of Global Warrant Certificate
EXHIBIT A-2 - Exercise Notice For Warrants Represented by the
Global Warrant Certificate
EXHIBIT B - Confirmation of Exercise For Warrants Represented
by Warrant Certificates
EXHIBIT B-1 - Notice of Rejection of Exercise Notice for
Warrants Represented by Warrant Certificates
EXHIBIT B-2 - Confirmation of Exercise For Warrants Represented
by the Global Warrant Certificate
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EXHIBIT B-3 - Notice of Rejection of Exercise Notice for
Warrants Represented by the Global Warrant
Certificate
EXHIBIT C-1 - Notice of Rejection Relating to Limit Option For
Warrants Represented by Warrant Certificates
EXHIBIT C-2 - Notice of Rejection Relating to Limit Option For
Warrants Represented by the Global Warrant
Certificate
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WARRANT AGREEMENT
THIS AGREEMENT, dated as of February 23, 1996, is among
THE BEAR STEARNS COMPANIES INC., a corporation organized and
existing under the laws of the State of Delaware (the "Company"),
CHEMICAL BANK, a New York banking corporation (the "Warrant
Agent"), and BEAR, STEARNS & CO. INC., a corporation organized
and existing under the laws of the State of Delaware (the
"Determination Agent").
WHEREAS, the Company proposes to sell from time to time
Vantage Point Portfolio Call Warrants (the "Warrants" or,
individually, a "Warrant") representing the right to receive from
the Company on exercise (including automatic exercise) an amount
equal to the Cash Settlement Value or Alternative Settlement
Amount, as the case may be (each, as defined below), determined
by reference to increases in the Spot Portfolio Value (as defined
herein) of the Vantage Point Portfolio (as defined herein), on
the terms and conditions set forth in this Agreement; and
WHEREAS, the Company desires the Warrant Agent to act
on behalf of the Company, and the Warrant Agent is willing so to
act, in connection with the issuance, transfer and exercise of
the Warrants, and the Company desires to set forth herein, among
other things, the provisions of the Warrants and the terms and
conditions on which they may be issued, transferred, exercised
and cancelled;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE OF WARRANTS AND FORM,
EXECUTION, DELIVERY AND REGISTRATION
OF WARRANT CERTIFICATES AND
GLOBAL WARRANT CERTIFICATE
SECTION 1.01. Issuance of Warrants. (a) The Warrants
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are unsecured contractual obligations of the Company and will
rank on a parity with the Company's other unsecured contractual
obligations and with the Company's unsecured and unsubordinated
debt.
(b) Each Warrant entitles a Registered Holder (as
defined herein, a "Warrantholder") to receive upon exercise
(including automatic exercise), subject to the provisions
contained herein, the Cash Settlement Value or the Alternative
Settlement Amount, as the case may be (each as defined herein),
of such Warrant. A Warrant will not require or entitle a
Warrantholder to purchase or take delivery from the Company of
any shares of any component stocks of the Vantage Point Portfolio
(the "Portfolio Securities"), or any other securities. Upon
exercise of a Warrant, the Company will make only a cash payment
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in the amount of the Cash Settlement Value or Alternative
Settlement Amount, if any and as applicable, of such Warrant.
The Company is under no obligation to, nor will it, sell or
deliver to any Warrantholder any shares of any of the Portfolio
Securities or any other securities in connection with the
exercise of any Warrants. Warrantholders will not receive any
interest on any Cash Settlement Value or Alternative Settlement
Amount, and the Warrants will not entitle the Warrantholders to
any of the rights of holders of any of the Portfolio Securities
or any other securities.
SECTION 1.02. Form, Execution and Delivery of Warrant
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Certificates. (a) The Warrants, whenever issued, shall be
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represented by certificates in registered form substantially in
the form set forth in Exhibit A hereto (the "Warrant
Certificates"), with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Agreement, and may represent any whole number of
Warrants. The Warrant Certificates may have imprinted or
otherwise reproduced thereon such letters, numbers or other marks
of identification or designation and such legends or endorsements
as the officers of the Company executing the same may approve
(execution thereof to be conclusive evidence of such approval)
and which are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with
any rule or regulation made pursuant thereto, or with any rule or
regulation of any self-regulatory organization (an "SRO") on
which the Warrants may be listed, or of any securities
depository, or to conform to usage. Warrant Certificates shall
be signed on behalf of the Company by its chairman, its
president, its chief financial officer, its treasurer or one of
its managing directors and attested by its secretary or an
assistant secretary. The signature of any of such officers may
be either manual or facsimile. Typographical and other minor
errors or defects in any such signature shall not affect the
validity or enforceability of any Warrant Certificate that has
been duly countersigned and delivered by the Warrant Agent.
(b) In case any officer of the Company who shall have
signed a Warrant Certificate, either manually or by facsimile
signature, shall cease to be such officer before such Warrant
Certificate shall have been countersigned and delivered by the
Warrant Agent to the Company or delivered by the Company, such
Warrant Certificate nevertheless may be countersigned and
delivered as though the person who signed such Warrant
Certificate had not ceased to be such officer of the Company; and
the Warrant Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of the Company to
sign such Warrant Certificate, although at the date of the
execution of this Warrant Agreement any such person was not such
officer.
SECTION 1.03. Warrant Certificates. Each Warrant
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Certificate, when executed on behalf of the Company in accordance
with Section 1.02, shall be delivered to the Warrant Agent, which
shall manually countersign and deliver the same to or upon the
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order of the Company. After the initial original issuance of
Warrants hereunder, additional Warrant Certificates may be issued
on original issuance upon two (2) Business Days (as defined
herein) prior notice to the Warrant Agent. Each Warrant
Certificate shall be dated the date of its countersignature. A
Warrant Certificate shall not be valid for any purpose, and no
Warrant evidenced thereby shall be exercisable, unless and until
such Warrant Certificate has been countersigned by the manual
signature of an authorized officer of the Warrant Agent. Such
countersignature by an authorized officer of the Warrant Agent
upon any Warrant Certificate signed by the Company in accordance
with Section 1.02 shall be conclusive evidence that the Warrant
Certificate so countersigned has been duly issued hereunder.
SECTION 1.04. Registration of Transfers and Exchanges.
---------------------------------------
(a) Except as otherwise provided herein or in the Warrant
Certificate, the Warrant Agent shall from time to time register
the transfer of any outstanding Warrant Certificates upon the
records to be maintained by it for that purpose (the "Warrant
Register") at the Warrant Agent's Office (as defined herein),
subject to such reasonable regulations as the Company or the
Warrant Agent may prescribe, upon surrender thereof at the
Warrant Agent's Window (as defined herein), Attention: Transfer
Department, duly endorsed by, or accompanied by a written
instrument or instruments of transfer in form satisfactory to the
Warrant Agent and the Company duly executed by, the Registered
Holder(s) (as defined herein) thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney,
such signature to be guaranteed by a bank or trust company with a
correspondent office in The City of New York or by a broker or
dealer which is a member of the National Association of
Securities Dealers, Inc. (the "NASD") or by a member of a
national securities exchange. Upon any such registration of
transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be
cancelled by the Warrant Agent.
(b) At the option of a Warrantholder, unexercised
Warrant Certificates may be exchanged for other Warrant
Certificates, representing a like number of Warrants, upon
surrender to the Warrant Agent of the Warrant Certificates to be
exchanged at the Warrant Agent's Window, Attention: Transfer
Department. The "Warrant Agent's Window" shall be the window of
the Warrant Agent maintained for purposes of transfer and tender
in the Borough of Manhattan, The City of New York or at the
address of any successor Warrant Agent (as provided in Section
5.03) and which is, on the date of this Agreement, Chemical
Bank/Geoserve, Corporate Trust Securities Window, 55 Water
Street, Room 234, North Building, New York, New York 10041,
Attention: Tender Department. Upon surrender of any unexercised
Warrant Certificate for exchange, the Warrant Agent shall cancel
such Warrant Certificate, and the Company shall execute, and the
Warrant Agent shall countersign and deliver, in accordance with
Sections 1.02 and 1.03, one or more new Warrant Certificates of
like tenor and representing a like number of unexercised
Warrants.
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(c) Warrant Certificates issued upon transfer or
exchange pursuant to Section 1.04(a) or (b) shall be valid
obligations of the Company, evidencing the same obligations of
the Company as the Warrant Certificates surrendered for transfer
or exchange, and entitled to the same benefits under this
Agreement as were such Warrant Certificates prior to such
surrender.
(d) Except as provided in Section 1.05, no service
charge shall be made for any registration of transfer or exchange
of Warrant Certificates, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or
exchange of Warrant Certificates, other than exchanges pursuant
to this Section 1.04 not involving any transfer.
(e) In the event that upon any exercise of Warrants
evidenced by a Warrant Certificate the number of Warrants
exercised shall be less than the total number of Warrants
evidenced by such Warrant Certificate, there shall be issued to
the Registered Holder thereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised.
SECTION 1.05. Mutilated or Missing Warrant
----------------------------
Certificates. (a) If any Warrant Certificate is mutilated,
------------
lost, stolen or destroyed, the Company may in its discretion
execute, and the Warrant Agent may countersign and deliver, in
exchange and substitution for, and upon cancellation of, the
mutilated Warrant Certificate, or in replacement of the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate
of like tenor and representing an equivalent number of Warrants,
bearing an identification number not contemporaneously
outstanding, but only (in case of loss, theft or destruction)
upon receipt of evidence satisfactory to the Company and the
Warrant Agent of such loss, theft or destruction of such Warrant
Certificate and security or indemnity, if requested, also
satisfactory to them. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company
or the Warrant Agent may prescribe.
(b) In case any such mutilated, lost, stolen or
destroyed Warrant Certificate has been or is about to be
exercised, or deemed to be exercised, the Company in its absolute
discretion may, instead of issuing a new Warrant Certificate,
direct the Warrant Agent to treat the same as if it had received
the Warrant Certificate together with an irrevocable Exercise
Notice (as defined herein) in proper form in respect thereof, as
provided herein, or as being subject to automatic exercise, as
the case may be.
(c) Each new Warrant Certificate issued pursuant to
this Section 1.05 in lieu of any lost, stolen or destroyed
Warrant Certificate shall be an original, additional contractual
obligation of the Company, and shall be entitled to the same
benefits under this Agreement as the Warrant Certificate that was
lost, stolen or destroyed.
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(d) Upon the issuance of any new Warrant Certificate
in accordance with this Section 1.05, the Company may require the
payment of a sum sufficient to cover any tax or other govern-
mental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Warrant
Agent) connected therewith.
(e) The provisions of this Section 1.05 are exclusive
and shall preclude (to the extent lawful) any other rights and
remedies with respect to the replacement or payment of mutilated,
lost, stolen or destroyed Warrant Certificates.
SECTION 1.06. Registered Holders. Prior to due
------------------
presentment for registration of transfer, the Company, the
Warrant Agent, and any agent of the Company or the Warrant Agent,
may deem and treat the person in whose name a Warrant Certificate
shall be registered in the Warrant Register (a "Registered
Holder") as the absolute owner of the Warrants evidenced thereby
(notwithstanding any notation of ownership or other writing on
the Warrant Certificate) for any purpose whatsoever, and as the
person entitled to exercise the rights represented by the
Warrants evidenced thereby, and neither the Company nor the
Warrant Agent, nor any agent of the Company or the Warrant Agent,
shall be affected by any notice to the contrary. This Section
1.06 shall be without prejudice to the rights of Warrantholders
as described elsewhere herein.
SECTION 1.07. Conversion Option. (a) Commencing on
-----------------
the one hundred eightieth calendar day following February __,
1996, each Warrantholder will have the option (the "Conversion
Option") to convert the form in which such Warrantholder holds
his Warrants from definitive to book-entry form. The Company
shall notify each Warrantholder as soon as practicable after the
initial original issuance of the Warrants (i) that Warrant
Certificates (as defined herein) must be delivered to an entity
(a "Participant") entitled to execute, clear and settle
transactions through The Depository Trust Company, New York, New
York (the "Depository", which term, as used herein, includes any
successor securities depository selected by the Company) in
proper form for deposit in order for Warrants to be converted
into book-entry form, (ii) of the date on which such conversions
will commence (which shall be such 180th calendar day (the
"Initial Conversion Date")), (iii) of the date on which such
conversions will end (which date shall be the forty-fifth
calendar day after the Initial Conversion Date (the "Final
Conversion Date")) and (iv) of the CUSIP number assigned to the
Warrants. The Warrant Agent, at the request and expense of the
Company and on behalf of the Company, shall mail such notice to
each Warrantholder. The period from the Initial Conversion Date
to and including the Final Conversion Date is referred to herein
as the "Conversion Option Period". Warrants in book-entry form
shall not be exchangeable for Warrant Certificates, except as
provided herein.
(b) During the Conversion Option Period, the
Depository will credit the account of each Participant that
deposits Warrant Certificates with the quantity of Warrants
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evidenced by such Warrant Certificates either by the close of
business on the Business Day on which such Warrant Certificates
are deposited (if received by the Depository by its then
applicable cut-off time for same-day credit) or on the following
Business Day (if received by the Depository by its then
applicable cut-off time for next-day credit), all in accordance
with the provisions of the Letter of Representations relating to
the Warrants, among the Company, the Warrant Agent and the
Depository (the "Representations Letter").
(c) As more fully described in the Representations
Letter, the Depository will deliver daily to the Warrant Agent
Warrant Certificates deposited at the Depository on the previous
Business Day. If the Warrant Agent accepts such Warrant
Certificates for conversion, it shall promptly cancel such
Warrant Certificates, debit the accounts of the Warrantholders
registered on its books, and credit the account of the Depository
with the aggregate quantity of Warrants evidenced by the
cancelled Warrant Certificates. On the first day during the
Conversion Option Period that the Warrant Agent credits Warrants
to the Depository's account, the Warrant Agent shall countersign
a global certificate evidencing such Warrants (the "Global
Warrant Certificate") in the manner provided herein. On each
subsequent day during the Conversion Option Period that the
Warrant Agent credits Warrants to the Depository's account, the
Warrant Agent may (i) as provided in the Fast Automated
Securities Transfer Balance Certificate Agreement between
Chemical Bank and the Depository (the "FAST Agreement"),
countersign a new Global Warrant Certificate or (ii) endorse the
existing Global Warrant Certificate to evidence the increased
quantity of Warrants credited to the Depository's account. If
the Warrant Agent countersigns a new Global Warrant Certificate,
it shall cancel the existing Global Warrant Certificate. Only
one Global Warrant Certificate evidencing Warrants credited to
the Depository's account shall be outstanding at any time.
(d) If (i) the Depository is at any time unwilling or
unable to continue as securities depository for the Warrants and
a successor Depository is not appointed by the Company within 90
days, or (ii) the Company shall be adjudged a bankrupt or
insolvent or make an assignment for the benefit of its creditors
or institute proceedings to be adjudicated a bankrupt or shall
consent to the filing of a bankruptcy proceeding against it, or
shall file a petition or answer or consent seeking reorganization
under Federal bankruptcy laws or any other similar applicable
Federal or State law, or shall consent to the filing of any such
petition, or shall consent to the appointment of a receiver or
custodian of all or any substantial part of its property, or
shall admit in writing its inability to pay or meet its debts as
they mature, or if a receiver or custodian of it or all or any
substantial part of its property shall be appointed, or if a
public officer shall have taken charge or control of the Company
or of its property or affairs, for the purpose of rehabilitation,
conservation or liquidation, the Company will reissue Warrant
Certificates in exchange for the Global Warrant Certificate
registered in the names provided by the Depository to the Warrant
Agent in writing. In addition, the Company may at any time
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determine not to have the Warrants represented by a Global
Warrant Certificate and, in such event, will issue Warrant
Certificates in exchange for the Global Warrant Certificate
registered in the names provided by the Depository to the Warrant
Agent in writing. In any such instance, and in accordance with
the provisions of this Agreement, each Warrantholder will be
entitled to have a number of Warrants equivalent to such
Warrantholder's beneficial interest in the Global Warrant
Certificate registered in the name of the Warrantholder and will
be entitled to physical delivery of such Warrants in definitive
form. The provisions of Section 1.08 shall apply only if and
when the Conversion Option is utilized and a Global Warrant
Certificate is issued hereunder. Unless the context shall
otherwise require, and subject to the provisions of Section 1.08,
all references in this Agreement to the Warrant Certificates
(other than in Sections 1.02, 1.03, 1.04 and 1.08) shall include
the Global Warrant Certificate in the event that the Global
Warrant Certificate is issued.
SECTION 1.08. Global Warrant Certificate. (a) Any
--------------------------
Global Warrant Certificate issued in accordance with this
Section 1.08 shall be substantially in the form set forth in
Exhibit A-1 hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Agreement, and may represent any number of whole
Warrants. Each Global Warrant Certificate may have imprinted or
otherwise reproduced thereon such letters, numbers or other marks
of identification or designation and such legends or endorsements
as the officers of the Company executing the same may approve
(execution thereof to be conclusive evidence of such approval)
and which are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with
any rule or regulation made pursuant thereto, or with any rule or
regulation of any stock exchange on which the Warrants may be
listed or of any securities depository referred to herein, or to
conform to usage. Each Global Warrant Certificate shall be
signed on behalf of the Company upon the same conditions, in
substantially the same manner and with the same effect as the
Warrant Certificates.
(b) The Warrant Agent is authorized, from time to time
during the Conversion Option Period, upon receipt of a Global
Warrant Certificate from the Company, duly executed on behalf of
the Company, to countersign such Global Warrant Certificate. The
Global Warrant Certificate shall be manually countersigned and
dated the date of its countersignature by the Warrant Agent and
shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall deliver the Global Warrant Certificate to or
upon the order of the Depository against receipt of an appro-
priate amount of Definitive Warrants (as defined herein) (such
Definitive Warrants shall be disposed of in accordance with
instructions provided by the Company). One or more Global
Warrant Certificates may be executed by the Company and delivered
to the Warrant Agent on or after the date of execution of this
Agreement; provided that only one Global Warrant Certificate
shall be outstanding at any one time.
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The Company reserves the right to issue, from time to
time after the date of execution of this Agreement, additional
Warrants, and in connection therewith the Global Warrant
Certificate may be exchanged for a new Global Warrant Certificate
to reflect the issuance by the Company of such additional
Warrants. To effect such an exchange the Company shall deliver
to the Warrant Agent a new Global Warrant Certificate duly
executed on behalf of the Company as provided in Section 1.02.
The Warrant Agent shall countersign the new Global Warrant
Certificate as provided in this Section and shall deliver the new
Global Warrant Certificate to the Depository in exchange for, and
upon receipt of, the Global Warrant Certificate then held by the
Depository. The Warrant Agent shall cancel the Global Warrant
Certificate delivered to it by the Depository, dispose of such
Global Warrant Certificate and provide a certificate of
disposition to the Company.
(c) The Global Warrant Certificate will initially be
registered in the name of a nominee of the Depository. The
Warrant holdings of the Participants will be recorded on the
books of the Depository. The holdings of customers of the
Participants and the identity of the Warrantholders will be
reflected on the books and records of such Participants and will
not be known to the Warrant Agent, the Company or the Depository.
The Global Warrant Certificate will be held by the Depository or
its agent.
Neither the Company nor the Warrant Agent will have any
responsibility or liability for any aspect of the records
relating to beneficial ownership interests in the Global Warrant
Certificate or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company may from time to time select a new entity
to act as Depository with respect to the Warrants and, if such
selection is made, the Company shall promptly give the Warrant
Agent notice to such effect identifying the new Depository, and
the Global Warrant Certificate shall be delivered to the Warrant
Agent and shall be transferred to the new Depository as provided
below as promptly as possible. Appropriate changes may be made
in the forms of the Global Warrant Certificate, the Exercise
Notice and the related notices to be delivered in connection with
an exercise to reflect the selection of the new Depository.
(d) Except as otherwise provided herein or in the
Global Warrant Certificate, the Warrant Agent shall from time to
time register the transfer of the Global Warrant Certificate in
its records (which may be maintained electronically), subject to
such reasonable regulations as the Company or the Warrant Agent
may prescribe, only to the Depository, to another nominee of the
Depository, to a successor Depository or to a nominee of a
successor Depository, upon surrender of such Global Warrant
Certificate, duly endorsed, or accompanied by a written
instrument or instruments of transfer in form satisfactory to the
Warrant Agent and the Company, duly executed by the Registered
Holder thereof or by the duly appointed legal representative
thereof, or by its duly authorized attorney. Such signature
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shall be guaranteed by a bank or trust company with a
correspondent office in The City of New York or by a broker or
dealer which is a member of the NASD or by a member of a national
securities exchange. Upon any such registration of transfer, a
new Global Warrant Certificate shall be issued to the transferee
and the surrendered Global Warrant Certificate shall be cancelled
by the Warrant Agent.
The Global Warrant Certificate may be transferred as
provided in paragraph (d) above, when surrendered to the Warrant
Agent's Window, Attention: Transfer Department, or at the address
of any successor Warrant Agent (as provided in Section 5.03), for
another Global Warrant Certificate of like tenor and representing
a like number of unexercised Warrants.
ARTICLE II
DURATION AND EXERCISE OF WARRANTS
SECTION 2.01. Duration of Warrants; Minimum Exercise
--------------------------------------
Amounts; Exercise Notice. (a) Subject to the limitations set
------------------------
forth herein and in Sections 2.02 and 2.03, each Warrant may be
irrevocably exercised in whole but not in part, immediately upon
issuance. Subject to the limitations set forth herein and except
in the case of automatic exercise or following an Extension
Event, each Warrant shall be irrevocably exercised either (A) in
the case of Warrants represented by Warrant Certificates
("Definitive Warrants"), including Definitive Warrants held
through CEDEL (as defined herein) or Euroclear (as defined
herein), on any Business Day during the period from the date of
issuance until 3:00 P.M., New York City time, on the earlier of
(i) the third Business Day immediately preceding the Expiration
Date (as defined herein), and (ii) the Business Day immediately
preceding any Delisting Date (as defined herein) by delivering or
causing to be delivered to the Warrant Agent (at the Warrant
Agent's Window, Attention: Tender Department) the Warrant
Certificate representing such Warrant, with the Exercise Notice
duly completed and executed by the Registered Holder of such
Warrant (or in the case of Definitive Warrants held through the
facilities of CEDEL or Euroclear, by an entity entitled to
execute, clear and settle transactions through CEDEL or Euroclear
(a "CEDEL or Euroclear Participant"), as the case may be) or (B)
in the case of Warrants represented by a Global Warrant
Certificate ("Book-entry Warrants"), on any Business Day during
the period from the Initial Conversion Date until 3:00 P.M., New
York City time, on the earlier of (i) the third Business Day
immediately preceding the Expiration Date, and (ii) the Business
Day immediately preceding any Delisting Date by causing (x) such
Warrants to be transferred free to the Warrant Agent on the
records of the Depository in accordance with the Depository's
Deposit/Withdrawal at Custodian procedures, as provided in the
Representations Letter, and (y) a duly completed and executed
Exercise Notice to be received by the Warrant Agent (the Warrant
Agent's facsimile transmission number for such purpose is (212)
946-7682) from a Participant, in the case of Book-Entry Warrants
held through the Depository, or a CEDEL or Euroclear Participant,
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in the case of such Warrants held through CEDEL or Euroclear,
acting, directly or indirectly, on behalf of the Warrantholder
(such form of Exercise Notice may be obtained from the Warrant
Agent); provided, however, that Exercise Notices are subject to
rejection by the Warrant Agent as provided herein. The
"Expiration Date" shall be August 20, 1997. Neither the Warrant
Agent nor the Determination Agent will be responsible for any
losses resulting from a failure of a brokerage firm, a
Participant or a CEDEL or Euroclear Participant to properly
exercise Warrants on behalf of a Warrantholder.
(b) No fewer than 500 Warrants may be exercised by or
on behalf of any one Warrantholder at any one time, except that
no such minimum exercise amount shall apply in the case of
automatic exercise on or following the Expiration Date or on any
Delisting Date, or in the case of cancellation of the Warrants as
a result of an Extraordinary Event (as defined herein). A
Warrantholder shall not combine Definitive Warrants and Book-
entry Warrants or Book-entry Warrants held through more than one
Participant to meet the 500 Warrant minimum exercise requirement
provided herein. With the exception of the Limit Option, an
Exercise Notice shall be unconditional. Except as provided in
Section 2.02(c), the Warrant Agent shall be entitled, with no
duty of inquiry, to rely conclusively on any Exercise Notice
received by it and on any representation of the exercising
Warrantholder contained therein.
(c) "Exercise Notice" means an irrevocable notice of
exercise to the Warrant Agent at the Warrant Agent's Window,
Attention: Tender Department (or by facsimile transmission in
accordance with Section 2.01(a)(B)(y) in the case of Exercise
Notices for Book-entry Warrants), which notice (A) for Definitive
Warrants, shall be on the reverse of the Warrant Certificate or
such other form as the Company and the Warrant Agent may approve
and (B) for Book-entry Warrants, shall be substantially in the
form set forth in Exhibit A-2 hereto or such other form as the
Company and the Warrant Agent may approve and may be given by
facsimile transmission.
SECTION 2.02. Exercise, Valuation and Delivery of
-----------------------------------
Warrants. (a) Except for Warrants subject to automatic
--------
exercise, or Warrants subject to the Limit Option or following an
Extension Event, the "Exercise Date" for a Warrant will be (A) in
the case of Warrants other than those held through the facilities
of Centrale de Livraison de Valeris Mobiliees S.A. ("CEDEL") or
Euroclear System ("Euroclear") (i) the Business Day on which the
Warrant Agent receives at the Warrant Agent's Window, Attention:
Tender Department, the Warrant Certificate (or transfer of such
Warrant through the Depository in the case of Book-entry
Warrants) and Exercise Notice (by facsimile transmission in
accordance with Section 2.01(a)(B)(y) in the case of Exercise
Notices for Book-entry Warrants) in proper form with respect to
such Warrant, if received at or prior to 3:00 P.M., New York City
time, on such day, or (ii) if the Warrant Agent receives such
Warrant Certificate (or transfer of such Warrant through the
Depository in the case of Book-entry Warrants) or Exercise Notice
after 3:00 P.M., New York City time, on a Business Day, then the
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Business Day next succeeding the Business Day on which such
Warrant or Exercise Notice is received (B) in the case of
Warrants held through the facilities of CEDEL or Euroclear, (i)
the Business Day on which the Warrant Agent receives the Exercise
Notice in proper form with respect to such Warrant Certificate
(or transfer of such Warrant through the Depository in the case
of Book-entry Warrants) if such Exercise Notice is received at or
prior to 3:00 P.M., New York City time, on such day, provided
that the Warrant Certificate (or transfer of such Warrant through
the Depository) is received by the Warrant Agent by 3:00 P.M.,
New York City time, on the Valuation Date, or (ii) if the Warrant
Agent receives such Exercise Notice after 3:00 P.M., New York
City time, on a Business Day, then the Business Day next
succeeding such Business Day, provided that the Warrant
Certificate (or transfer of such Warrant through the Depository
in the case of Book-entry Warrants) is received by 3:00 P.M., New
York City time, on the Valuation Date relating to exercises of
Warrants on such succeeding Business Day; provided, further,
however, in the case of exercises by Euroclear Participants,
Euroclear must by facsimile to the Warrant Agent by 9:00 A.M.,
New York City time, on the Valuation Date confirm that the
Warrants will be received by the Warrant Agent on such date (the
"Euroclear Confirmations"), provided, that if such facsimile is
received after 9:00 A.M., New York City time, on the Valuation
Date, the Company will be entitled to direct the Warrant Agent to
reject the related notice of exercise or waive the requirement
for timely delivery of such facsimile. In the event that the
Warrant Certificate (or transfer of such Warrant through the
Depository in the case of Book-entry Warrants) is received after
3:00 P.M., New York City time, on the Valuation Date, then the
Exercise Date for such Warrant will be the day on which such
Warrant is received or, if such day is not a Business Day, the
next succeeding Business Day.
(b) The "Valuation Date" for a Warrant shall be the
first Business Day following the applicable Exercise Date
(subject to postponement upon the occurrence of an Extraordinary
Event or Exercise Limitation Event (as defined herein) or as a
result of the exercise of a number of Warrants exceeding the
limits on exercise set forth herein).
(c) The Warrant Agent shall, in the case of Warrants
other than Warrants held through CEDEL or Euroclear, following
receipt of proper and timely delivery of a Warrant in accordance
with Section 2.02(a)(A) accompanied by a completed Exercise
Notice and, in the case of Warrants held through CEDEL or
Euroclear, following receipt of proper delivery of a completed
Exercise Notice in accordance with Section 2.02(a)(B):
(i) promptly (1) for Definitive Warrants not held
through CEDEL or Euroclear, determine whether such Exercise
Notice has been duly completed and is in proper form duly
executed by the Registered Holder thereof or by the duly
appointed legal representative thereof or by a duly
authorized attorney, (2) for Definitive Warrants held
through CEDEL or Euroclear, determine whether such Exercise
Notice has been duly completed and is in proper form duly
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executed by the CEDEL or Euroclear Participant tendering
such Warrant, as applicable, (3) for Book-entry Warrants not
held through CEDEL or Euroclear, determine whether such
Exercise Notice has been duly completed and is in proper
form, (4) for Book-Entry Warrants held through CEDEL or
Euroclear, determine whether such Exercise Notice has been
duly completed and is in proper form duly executed by the
CEDEL or Euroclear Participant tendering such Warrant, as
applicable; and if the Warrant Agent determines that the
Exercise Notice has not been duly completed or is not in
proper form or, in the case of Definitive Warrants, has not
been so executed, the Warrant Agent (A) promptly shall
reject such Exercise Notice and shall send to the entity
that executed such Exercise Notice a notice of rejection
substantially in the form set forth in Exhibit B-1 or
Exhibit B-3 hereto, as the case may be, and, in the case of
Definitive Warrants, shall return to the Registered Holder
that submitted such Exercise Notice, by first class mail,
the Warrant Certificates evidencing such Warrants (to the
extent received in the case of Warrants held through CEDEL
or Euroclear), or, in the case of Book-entry Warrants, shall
re-deliver such Warrants (to the extent received in the case
of Warrants held through CEDEL or Euroclear) free through
the facilities of the Depository to the account from which
they were transferred to the Warrant Agent and (B) in either
case, shall not take the actions required by clauses (ii)-
(vii) below with respect to such Exercise Notice or the
related Warrants; provided, however, that the Warrant Agent
shall deliver a copy of the Exercise Notice relating to such
Warrants to the Company as required by Section 2.02(c)(viii)
below and the Company may waive any defect in the form of
such Exercise Notice;
(ii) notify the Company and the Determination Agent
(and such other parties (not to exceed two) as the Company
shall designate in writing) by 5:00 P.M., New York City
time, on the Business Day that such Exercise Notice has been
received (or shall be deemed to have been received) of (A)
the total number of Warrants covered by such Exercise
Notice, (B) the number of such Warrants subject to the Limit
Option (as defined herein) ("Contingently Tendered
Warrants") and (C) the number of such Warrants not subject
to the Limit Option;
(iii) with respect to Warrants held through Euroclear,
determine whether the Warrant Agent has received by 9:00
a.m., New York City time, on the Valuation Date relating to
such Warrants, Euroclear Confirmations with respect to such
Warrants, and if the Warrant Agent has not received any of
such Euroclear Confirmations by such time, notify the
Company (and such other parties (not to exceed two) as the
Company shall designate in writing) by 10:00 a.m., New York
City time, on such Valuation Date of the number of such
Warrants in respect of which the Warrant Agent has not
received such Euroclear Confirmations and (except to the
extent the Company has notified the Warrant Agent that it
has waived the timing requirement of timely delivery of such
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Euroclear Confirmation) send to the Euroclear Participant
that executed such Exercise Notice for which no related
Euroclear Confirmation was received (at the address
specified in such notice) a notice of rejection
substantially in the form set forth in Exhibit B-1 or
Exhibit B-3 hereto, as the case may be;
(iv) if any of the Warrants covered by such Exercise
Notice constitute Contingently Tendered Warrants, by 10:00
A.M., New York City time, on the Business Day next
succeeding the Valuation Date, (A) except as provided in
Section 2.02(k)(i), determine the Limit Option Reference
Index (as defined herein) for such Warrants (based on the
applicable Limit Option Reference Index provided by the
Determination Agent pursuant to Section 2.02(j)); (B)
determine in accordance with Section 2.02(k) (based on the
applicable Spot Portfolio Value provided by the
Determination Agent pursuant to 2.02(j)) whether such
Contingently Tendered Warrants will be subject to exercise
after giving effect to the Limit Option and, if such
Warrants will not be subject to exercise, send, in the case
of Definitive Warrants, to the Registered Holder (or the
entity that executed the Exercise Notice, in the case of
Definitive Warrants held through CEDEL or Euroclear) or, in
the case of Book-entry Warrants to the Participant, that
submitted such Exercise Notice a notice of rejection
substantially in the form set forth in Exhibit C-1 or
Exhibit C-2 hereto, as appropriate, with respect to such
Warrants and return to the Registered Holder (to the extent
received in the case of Warrants held through CEDEL or
Euroclear) that submitted such Exercise Notice, by first
class mail, the Warrant Certificates evidencing such
Warrants (to the extent received in the case of Warrants
held through CEDEL or Euroclear), or, in the case of Book-
entry Warrants (to the extent received in the case of
Warrants held through CEDEL or Euroclear), redeliver the
Warrants free through the facilities of the Depository to
the account of such Participant; and (C) notify the Company
and the Determination Agent as to whether such Contingently
Tendered Warrants will be subject to exercise;
(v) by 10:00 A.M., New York City time, on the Business
Day next succeeding the Valuation Date,(A) determine the sum
of (1) the number of such Warrants not subject to the Limit
Option (i.e., the number of Warrants determined pursuant to
clause (ii)(C) above) plus (2) the number of such Warrants
that are Contingently Tendered Warrants that will be subject
to exercise notwithstanding the Limit Option (i.e., the
number of Warrants so identified pursuant to clause (iv)(B)
above) (all of such Warrants, the "Exercised Warrants") and
(B) notify the Company and the Determination Agent of the
total number of Exercised Warrants so determined (if such
number is zero, the Warrant Agent shall not take the actions
required by clauses (vi), (vii) and (viii) of this Section
2.02(c) with respect to such Exercise Notice or the related
Warrants);
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(vi) by 10:00 A.M., New York City time, on the Business
Day next succeeding the Valuation Date determine the Cash
Settlement Value of the Exercised Warrants based on the Spot
Portfolio Value provided by the Determination Agent pursuant
to Section 2.02(j) and in the manner set forth in Section
2.02(e);
(vii) notify the Company (and such other parties (not to
exceed two) as the Company shall designate in writing) by
12:00 noon, New York City time, on the Business Day next
succeeding the Valuation Date of the aggregate Cash
Settlement Value payable in respect of the Exercised
Warrants (unless the Cash Settlement Value shall be
calculated by the Determination Agent), and send notices of
confirmation substantially in the form included in Exhibit B
or Exhibit B-2 hereto, as the case may be, to the Registered
Holder (or the entity that executed the Exercise Notice, in
the case of Definitive Warrants held through CEDEL or
Euroclear) or Participant; and
(viii) promptly deliver a copy of each Exercise Notice to
the Company and advise the Company of such other matters
relating to the Exercised Warrants as the Company shall
reasonably request. Any notice to be given to the Company
by the Warrant Agent pursuant to this Section 2.02 or
Section 2.03 shall be by telephone (promptly confirmed in
writing) or facsimile transmission.
Except in the case of Warrants subject to automatic
exercise, Warrants that upon exercise entitle the holder thereof
to receive an Alternative Settlement Amount and Warrants deemed
worthless following an Extension Event, if on any Valuation Date
the Cash Settlement Value for any Warrants then exercised would
be zero, then the attempted exercise of any such Warrants shall
be void and of no effect and (i) for Definitive Warrants, the
Warrant Certificate evidencing such Warrants (to the extent
received in the case of Warrants held through CEDEL or Euroclear)
shall be promptly returned by the Warrant Agent to the Registered
Holder (or the entity that executed the Exercise Notice, in the
case of Definitive Warrants held through CEDEL or Euroclear) by
first class mail at the Company's expense or (ii) for Book-entry
Warrants, the Warrants will be transferred by the Warrant Agent
back to the Participant that submitted them free on the records
of the Depository (to the extent received in the case of Warrants
held through CEDEL or Euroclear) and, in either case such
Warrantholder shall be permitted to re-exercise such Warrants
prior to the earlier of (i) the third Business Day immediately
prior to the Expiration Date and (ii) the Business Day
immediately preceding any Delisting Date, as the case may be.
(d) Except for Warrants subject to automatic exercise,
Warrants that upon exercise entitle the holder thereof to receive
an Alternative Settlement Amount and Warrants deemed worthless
following an Extension Event, if the Company has made adequate
New York Clearing House or next day funds available to the
Warrant Agent in a timely manner, which shall in no event be
later than 3:00 P.M., New York City time, on the second Business
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Day following a Valuation Date (the "Funding Date"), the Warrant
Agent will be responsible for making its payment available (i)
for Definitive Warrants, to each Registered Holder of an
Exercised Warrant in the form of a cashier's check or an official
bank check, or (in the case of payments of at least $100,000) by
wire transfer to a U.S. Dollar account maintained by such
Registered Holder in the United States (at such Registered
Holder's election as specified in the applicable Exercise Notice)
prior to the close of business on the first Business Day
immediately succeeding such Funding Date (the "Settlement Date")
or (ii) for Book-entry Warrants, to each appropriate Participant
in the form of a cashier's check or an official bank check, or
(in the case of payments of at least $100,000) by wire transfer
to a U.S. Dollar account maintained by such Participant in the
United States (at the Participant's election as specified in the
Exercise Notice) prior to the close of business on the Settlement
Date. For either clause (i) or (ii) above, such payment shall be
in the amount of the aggregate Cash Settlement Value in respect
of the Warrant Certificates or Warrants that were delivered to
the Warrant Agent (together with the related Exercise Notice) as
provided in Sections 2.01 and 2.02(a), (b) and (c). Each
Participant will be responsible for disbursing such payments to
the Warrantholders that it represents and to each brokerage firm
for which it acts as agent.
(e) The "Cash Settlement Value" of an Exercised
Warrant will be an amount in U.S. Dollars equal to the product
(rounded down to the nearest cent) of (A) the quotient obtained
by dividing (i) the amount, if any, by which the Spot Portfolio
Value for the applicable Valuation Date for such Warrant exceeds
the Original Portfolio Value (as defined herein) by (ii) the
Original Portfolio Value and (B) $35. The Original Portfolio
Value has been set at 100. The Cash Settlement Value is
calculated using the following formula:
Cash Settlement Value = the greater of
(i) $0 and (ii) Spot Portfolio Value - 100
-------------------------- x $35
100
The "Spot Portfolio Value" will be determined by the
Determination Agent, and will equal the sum of the products of
the Market Price (as defined herein) of each Portfolio Security
(as defined herein) and the then applicable Multiplier (as
defined herein) for that Portfolio Security. The applicable
multiplier (the "Multiplier") for each Portfolio Security is as
specified under the caption "Description of Warrants -- Portfolio
Securities" in the Company's Prospectus Supplement dated February
20, 1996 relating to the Warrants (the "Prospectus Supplement")
and indicates the number of shares (or fraction of one share) of
that Portfolio Security included in the calculation of the Spot
Portfolio Value. The "Portfolio Securities" are the common
stocks or American Depositary Receipts ("ADRs") of the 43
corporations which are listed under the caption "Description of
Warrants -- Portfolio Securities" in the Prospectus Supplement.
Each Multiplier will remain constant for the term of the Warrants
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unless adjusted for certain corporate events described herein.
If a Market Disruption Event (as defined herein) occurs or is
continuing with respect to a Portfolio Security on a Valuation
Date, then the calculation of the Market Price of that Portfolio
Security will be based on the Business Day immediately preceding
that Valuation Date that does not have a Market Disruption Event
with respect to that Portfolio Security.
(f) "Market Price," which will be determined by the
Determination Agent based on information reasonably available to
it, means (i) for a Valuation Date on or prior to the third
Business Day immediately preceding the Expiration Date, the
following:
A. If the Portfolio Security is listed on a national
securities exchange or is a NASDAQ security, Market Price
means the last reported sale price of that Portfolio
Security on the Valuation Date (or the preceding Business
Day if that Portfolio Security is not traded on the
Valuation Date) on the principal national securities
exchange on which such Portfolio Security is listed or
admitted to trading or on NASDAQ, as the case may be.
B. If the Portfolio Security is not listed on a
national securities exchange and is not a NASDAQ security,
Market Price means the last reported bid price of that
Portfolio Security in the over-the-counter market on the
Valuation Date.
and (ii) for any Valuation Date after the third Business Day
immediately preceding the Expiration Date, the following:
A. If the Portfolio Security is listed on a national
securities exchange or is a NASDAQ security, Market Price
means the opening reported sale price of that Portfolio
Security on the Valuation Date (or the preceding Business
Day if that Portfolio Security is not traded on the
Valuation Date) on the principal national securities
exchange on which such Portfolio Security is listed or
admitted to trading or on NASDAQ, as the case may be.
B. If the Portfolio Security is not listed on a
national securities exchange and is not a NASDAQ security,
Market Price means the first reported bid price of that
Portfolio Security in the over-the-counter market on the
Valuation Date.
(g) "Market Disruption Event" with respect to a Portfolio
Security means any of the following events, in each case as
determined by the Determination Agent:
(i) the suspension of or material limitation in
trading in that Portfolio Security for more than two hours
of trading or during the one-half hour period immediately
preceding the time that Portfolio Security is to be priced
(for purposes of this definition, limitations pursuant to
New York Stock Exchange ("NYSE") Rule 80A (or any applicable
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rule or regulation enacted or promulgated by the NYSE, any
other self-regulatory organization or the Securities and
Exchange Commission that is deemed of similar scope by the
Determination Agent) on trading during significant market
fluctuations shall be considered "material"),
(ii) the suspension of or material limitation (whether
by reason of movements in price that exceed levels permitted
by the relevant exchange or otherwise) in trading in option
contracts related to a Portfolio Security traded on any
exchange for more than two hours of trading or during the
one-half hour period immediately preceding the time that
Portfolio Security is to be priced,
(iii) a banking moratorium has been declared by
federal or any state authorities.
For purposes of this definition, a limitation on the hours in a
trading day and/or number of days of trading will not constitute
a Market Disruption Event if it results from an announced change
in the regular business hours of the relevant exchange.
(h) The Multiplier with respect to any Portfolio
Security and the Portfolio will be adjusted by the Determination
Agent (and with respect to the events described in paragraphs iv,
v and vii below, with the consent of the AMEX) as follows:
(i) If a Portfolio Security is subject to a stock
split or reverse stock split (or similar adjustment in the
case of ADRs) then, once the split has become effective, the
Multiplier relating to that Portfolio Security will be
adjusted to equal the product of (x) the number of shares of
the Portfolio Security outstanding after the split has
become effective with respect to each share of such
Portfolio Security outstanding immediately prior to the
effectiveness of such split (or the number of receipts
outstanding with respect to each ADR if a Portfolio Security
is an ADR) and (y) the prior Multiplier.
(ii) If a Portfolio Security is subject to a stock
dividend or stock distribution (other than a stock dividend
elected by a holder of that Portfolio Security in lieu of an
ordinary cash dividend) that is given equally to all holders
of that Portfolio Security, then, once that Portfolio
Security is trading ex-dividend, the Multiplier will be
adjusted so that the new Multiplier shall equal the former
Multiplier plus the product of (i) the number of shares of
that Portfolio Security issued with respect to one such
share of that Portfolio Security and (ii) the prior
Multiplier.
(iii) If the issuer of a Portfolio Security is being
liquidated or dissolved or is subject to a proceeding under
any applicable bankruptcy, insolvency or similar law, that
Portfolio Security will continue to be included in the
Portfolio so long as a Market Price for that Portfolio
Security is available. Subject to paragraph (vi) below, if
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a Market Price is no longer available for a Portfolio
Security for whatever reason, including the liquidation or
dissolution of the issuer of that Portfolio Security or the
subjection of the issuer to a proceeding under any
applicable bankruptcy, insolvency or similar law, then, for
so long as a Market Price is unavailable for that Portfolio
Security, the value of that Portfolio Security will be
deemed to be zero for the purposes of calculating the Spot
Portfolio Value, and no attempt will be made to find a
replacement Portfolio Security or increase the value of the
Portfolio to compensate for the deletion of such Portfolio
Security.
(iv) If all the Portfolio Securities of any class or
series of an issuer are converted into or exchanged for the
same or a different number of shares of any class or classes
of equity security of that issuer other than such Portfolio
Security, whether by capital reorganization,
recapitalization, reclassification or otherwise, then, once
that conversion or exchange has become effective, the former
Portfolio Security will be removed from the Portfolio and
the new equity securities will be added to the Portfolio as
new Portfolio Securities. The Multiplier relating to each
such new Portfolio Security will equal the product of
(x) the last value of the Multiplier with respect to the
former Portfolio Security and (y) the number of shares of
the new Portfolio Security issued with respect to one share
of the former Portfolio Security.
(v) If the issuer of a Portfolio Security distributes
to all of its shareholders equity securities of any other
issuer, then such new equity securities will be added to the
Portfolio as a new Portfolio Security. The Multiplier for
the new Portfolio Security will equal the product of (x) the
last value of the Multiplier relating to the Portfolio
Security in respect of which the new Portfolio Security is
being distributed and (y) the number of shares of the new
Portfolio Security distributed with respect to one share of
the former Portfolio Security.
(vi) If a Portfolio Security is subject to an
extraordinary dividend or an extraordinary distribution
(including upon liquidation or dissolution) of cash or other
property of any kind (other than any such dividend or
distribution otherwise addressed in the preceding
paragraphs) that is received equally by all holders of that
Portfolio Security, then the Determination Agent shall
determine the fair market value, if any, of the cash or
other property received in respect of each share of that
Portfolio Security and the Portfolio shall thereafter be
deemed to include an amount equal to the product of the
Multiplier relating to that Portfolio Security on that date
and the fair market value as so determined.
(vii) If the issuer of a Portfolio Security (or, if a
Portfolio Security is an ADR, the Foreign Issuer of such
Underlying Shares) has been subject to a merger or conso-
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lidation (a "Consolidation Event") and is not the surviving
entity and holders of that Portfolio Security are entitled
to receive cash or securities in exchange for that Portfolio
Security, then a value for that Portfolio Security will be
determined (w) in the case of cash, at the time of receipt
by those holders and will equal the amount of such cash, and
(x) in the case of securities, on the first Business Day on
which those securities are traded regular way, and will
equal the Market Price of those securities (the values in
each of (w) and (x), and the values defined in paragraphs
(viii) and (ix) below, each being a "Cash Component"); pro-
vided, that if those securities do not have a Market Price,
the Cash Component shall be the fair market value of those
securities, as determined by the Determination Agent. The
Cash Component, as adjusted for the accrual of interest
described below, will be constant for the remaining term of
the Warrants. No adjustment will be made to the Multiplier
relating to the Portfolio Security.
(viii) If a Portfolio Security that is an ADR is no
longer listed or admitted for trading on any of the AMEX,
NYSE, or NASDAQ (an "ADR Termination Event"), then a value
for that Portfolio Security will be determined based upon
the last reported trading price of such ADR on the last
trading day immediately prior to its ceasing to be listed or
admitted for trading on the AMEX, NYSE, or NASDAQ, as the
case may be, (such value being a "Cash Component"). The
Cash Component, as adjusted for the accrual of interest
described below, will be constant for the remaining term of
the Warrants. No adjustment will be made to the Multiplier
relating to the Portfolio Security.
(ix) If the average daily trading volume of a Portfolio
Security during any six months is less than 20,000 shares
per trading day (a "Liquidity Event"), then such Portfolio
Security will no longer be included in the Portfolio and a
value for that Portfolio Security will be determined based
upon the last reported trading price for such Portfolio
Security on the last trading day immediately prior to the
occurrence of the Liquidity Event (such value being a "Cash
Component"). The Cash Component, as adjusted for the
accrual of interest described below, will be constant for
the remaining term of the Warrants. No adjustment will be
made to the Multiplier relating to the Portfolio Security.
The applicable Cash Component in the event of a
Consolidation Event, ADR Termination Event or Liquidity
Event, as the case may be, will accrue interest at a rate
equal to the London Inter-Bank Offered Rate ("LIBOR"), with
a term equal to the period of time from the applicable
Interest Commencement Date (as defined herein) to the
Expiration Date (the "Specified Maturity"), determined and
fixed on the first London Business Day (the "LIBOR
Determination Date") that is immediately following the date
of determination of such Cash Component. Interest will
accrue on such Cash Component commencing (y) in the case of
cash or in the event of an ADR Termination Event or a
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Liquidity Event, on the second London Business Day following
such LIBOR Determination Date and (z) in the case of
securities, on the third London Business Day following such
LIBOR Determination Date (in each of (y) and (z), the
"Interest Commencement Date") up to and including the
Specified Maturity.
LIBOR will be determined by the Determination Agent in
accordance with the following provisions:
A. On the relevant LIBOR Determination Date,
LIBOR will be determined through the application of
linear interpolation by reference to the offered rates
for deposits of not less than $1,000,000 having a
maturity immediately before and immediately after the
Specified Maturity, commencing on the Interest
Commencement Date, which appear either (a) if the
Specified Maturity is one year or less from the
relevant LIBOR Determination Date, on the display
designated as Page 3750 on the Dow Jones Tolerate
Service (or such other page as may replace Page 3750 on
that service for the purpose of displaying London
Interbank offered rates of major banks) ("Tolerate Page
3750"), or (b) if the Specified Maturity is more than
one year from the relevant LIBOR Determination Date, on
each of Tolerate Page 3750 and on the display
designated as page "SWAP" on the Reuters Monitor Money
Rates Service (or such other page as may replace the
SWAP page on that service for the purpose of displaying
London Interbank offered rates of major banks)
("Reuters-SWAP"), in each case as of 11:00 A.M., London
time; provided that if there is an offered rate for the
Specified Maturity, then LIBOR will be such offered
rate. If such offered rates do not appear, LIBOR with
respect to such LIBOR Determination Date will be
determined as described in B below.
B. With respect to a LIBOR Determination Date on
which no such offered rates appear on Tolerate Page
3750 or Reuters SWAP as described in A above, LIBOR
will be determined on the basis of the rates at
approximately 11:00 A.M., London time, on such LIBOR
Determination Date, at which deposits in U.S. dollars
having the Specified Maturity are offered to prime
banks in the London Interbank market by four major
banks in the London Interbank market selected by the
Determination Agent commencing on the Interest
Commencement Date and in a principal amount equal to an
amount not less than $1,000,000 that in the
Determination Agent's judgment is representative for a
single transaction in such market at such time (a
"Representative Amount"). The Determination Agent will
request the principal London office of each of such
banks to provide a quotation of its rate. If at least
two such quotations are provided, LIBOR with respect to
such LIBOR Determination Date will be calculated by
reference to the arithmetic mean of such quotations.
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If fewer than two quotations are provided, LIBOR with
respect to such LIBOR Determination Date will be
calculated by reference to the arithmetic mean of the
rates quoted at approximately 11:00 A.M., New York City
time, on such LIBOR Determination Date by three major
banks in New York City, selected by the Determination
Agent, for loans in U.S. dollars to leading European
banks having the Specified Maturity commencing on the
Interest Commencement Date and in a Representative
Amount; provided, however, that if fewer than three
banks selected as aforesaid by the Determination Agent
are quoting as mentioned in this sentence, LIBOR with
respect to such Cash Component will be the LIBOR as
last in effect.
"London Business Day" means any day on which dealings
in U.S. dollars are transacted in the London interbank
market.
The value as of any given day of any Portfolio Security
converted into a Cash Component will equal the sum of the
Cash Component and all interest accrued thereon through that
day. The interest that has accrued on any given day will be
reflected only in the Spot Portfolio Value quoted by the
AMEX at the end of that day and not in the values
disseminated at interim periods during the day. Interest
will be compounded daily.
No adjustments of any Multiplier of a Portfolio
Security will be required unless that adjustment would require a
change of at least 1% in the Multiplier in effect. The
Multiplier resulting from any of the adjustments specified above
will be rounded to the nearest one thousandth with five ten-
thousandths being rounded upward.
Except with respect to certain adjustments to the
Portfolio described in Section 2.02(h)(iv),(v) and (vii) above,
which shall be made with the consent of AMEX, all determinations
made by the Determination Agent shall be at the sole discretion
of the Determination Agent and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Company
and the holders of the Warrants, and the Determination Agent
shall have no liability therefor.
For purposes of this Agreement, "Business Day" means
any day other than a Saturday, Sunday or a day on which either
the American Stock Exchange, Inc. (the "AMEX") is not open for
securities trading or commercial banks in New York City are
required or authorized by law or executive order to remain
closed.
(i) In the case of exercise of Book-Entry Warrants,
the Warrant Agent shall cause its records, which may be kept
electronically, to be marked to reflect the reduction in the
number of Warrants represented by the Global Warrant Certificate
by the number of Warrants that were delivered to the Warrant
Agent and for which payment has been made as provided in Section
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2.02(d) promptly after such delivery and payment. Absent
manifest error, the Warrant Agent's records shall be conclusive
evidence of such matters.
(j) The Company hereby appoints Bear, Stearns & Co.
Inc. and Bear, Stearns & Co. Inc. accepts such appointment, to be
the Company's Determination Agent to determine the Spot Portfolio
Value in accordance with this Section 2.02(j) and to make such
calculations as may be required upon the occurrence of any of the
circumstances described in Section 2.03, including, without
limitation, calculation of the Limit Option Reference Index, Cash
Settlement Value or the Alternative Settlement Amount, as
applicable, of a Warrant. The Determination Agent shall act as
an independent expert and not as an agent of the Company, and,
unless otherwise provided by this Agreement, its calculations and
determinations under this Agreement shall, absent manifest error,
be final and binding on the Company, the Warrant Agent, the
Warrantholders and any Participant. Any such calculations will
be made available to a Warrantholder for inspection at the
Warrant Agent's Office.
The Company agrees, for the benefit of the Warrant-
holders that there shall at all times be a Determination Agent
hereunder until all the Warrants are no longer outstanding or
until monies for the payment of all outstanding Warrants, if any,
shall have been paid to the Warrant Agent and shall have been
returned to the Company as provided in Section 2.06, whichever
occurs earlier. Resignation, removal and appointment of the
Determination Agent shall be in accordance with the procedures
set forth for the resignation, removal and appointment of the
Warrant Agent, as provided in Section 5.03, except that a
successor Determination Agent need not be a banking institution
with offices in the Borough of Manhattan, The City of New York,
and may only be appointed if such successor has been nominated by
the Company and approved by the predecessor Determination Agent.
The Company agrees promptly to pay the Determination
Agent the compensation to be agreed upon with the Company for all
services rendered by the Determination Agent hereunder. The
Company also agrees to indemnify the Determination Agent for, and
to hold it harmless against, any loss, liability, cost or expense
(including reasonable attorneys' fees and expenses) incurred by
the Determination Agent by reason of its being made a party to a
suit or claim arising out of this Agreement; provided, however,
that such indemnity shall in no event apply to the extent that
any such loss, liability, cost or expense is a result of the
negligence, bad faith or breach of this Agreement on its part in
connection with the services rendered by it hereunder. The
indemnity obligation of the Company shall continue
notwithstanding the termination of this Agreement or the
resignation or removal of the Determination Agent.
Provided that the Determination Agent has received the
Warrant Agent's notice pursuant to Section 2.02(c)(ii), the
Determination Agent shall provide to the Warrant Agent by
(i) 10:00 A.M., New York City time, on the Business Day following
its receipt of such notice, the Limit Option Reference Index
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applicable to any Contingently Exercised Warrants specified in
such notice, and (ii) by 9:00 A.M., New York City time, on the
Business Day next succeeding the Business Day referred to in
clause (i), the Spot Portfolio Value for the Business Day that
but for the provisions of Section 2.02(k) would be the Valuation
Date for any Contingently Exercised Warrants specified in such
notice.
(k) Except for Warrants subject to automatic exercise,
Warrants with respect to which payments of any Alternative
Settlement Amount are made and Warrants deemed worthless
following an Extension Event (all as described in Section 2.03
below) each Warrantholder, in connection with any exercise of
Warrants (including an exercise with a postponed Valuation Date
following an Extraordinary Event or an Exercise Limitation
Event), shall have the option (the "Limit Option") to specify in
the related Exercise Notice that such exercise be subject to the
condition that the Spot Portfolio Value that would otherwise be
used to determine the Cash Settlement Value of such Warrants not
be three or more points lower than the Limit Option Reference
Index for such Warrants. "Limit Option Reference Index", with
respect to any Contingently Tendered Warrants, means, the Spot
Portfolio Value on the relevant Exercise Date. If a
Warrantholder elects the Limit Option in connection with any
exercise of Warrants, the following provisions shall apply:
(i) To be valid, such election must be specified in
the related Exercise Notice. Each of the Warrant Agent and
the Company shall be entitled to rely conclusively on such
Exercise Notice, as received by the Warrant Agent, in
determining whether such election has been validly made. In
connection with any exercise of 1,000 or more Warrants, a
Warrantholder may elect to subject only a portion of such
Warrants to the Limit Option; provided that the number of
such Warrants subject to the Limit Option and the number of
such Warrants not subject to the Limit Option shall in each
case not be less than 500; provided, further that, a
Warrantholder shall not combine Definitive Warrants and
Book-entry Warrants or Book-entry Warrants held through more
than one Participant to meet the 500 Warrant minimum
exercise requirement. Registered Holders and Participants
shall be required to certify that the number of Warrants
exercised on behalf of any Warrantholder pursuant to the
related Exercise Notice that are subject to the Limit Option
is an amount that is not less than 500.
(ii) Except as otherwise provided in this Section
2.02(k), the Limit Option Reference Index shall be
determined by the Warrant Agent, which determination shall
be conclusive and binding for all purposes relating to such
exercise.
(iii) In the event that the Spot Portfolio Value for the
first Business Day following the relevant Exercise Date is
three or more points lower than the Limit Option Reference
Index for such Warrants, such Warrants (A) shall not be
subject to exercise and shall be treated for all purposes of
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this Agreement and the Warrant Certificates and Global
Warrant Certificate as if the related Exercise Notice had
never been received by the Warrant Agent, and (B) shall not
constitute "Exercised Warrants" for purposes of Section
2.02(c). If such Spot Portfolio Value is not three or more
points lower than such Limit Option Reference Index, such
Warrants shall be subject to exercise as provided in this
Section 2.02 and shall be deemed to be "Exercised Warrants"
for such purposes. The Warrant Agent's determination shall
be conclusive and binding for all purposes relating to such
Warrants.
(iv) Except as provided in Section 2.03(b), the Limit
Option (based on the Limit Option Reference Index as
determined for the relevant Exercise Date, shall continue to
be applicable to any Exercised Warrant for which the
Valuation Date has been postponed as a result of the
occurrence of an Extraordinary Event or an Exercise
Limitation Event until the Warrants are cancelled as
provided in Section 2.03(b) or until the Expiration Date or
any Delisting Date.
SECTION 2.03. Automatic Exercise of Warrants; Exercise
----------------------------------------
upon an Extension Event, an Extraordinary Event or an Exercise
--------------------------------------------------------------
Limitation Event. (a) Subject to the provisions of Section
----------------
2.03(b) regarding Extension Events, all Warrants for which the
Warrant Agent has not received a valid Exercise Notice in proper
form at or prior to 3:00 P.M., New York City time, on (i) the
third Business Day immediately preceding the Expiration Date or
(ii) with respect to any date prior to the Expiration Date, the
Business Day immediately preceding the last Business Day prior to
the effective date on which the Warrants are delisted from, or
permanently suspended from trading (within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations of the Securities and Exchange Commission
thereunder) on the AMEX, and not accepted prior thereto or at the
same time for trading pursuant to the rules of another SRO that
are filed with the Securities and Exchange Commission under the
Exchange Act (such last Business Day prior to the effective date
being a "Delisting Date"), or for which the Warrant Agent has
received a valid Exercise Notice in proper form but with respect
to which timely delivery of the relevant Warrants has not been
made by such time, or for which the Valuation Date has as of such
time been postponed as provided in Section 2.03(b), shall be
deemed to be automatically exercised as of such Expiration Date
or Delisting Date, as the case may be, without any requirement of
delivery of an Exercise Notice to the Warrant Agent. If such
Delisting Date occurs on or after the Expiration Date and prior
to any Extended Expiration Date (as defined in Section
2.03(b)(ii)), the Warrants will be deemed worthless. However, if
the Company first receives notice of the delisting or suspension
of the Warrants on the same day on which such Warrants are
delisted or suspended, such day will be deemed a Delisting Date
for purposes of this Agreement. The Exercise Date for such
Warrants shall be the Expiration Date or Delisting Date, as the
case may be, or, if such date is not a Business Day, the next
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succeeding Business Day and the Valuation Date for such Warrants
shall be the first Business Day following such date.
The Warrant Agent shall by 5:00 P.M., New York City
time, on the Expiration Date or any earlier date on which the
Warrant Agent receives notice of any delisting of the Warrants,
as the case may be, notify the Company and the Determination
Agent (and such other parties (not to exceed two) as the Company
shall designate in writing) of the number of Warrants to be
automatically exercised. By 12:00 noon, New York City time, on
the Business Day next succeeding the Valuation Date for such
Warrants, the Warrant Agent shall (i) determine the Cash
Settlement Value (in the manner provided in Section 2.02(e)) of
the Warrants to be automatically exercised; (ii) by 5:00 P.M.,
New York City time, on the Business Day next succeeding such
Valuation Date, notify the Company (and such other parties (not
to exceed two) as the Company shall designate in writing) of the
Cash Settlement Value payable in respect of such exercised
Warrants; and (iii) advise the Company of such other matters
relating to the exercised Warrants as the Company shall
reasonably request.
The Determination Agent shall by 10:00 A.M., New York
City time, on the Business Day next succeeding the applicable
Valuation Date, notify the Warrant Agent of the Spot Portfolio
Value applicable to the Warrants to be automatically exercised.
In the case of Definitive Warrants subject to automatic
exercise (other than Definitive Warrants subject to postponed
exercise following the occurrence of an Extraordinary Event,
Exercise Limitation Event or Extension Event as described in
Section 2.03(b)), if the Company has made adequate New York
Clearing House or next day funds available to the Warrant Agent
in a timely manner, which shall in no event be later than 3:00
P.M., New York City time, on the second Business Day following
the Valuation Date for automatically exercised Warrants (in any
such case, the "Automatic Funding Date"), the Warrant Agent will
be responsible for making its payment available to the
appropriate Registered Holder in the form of a cashier's check or
an official bank check, or (in the case of payments of at least
$100,000) by wire transfer to a U.S. Dollar account maintained by
such Registered Holder in the United States (at such Registered
Holder's election upon written notice to the Company and the
Warrant Agent) prior to the close of business on the Automatic
Funding Date (or, in the case of payments made by wire transfer,
prior to the close of business on the Business Day next
succeeding the Automatic Funding Date), against receipt by the
Warrant Agent at the Warrant Agent's Window, Attention: Tender
Department, from such Registered Holder of its Warrant
Certificates. Such payment shall be in the amount of the
aggregate Cash Settlement Value in respect of the Warrants,
evidenced by such Warrant Certificates, that were exercised
automatically on the Expiration Date or on any Delisting Date, as
the case may be. Warrant Certificates delivered to the Warrant
Agent shall thereafter be promptly cancelled by the Warrant
Agent.
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In the case of Book-entry Warrants subject to automatic
exercise (other than Warrants subject to postponed exercise
following the occurrence of an Extraordinary Event, Exercise
Limitation Event or Extension Event as described in Section
2.03(b)), if the Company has made adequate New York Clearing
House or next day funds available to the Warrant Agent in a
timely manner, which shall in no event be later than 3:00 P.M.,
New York City time, on the Automatic Funding Date, the Warrant
Agent will be responsible for making funds available to the
securities depository, against receipt of the Global Warrant
Certificate, prior to the close of business, on the Automatic
Funding Date. Such funds are to be in an amount equal to the
aggregate Cash Settlement Value of the Warrants subject to such
automatic exercise.
The Company will advise the Warrant Agent as soon as
practicable of the date of any expected delisting or permanent
suspension of trading of the Warrants and will immediately inform
the Warrant Agent after the Company has received notice that such
delisting or suspension is occurring, but in no event will notice
of such delisting or suspension be given to the Warrant Agent
later than 9:30 A.M., New York City time, on the first Business
Day following the date on which such delisting or suspension
occurs. The Company will use its best efforts to notify the
Warrantholders, or cause the Warrantholders to be notified, as
promptly as practicable of any expected delisting or suspension
of trading of the Warrants.
(b) (i) Subject to the provisions of Section
2.03(b)(ii), if the Company determines that an Extraordinary
Event or Exercise Limitation Event has occurred and is continuing
on any Business Day that would otherwise be the Valuation Date
with respect to an exercise of Warrants (the "Applicable Business
Day") then the Cash Settlement Value with respect to such
exercise of Warrants shall be calculated on the basis that the
Valuation Date shall be the next Business Day following such
Applicable Business Day on which there is no Extraordinary Event
or Exercise Limitation Event; provided, that if the Valuation
Date has not occurred on or prior to the Expiration Date or any
Delisting Date, then the Warrantholders will receive, in lieu of
the Cash Settlement Value, the Alternative Settlement Amount (as
defined herein) which shall be calculated as if the Warrants had
been cancelled on the Expiration Date or such Delisting Date, as
the case may be.
Upon the occurrence of an Extraordinary Event or an
Exercise Limitation Event, the Company shall use its best efforts
to notify the Warrant Agent and the Determination Agent promptly
that an Extraordinary Event or Exercise Limitation Event, as the
case may be, has occurred and shall promptly give notice to the
Warrantholders, by publication in a United States newspaper with
a national circulation (currently expected to be The Wall Street
Journal), that an Extraordinary Event or an Exercise Limitation
Event has occurred.
If the Company determines that an Extraordinary Event
or an Exercise Limitation Event has occurred and is continuing on
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the Expiration Date or on any earlier Delisting Date, the Company
shall so notify the Warrant Agent and the Determination Agent,
and the Cash Settlement Value with respect to the exercised
Warrants shall be equal to, and be calculated in the same manner
as, an "Alternative Settlement Amount", in accordance with
Section 2.03(d) herein (treating the Expiration Date or such
Delisting Date, as the case may be, as the date on which the
Warrants were cancelled for the purposes of this Section
2.03(b)).
If the Company determines that an Extraordinary Event
has occurred and is continuing, and if that Extraordinary Event
is expected by the Company to continue, the Company, prior to the
Expiration Date, may immediately cancel the Warrants by notifying
the Warrant Agent of such cancellation (the date such notice is
given being the "Cancellation Date"), and each Warrantholder's
rights with respect to the Warrants and under this Agreement
shall thereupon cease; provided, that each Warrant shall be
exercised (even if such Warrant would not otherwise be exercis-
able on such date because of the Limit Option) on the basis that
the Valuation Date for such Warrant shall be the Cancellation
Date and each Warrantholder shall receive, in lieu of the Cash
Settlement Value of such Warrant, the Alternative Settlement
Amount, determined by the Determination Agent.
If, following the determination by the Company that an
Extraordinary Event or Exercise Limitation Event has occurred and
is continuing, the Company determines that such Extraordinary
Event or Exercise Limitation Event has ceased and that no
additional Extraordinary Event or Exercise Limitation Event has
occurred or is continuing, the Company shall so notify the
Warrant Agent and the Determination Agent.
(ii) If the Company determines that an event described
in clause (i) of the definition of Exercise Limitation Event
below has occurred and is continuing on the Expiration Date (an
"Extension Event"), then the term of any outstanding Warrants
shall be automatically extended for a period of 30 days (the
thirtieth day following the Expiration Date being the "Extended
Expiration Date"), except that if the Cash Settlement Value or
the Intrinsic Value (as defined below) used in calculating the
Alternative Settlement Amount, as the case may be, of such
Warrants would have been zero if the Warrants had been exercised
such that the Valuation Date for such exercise was the
Measurement Date (as defined below), then the term of the
Warrants shall not be extended, the Warrants shall be deemed to
be worthless and the Company shall not be required to make any
payments in respect thereof. Any such automatic extension shall
be deemed to have been revoked and the Warrants shall expire on
the earlier of (x) the next Business Day on which there is no
Extension Event (the "Early Extended Expiration Date") and (y)
any Delisting Date occurring on or after the Expiration Date.
The Company will give the Warrant Agent prompt notice by
telephone or facsimile transmission and will give prompt notice
to the Warrantholders by publication in a United States newspaper
with a national circulation (currently expected to be The Wall
Street Journal) of the occurrence of an Extension Event, any
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Extended Expiration Date, any Early Extended Expiration Date and
any Delisting Date occurring on or after the Expiration Date, but
in no event will such notice to the Warrant Agent be given later
than 9:30 A.M., New York City time, on the Business Day following
the Extension Event, Extended Expiration Date, Early Extended
Expiration Date or Delisting Date, as applicable.
Any Warrants that expire on an Early Extended
Expiration Date, as described in clause (x) of the preceding
paragraph, will be deemed to be exercised on such Early Extended
Expiration Date (even if such Warrants would not otherwise be
exercisable on such date because of the Limit Option) on the
basis that the Valuation Date for such exercise shall be such
Early Extended Expiration Date, and the holder of each such
Warrant will receive an Alternative Settlement Amount, whether or
not an Extraordinary Event or an Exercise Limitation Event is
continuing on such Early Extended Expiration Date. Any Warrants
that expire on a Delisting Date occurring on or after the
Expiration Date and prior to the Extended Expiration Date, as
described in clause (y) of the preceding paragraph, shall be
deemed to be worthless and the Company shall not be required to
make any payments in respect thereof.
If the term of the Warrants has been extended pursuant
to the second preceding paragraph but the Company determines that
an Extension Event is continuing when the Warrants expire on the
Extended Expiration Date, the Warrants shall be deemed to be
worthless and the Company shall not be required to make any
payments in respect thereof. The Company shall give prompt
notice of any such determination to the Warrant Agent by
telephone or facsimile transmission and to the Warrantholders by
publication in a United States newspaper with a national
circulation (currently expected to be The Wall Street Journal).
"Measurement Date" means the Business Day occurring
most recently prior to the Expiration Date on which none of the
events described in clause (i) of the definition of Exercise
Limitation Event below had occurred or was continuing.
(c) For purposes of this Agreement, "Extraordinary
Event" means any of the following events:
(i) a suspension, material limitation or absence of
trading of all of the Portfolio Securities;
(ii) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of
any court of any jurisdiction, any administrative agency or
any other governmental authority that would make it unlawful
for the Company to perform any of its obligations under this
Agreement or the Warrants or that has had or is reasonably
expected to have a material adverse effect on the ability of
(A) the Company to perform its obligations under the
Warrants or to hedge or modify the hedge of its position
with respect to the Portfolio; or (B) any affiliate of the
Company to hedge or modify the hedge of its position with
respect to any hedging transaction entered into with the
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Company in connection with the Company's obligations under
the Warrants; or
(iii)any outbreak or escalation of hostilities or other
national or international calamity or crisis (including,
without limitation, natural calamities that in the opinion
of the Company may materially and adversely affect the
economy of the United States or the trading of securities
generally on the AMEX, NYSE or NASDAQ, or any other
securities exchange) that has had or is reasonably expected
to have a material adverse effect on the ability of (A) the
Company to perform its obligations under the Warrants or to
modify the hedge of its position with respect to the
Portfolio or (B) any affiliate of the Company to hedge or
modify the hedge of its position with respect to any hedging
transaction entered into with the Company in connection with
the Company's obligations under the Warrants.
For the purpose of determining whether an Extraordinary
Event has occurred: (1) a limitation on the hours or number of
days of trading will not constitute an Extraordinary Event if it
results from an announced change in the regular business hours of
the AMEX, NYSE, NASDAQ or any other securities exchange on which
a Portfolio Security is traded, as the case may be, and (2) an
"absence of trading" on the AMEX, NYSE, NASDAQ or any other
securities exchange on which a Portfolio Security is traded, as
the case may be, will not include any time when the AMEX, NYSE,
or NASDAQ or such other securities exchange, as the case may be,
is closed for trading under ordinary circumstances.
(d) For purposes of this Agreement, "Exercise
Limitation Event" means either of the following events:
(i) a suspension, material limitation or absence of
trading on the AMEX, NYSE, NASDAQ or any other securities
exchange on which a Portfolio Security is traded of 20% or
more in number of the Portfolio Securities; or
(ii) the suspension or material limitation on the AMEX
or any other major futures, options or securities market of
trading in futures or options contracts related to the
Portfolio.
For the purposes of determining whether an Exercise
Limitation Event has occurred: (1) a limitation on the hours or
number of days of trading will not constitute an Exercise
Limitation Event if it results from an announced change in the
regular business hours of the relevant exchange, (2) a decision
to permanently discontinue trading in the relevant futures or
options contract will not constitute an Exercise Limitation
Event, (3) a suspension of trading in a Portfolio Security or in
a futures or options contract referred to in clauses (i) and (ii)
above, by reason of (x) a price change violating limits set by
the AMEX or other futures or securities market on which futures
or options contracts related to the Portfolio are traded or such
other futures or securities market or (y) an imbalance of orders
relating to Portfolio Securities or such contracts will
<PAGE>
<PAGE>
constitute a suspension or material limitation of trading, (4) an
"absence of trading" on the AMEX, NYSE or NASDAQ, or any other
securities exchange will not include any time when the AMEX, NYSE
OR NASDAQ, or such other securities exchange is closed for
trading under ordinary circumstances and (5) the occurrence of an
Extraordinary Event described in clause (i) of the definition of
Extraordinary Event will not constitute, and will supersede the
occurrence of, an Exercise Limitation Event.
The "Alternative Settlement Amount" is the amount
calculated using the formula set forth below:
Alternative Settlement Amount = Intrinsic Value +
(T/2 x A/B)
where
Intrinsic Value = the Cash Settlement Value of the Warrants
determined as described under Section
2.02(e), but calculated with a Spot Portfolio
Value determined by the Determination Agent
which, subject to approval by the Company
(such approval not to be unreasonably
withheld), in the reasonable opinion of the
Determination Agent, fairly reflects the
value of the Portfolio Securities on the
Cancellation Date, Expiration Date, Delisting
Date or Early Extended Expiration Date,
whichever has given rise to the payment of
the Alternative Settlement Amount;
T = U.S. $5.25 the maximum initial offering price
per Warrant;
A = the total number of days from but excluding
the Cancellation Date or Delisting Date,
whichever has given rise to the payment of
the Alternative Settlement Amount for such
Warrants, to and including the Expiration
Date; and
B = the total number of days from, but excluding
the date on which sales of the Warrants were
initially confirmed, to and including the
Expiration Date.
Where an Expiration Date or an Early Extended
Expiration Date has given rise to the payment of the Alternative
Settlement Amount, such Alternative Settlement Amount shall equal
the Intrinsic Value.
For the purposes of determining "Intrinsic Value" in
the above formula, in the event that the Determination Agent and
the Company are required, but have not, after good faith
consultation with each other and within five days following the
first day on which such Alternative Settlement Amount may be
calculated in accordance with the above formula, agreed upon a
<PAGE>
<PAGE>
Spot Portfolio Value which fairly reflects the value of the
Portfolio Securities on the Cancellation Date, Expiration Date,
Delisting Date or Early Extended Expiration Date, whichever gives
rise to the payment of the Alternative Settlement Amount, then
the Determination Agent shall promptly nominate a third party,
subject to approval by the Company (such approval not to be
unreasonably withheld), to determine such figure and calculate
the Alternative Settlement Amount in accordance with the above
formula. Such party shall act as an independent expert and not
as an agent of the Company or the Determination Agent, and its
calculation and determination of the Alternative Settlement
Amount shall, absent manifest error, be final and binding on the
Company, the Warrant Agent, the Determination Agent and the
Warrantholders. Any such calculations will be made available to
a Warrantholder for inspection at the Warrant Agent's Office.
Neither the Company nor such third party shall have any
responsibility for good faith errors or omissions in calculating
the Alternative Settlement Amount.
(e) With respect to all Warrants as to which the
Valuation Date has been postponed (other than Warrants that have
been deemed worthless following an Extension Event) or which have
been cancelled as described above, the Company shall make
available to the Warrant Agent in a timely manner, which shall in
no event be later than 3:00 P.M., New York City time, on the
second Business Day following the date on which the Cash
Settlement Value or Alternative Settlement Amount, as the case
may be, has been calculated (the "Alternative Funding Date"), New
York Clearing House Funds or next day funds in an amount equal
to, and for the payment of, the aggregate Cash Settlement Value
or Alternative Settlement Amount, as applicable, of such
Warrants. Subject to such funds having been made available as
provided in the preceding sentence, the Warrant Agent will
thereafter be responsible for making its payment available in the
manner set forth in Section 2.03(a), (i) in the case of Defini-
tive Warrants, to each Registered Holder that submitted a Warrant
Certificate for exercise (and in the case of cancellation as
described above, to each Registered Holder) or (ii) in the case
of Book-entry Warrants, to the Depository, prior to the close of
business on the Alternative Funding Date, in an amount equal to
the aggregate Cash Settlement Value or Alternative Settlement
Amount (as applicable) of such exercised Warrants (and in the
case of cancellation as described above, of all previously
unexercised Warrants).
SECTION 2.04. Limitation of Number of Exercisable
-----------------------------------
Warrants. All exercises of Warrants (other than on automatic
--------
exercise or following an Extension Event) are subject, at the
Company's option, to the limitation that not more than 750,000
Warrants in total may be exercised on any Exercise Date and not
more than 250,000 Warrants may be exercised by or on behalf of
any beneficial owner, either individually or in concert with any
other beneficial owner, on any Exercise Date. If any Business
Day would otherwise, under the terms hereof, be the Exercise Date
in respect of more than 750,000 Warrants, then at the Company's
election (by giving notice thereof to the Warrant Agent not later
than 11:00 A.M., New York City time, on the Business Day
<PAGE>
<PAGE>
immediately following such Exercise Date), 750,000 of such
Warrants shall be deemed exercised on such Exercise Date
(selected by the Warrant Agent on a pro rata basis, but if, as a
result of such pro rata selection, any Registered Holders would
be deemed to have exercised less than 500 Warrants, then the
Warrant Agent shall first select an additional amount of such
holders' Warrants so that no holder shall be deemed to have
exercised less than 500 Warrants), and the remainder of such
Warrants (the "Remaining Warrants") shall be deemed exercised on
the following Business Day (notwithstanding the provisions of
Section 2.01(b) and subject to successive applications of this
Section 2.04); provided that any Remaining Warrants for which an
Exercise Notice was delivered on a given Exercise Date shall be
deemed exercised before any other Warrants in respect of which an
Exercise Notice was delivered on a later Exercise Date. If any
beneficial owner of Warrants attempts to exercise more than
250,000 Warrants on any Business Day, individually or in concert,
then at the Company's election (as notified to the Warrant Agent
by giving notice thereof to the Warrant Agent not later than
11:00 A.M., New York City time, on the Business Day following
such Business Day) 250,000 of such Warrants shall be deemed
exercised on such Business Day and the remainder shall be deemed
exercised on the following Business Day (notwithstanding the
provisions of Section 2.01(b) and subject to successive
applications of this Section 2.04). The date on which any
Warrant is deemed exercised under the preceding two sentences
shall for all purposes of this Agreement be the "Exercise Date"
in respect of such Warrants.
SECTION 2.05. Covenant of the Company. The Company
-----------------------
covenants, for the benefit of the Warrantholders, that it will
not seek the delisting of the Warrants from, or suspension of
their trading on, the AMEX unless the Company has, at the same
time, arranged for the Warrants to be traded pursuant to the
rules of another SRO that are filed with the Securities and
Exchange Commission under the Exchange Act.
SECTION 2.06. Return of Money Held Unclaimed for Two
--------------------------------------
Years. Except as otherwise provided herein, any money deposited
-----
with or paid to the Warrant Agent for the payment of the Cash
Settlement Value or Alternative Settlement Amount of any Warrants
and not applied but remaining unclaimed for two years after the
date upon which such Cash Settlement Value or Alternative
Settlement Amount shall have become due and payable shall be
repaid by the Warrant Agent to the Company, at the Company's
request, and the holders of such Warrants shall thereafter look
only to the Company for any payment which such holders may be
entitled to collect and all liability of the Warrant Agent with
respect to such money shall thereupon cease; provided that the
Warrant Agent, before making any such repayment, may at the
expense of the Company notify (i) in the case of Definitive
Warrants, the Registered Holders or (ii) in the case of Book-
entry Warrants, the Participants concerned, that said money has
not been so applied and remains unclaimed and that after a date
named in the notification any unclaimed balance of said money
then remaining will be returned to the Company.
<PAGE>
<PAGE>
SECTION 2.07. Return of Global Warrant Certificate.
------------------------------------
In the event a Global Warrant Certificate is issued, at such time
as all of the Warrants evidenced by such Certificate have been
exercised (including pursuant to an automatic exercise) or other-
wise cancelled and all payments to the Participants made as
provided herein, the Warrant Agent shall dispose of the cancelled
Global Warrant Certificate in accordance with its customary
procedures (unless instructed by the Company to deliver the
Global Warrant Certificate to the Company) and shall provide a
certificate of disposition to the Company.
<PAGE>
<PAGE>
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF WARRANTHOLDERS
SECTION 3.01. Warrantholder May Enforce Rights.
--------------------------------
Notwithstanding any of the provisions of this Agreement, any
Warrantholder, without the consent of the Warrant Agent, may, in
and for its own behalf, enforce, and may institute and maintain,
any suit, action or proceeding against the Company suitable to
enforce, or otherwise in respect of, its right to exercise, and
to receive payment for, its Warrants as provided in this
Agreement.
ARTICLE IV
WARRANTS ACQUIRED BY THE COMPANY;
PAYMENT OF TAXES
SECTION 4.01. Warrants Acquired by the Company. In
--------------------------------
the event the Company shall purchase or otherwise acquire
Warrants, such Warrants may, at the option of the Company, be
(i) in the case of Definitive Warrants, delivered to the Warrant
Agent, and if so delivered, the Warrant Agent shall promptly
cancel such Warrants on the records of the Warrant Agent or
(ii) in the case of Book-entry Warrants, surrendered free through
a Participant to the Depository for credit to the account of the
Warrant Agent maintained at the Depository, and if so credited,
the Warrant Agent shall promptly note the cancellation of such
Warrants by notation on the records of the Warrant Agent and the
Warrant Agent shall cause its records to be marked to reflect the
reduction in the number of Warrants represented by the Global
Warrant Certificate by the number of Warrants so cancelled
promptly after such account is credited. In the case of Book-
entry Warrants, such Warrants may also, at the option of the
Company, be resold by the Company directly or to or through any
of its affiliates in lieu of being surrendered to the Depository.
No Warrant Certificate shall be countersigned in lieu of or in
exchange for any Warrant which is cancelled as provided herein,
except as otherwise expressly permitted by this Agreement.
Any cancelled Warrant Certificate held by the Warrant
Agent under this Agreement shall be disposed of by the Warrant
Agent in accordance with its customary procedures unless
otherwise directed by the Company, and the Warrant Agent shall
deliver a certificate of disposition to the Company evidencing
the same.
SECTION 4.02. Payment of Taxes. The Company will pay
----------------
all stamp, withholding and other duties, if any, attributable to
the initial issuance of Warrants; provided, however, that,
anything in this Agreement to the contrary notwithstanding, the
Company shall not be required to pay any tax or other
governmental charge which may be payable in respect of any
transfer involving any beneficial or record interest in, or
<PAGE>
<PAGE>
ownership interest of, any Warrants, Warrant Certificates or
Global Warrant Certificate.
ARTICLE V
CONCERNING THE WARRANT AGENT
SECTION 5.01. Warrant Agent. (a) The Company hereby
-------------
appoints Chemical Bank as Warrant Agent of the Company in respect
of the Warrants upon the terms and subject to the conditions set
forth herein; and ChemicaL Bank hereby accepts such appointment.
The Warrant Agent shall have the powers and authority granted to
and conferred upon it in this Agreement and such further powers
and authority to act on behalf of the Company as the Company may
hereafter grant to or confer upon it with its consent. All of
the terms and provisions with respect to such powers and
authority contained in any Warrant Certificates or the Global
Warrant Certificate are subject to and governed by the terms and
provisions hereof.
(b) Chemical covenants and agrees to maintain an
office staffed by qualified personnel, with adequate facilities
for the discharge of its responsibilities under this Agreement,
including, without limitation, the computation of the Cash
Settlement Value and the timely settlement of the Warrants upon
exercise thereof.
SECTION 5.02. Conditions of Warrant Agent's
-----------------------------
Obligations. The Warrant Agent accepts its obligations herein
-----------
set forth upon the terms and conditions hereof, 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
Warrants shall be subject:
(a) The Company agrees promptly to pay the Warrant
Agent the compensation to be agreed upon with the Company
for all services rendered by the Warrant Agent and to
reimburse the Warrant Agent for its reasonable out-of-pocket
expenses (including attorneys' fees and expenses) incurred
by the Warrant Agent without negligence, bad faith or breach
of this Agreement on its part in connection with the
services rendered by it hereunder. The Company also agrees
to indemnify the Warrant Agent for, and to hold it harmless
against, any loss, liability or expense (including reason-
able attorneys' fees and expenses) incurred without
negligence, bad faith or breach of this Agreement on the
part of the Warrant Agent, arising out of or in connection
with its acting as such Warrant Agent hereunder, as well as
the reasonable costs and expenses of defending against any
claim of liability in the premises.
(b) In acting under this Agreement, the Warrant Agent
is acting solely as agent of the Company and does not assume
any obligation or relationship of agency or trust for or
with any of the owners or holders of the Warrants.
<PAGE>
<PAGE>
(c) The Warrant Agent may consult with counsel
satisfactory to it (including counsel to the Company), and
the 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 the opinion of such counsel.
(d) The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or
thing suffered by it in reliance upon any notice, direction,
consent, certificate, affidavit, statement or other paper or
document reasonably believed by it to be genuine and to have
been presented or signed by the proper parties.
(e) The Warrant Agent, and its officers, directors and
employees, may become the owner of, or acquire any interest
in, any Warrants or other obligations of the Company, with
the same rights that it or they would have if it were not
the Warrant Agent hereunder and, to the extent permitted by
applicable law, it or they may engage or be interested in
any financial or other transaction with the Company and may
act on behalf of, or as depository, trustee or agent for,
any committee or body of owners or holders of Warrants or
other obligations of the Company as freely as if it were not
the Warrant Agent hereunder.
(f) The Warrant Agent shall not be under any liability
for interest on any monies at any time received by it
pursuant to any of the provisions of this Agreement nor
shall it be obligated to segregate such monies from other
monies held by it, except as required by law. The Warrant
Agent shall not be responsible for advancing funds on behalf
of the Company.
(g) The Warrant Agent shall not be under any
responsibility with respect to the validity or sufficiency
of this Agreement or the execution and delivery hereof
(except the due authorization, execution and delivery hereof
by the Warrant Agent) or with respect to the validity or
execution of the Warrant Certificates or the Global Warrant
Certificate (except its countersignature thereof).
(h) The recitals contained herein and in the Warrant
Certificates or the Global Warrant Certificate (except as to
the Warrant Agent's countersignature thereon) shall be taken
as the statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of the same.
(i) The Warrant Agent shall be obligated to perform
such duties as are herein specifically set forth, and no
implied duties or obligations shall be read into this
Agreement against the Warrant Agent. The Warrant Agent
shall not be under any obligation to take any action
hereunder likely to involve it in any expense or liability,
the payment of which is not, in its reasonable opinion,
assured to it. The Warrant Agent shall not be accountable
or under any duty or responsibility for the application by
<PAGE>
<PAGE>
the Company of any proceeds. The Warrant Agent shall have
no duty or responsibility in case of any default by the
Company in the performance of its covenants or agreements
contained in this Agreement or in any Warrant Certificate or
the Global Warrant Certificate or in the case of the receipt
of any written demand from a holder of a Warrant 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 6.02 hereof, to
make any demand upon the Company.
SECTION 5.03. Resignation and Appointment of
------------------------------
Successor. (a) The Company agrees, for the benefit of the
---------
holders from time to time of the Warrants, that there shall at
all times be a Warrant Agent hereunder until all the Warrants are
no longer outstanding or until monies for the payment of all
outstanding Warrants, if any, shall have been paid to the Warrant
Agent and shall have been returned to the Company as provided in
Section 2.06, whichever occurs earlier.
(b) The Warrant Agent may at any time resign as such
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, subject to the appointment of a successor
Warrant Agent and acceptance of such appointment by such
successor Warrant Agent as hereinafter provided. The Warrant
Agent hereunder may be removed at any time by the filing with it
of an instrument in writing signed by or on behalf of the Company
and specifying such removal and the date when it shall become
effective. Such resignation or removal shall take effect upon
the appointment by the Company, as hereinafter provided, of a
successor Warrant Agent (which shall be a banking institution
organized under the laws of the United States of America or one
of the states thereof, have a combined capital and surplus of at
least $100,000,000 (as set forth in its most recent reports of
condition published pursuant to law or to the requirements of any
United States federal or state regulatory or supervisory
authority) and having an office in the Borough of Manhattan, The
City of New York) and the acceptance of such appointment by such
successor Warrant Agent. In the event a successor Warrant Agent
has not been appointed and accepted its duties within 90 days of
the Warrant Agent's notice of resignation, the Warrant Agent may
apply to any court of competent jurisdiction for the designation
of a successor Warrant Agent. The obligation of the Company
under Section 5.02(a) shall continue to the extent set forth
therein notwithstanding the resignation or removal of the Warrant
Agent.
(c) In case at any time the Warrant Agent shall give
notice of its intent to resign, or shall be removed, or shall
become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or make an assignment for the benefit of its
creditors, or consent to the appointment of a receiver or
custodian of all or any substantial part of its property, or
shall admit in writing its inability to pay or meet its debts as
they mature, or if a receiver or custodian of it or of all or any
<PAGE>
<PAGE>
substantial part of its property shall be appointed, or if any
public officer shall have taken charge or control of the Warrant
Agent or of its property or affairs, for the purpose of
rehabilitation, conservation or liquidation, a successor Warrant
Agent, qualified as aforesaid, shall be promptly appointed by the
Company by an instrument in writing, filed with the successor
Warrant Agent. Upon the appointment as aforesaid of a successor
Warrant Agent and acceptance by the latter of such appointment,
the Warrant Agent so superseded shall cease to be Warrant Agent
hereunder.
(d) Any successor Warrant Agent appointed hereunder
shall execute, acknowledge and deliver to its predecessor and to
the Company an instrument accepting such appointment hereunder,
and thereupon such successor Warrant Agent, without any further
act, deed or conveyance, shall become vested with all the
authority, rights, powers, trusts, immunities, duties and
obligations of such predecessor with like effect as if originally
named as Warrant Agent hereunder, and such predecessor, upon
payment of its charges and disbursements then unpaid, shall
thereupon become obligated to transfer, deliver and pay over, and
such successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or held by
such predecessor (including, without limitation, the Warrant
Register), as the Warrant Agent hereunder.
(e) Any corporation into which the Warrant Agent
hereunder may be merged or converted or any corporation with
which the Warrant Agent may be consolidated, or any corporation
resulting from any merger, conversion or consolidation (a
"Consolidation Event") to which the Warrant Agent shall be a
party or any corporation to which the Warrant Agent shall sell or
otherwise transfer all or substantially all the corporate agency
assets and business of the Warrant Agent, provided that it shall
be qualified as aforesaid, shall be the successor 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.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendment. (a) This Agreement and the
---------
terms of the Warrants may be amended by the Company, the Warrant
Agent and the Determination Agent, without the consent of the
Warrantholders, for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective or inconsistent
provision contained herein or therein or in any other manner
which the Company may deem necessary or desirable and which will
not materially and adversely affect the interests of the owners
or holders of the Warrants. Notwithstanding anything in this
Section 6.01 to the contrary, this Agreement may not be amended
to provide for the countersigning by the Warrant Agent or Warrant
Certificates evidencing in the aggregate in excess of 1,150,000
Warrants unless and until the Warrant Agent has received notice
from the AMEX or any successor United States national securities
<PAGE>
<PAGE>
exchange that the additional Warrants in excess of 1,150,000 have
been approved for listing on such exchange.
(b) The Company, the Warrant Agent and the Determina-
tion Agent may modify or amend this Agreement, with the consent
of Warrantholders (by vote of Registered Holders or, in the case
of Warrants held through the Depository, acting through a
Participant or the Depository) holding not less than a majority
in number of the then outstanding Warrants affected by such
modification or amendment, for any purpose; provided, however,
that no such modification or amendment that increases the
Original Portfolio Value, shortens the period of time during
which the Warrants may be exercised, or otherwise materially and
adversely affects the exercise rights of the Warrantholders or
reduces the percentage of the number of outstanding Warrants, the
consent of whose holders is required for modification or
amendment of this Agreement, may be made without the consent of
each Warrantholder affected thereby. In the case of Warrants
evidenced by a Global Warrant Certificate, the Company and the
Warrant Agent shall be entitled to rely upon certification in
form satisfactory to each of them that any requisite consent has
been obtained from holders of beneficial ownership interests in
the relevant Global Warrant Certificate. Such certification may
be provided by Participants acting on behalf of such beneficial
owners of Warrants, provided that any such certification is
accompanied by a certification from the Depository as to the
Warrant holdings of such Participants.
SECTION 6.02. Notices and Demands to the Company, the
---------------------------------------
Warrant Agent and the Determination Agent. If the Warrant Agent
-----------------------------------------
or the Determination Agent shall receive any notice or demand
addressed to the Company by any Registered Holder or Participant
pursuant to the provisions of this Agreement, the Warrant Agent
or the Determination Agent, as the case may be, shall promptly
forward such notice or demand to the Company.
SECTION 6.03. Addresses for Notices. Any
---------------------
communications to the Warrant Agent with respect to this
Agreement shall be addressed to 450 West 33rd Street, New York,
New York 10001, Attention: Corporate and Municipal Agency
Department (the "Warrant Agent's Office") and any communications
to the Company with respect to this Agreement shall be addressed
to The Bear Stearns Companies Inc., 245 Park Avenue, New York,
New York 10167, Attention: Secretary, and any communications to
the Determination Agent with respect to this Agreement shall be
addressed to Bear, Stearns & Co. Inc., 245 Park Avenue, New York,
New York 10167 telephone number: 212-272-3000; facsimile number:
212-272-3092(or such other address as shall be specified in
writing by the Warrant Agent, the Company or the Determination
Agent, respectively) telephone number: 212-946-7655; facsimile
number: 212-946-7682.
SECTION 6.04. Notices to Holders. The Company may
------------------
cause to have notice given to the holders of Warrants by
providing the Warrant Agent with a form of notice to be
distributed by (i) in the case of Definitive Warrants, the
Warrant Agent to Registered Holders or (ii) in the case of Book-
<PAGE>
<PAGE>
entry Warrants, the Depository to be distributed by the
Depository to Participants in accordance with the custom and
practices of the Depository.
SECTION 6.05. Obtaining of Approvals. The Company
----------------------
will from time to time take all action which may be necessary to
obtain and keep effective (a) any and all permits, consents and
approvals of governmental agencies and authorities and the AMEX
or any successor SRO and (b) any and all filings or notices under
United States Federal and State securities laws, which may be or
become required in connection with the issuance, sale, trading,
transfer or delivery of the Warrant Certificates, the Global
Warrant Certificate or the exercise of the Warrants.
SECTION 6.06. Persons Having Rights Under This
--------------------------------
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 Warrant Agent,
the Registered Holder of the Global Warrant Certificate and the
Warrantholders 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, conditions,
stipulations, promises and agreements contained in this Agreement
shall be for the sole and exclusive benefit of the Company, the
Warrant Agent, and their respective successors, the Registered
Holder of the Global Warrant Certificate and the Warrantholders.
SECTION 6.07. Inspection of Agreement. A copy of this
-----------------------
Agreement shall be available at all reasonable times at the
Warrant Agent's office for inspection by the Warrantholders,
Participants or any person certified by any Participant to be an
indirect participant of the Depository or any person certified by
any Participant to be a Warrantholder, in each case, on behalf of
whom such Participant holds Warrants.
SECTION 6.08. 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 6.09. 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 6.10. Applicable Law. This Agreement and each
--------------
Warrant shall be deemed to be a contract under the laws of the
State of New York, and for all purposes shall be construed in
accordance with the laws of said State, excluding choice of law
provisions.
[Signature page follows]
<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly
executed by the parties hereto as of the day and year first above
written.
THE BEAR STEARNS COMPANIES INC.
By
-----------------------------
Name: James E. Cayne
Title: President and
Chief Executive Officer
CHEMICAL BANK
By
-------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By
-----------------------------
Name: Samuel Molinaro
Title: Senior Managing Director
<PAGE>
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
FACE
NO. C- CUSIP 073902 32 2
THE BEAR STEARNS COMPANIES INC.
Vantage Point Portfolio Call Warrants
Expiring August 20, 1997
This Warrant Certificate certifies that ___________, or
registered assigns, is the Registered Holder of __________
Vantage Point Portfolio Call Warrants Expiring August 20, 1997
(the "Warrants"). Upon receipt by the Warrant Agent of this
Warrant Certificate and the Exercise Notice on the reverse hereof
(or an Exercise Notice in substantially identical form delivered
herewith), duly completed and executed, at the Warrant Agent's
Window, Attention: Tender Department, in the Borough of
Manhattan, The City of New York, each Warrant evidenced hereby
entitles the registered owner hereof (each a "Warrantholder") to
receive, subject to the terms and conditions set forth herein and
in the Warrant Agreement, from The Bear Stearns Companies Inc.
(the "Company") the Cash Settlement Value of such Warrant, except
that, under the circumstances described below, such Warrantholder
may instead receive the Alternative Settlement Amount for such
Warrant or, in certain circumstances following an Extension
Event, the Warrants will be deemed to be worthless. The Cash
Settlement Value of an Exercised Warrant will be an amount (the
"Cash Settlement Value") equal to the product (rounded down to
the nearest cent) of (A) the quotient obtained by dividing (i)
the amount, if any, by which the Spot Portfolio Value for the
applicable Valuation Date for such Warrant exceeds the Original
Portfolio Value (as defined herein) by (ii) the Original
Portfolio Value and (B) $35. The Original Portfolio Value has
been set at 100.
The Cash Settlement Value is calculated using the following
formula:
Cash Settlement Value = the greater of
(i) $0 and (ii) Spot Portfolio Value - 100
-------------------------- x $35
100
A Warrant will not require or entitle a Warrantholder
to sell or deliver to the Company any shares of any component
stocks of the Portfolio (the "Portfolio Securities"), or any
other securities. Upon exercise of a Warrant, the Company will
make only a cash payment in the amount of the Cash Settlement
Value or Alternative Settlement Amount, if any and as applicable,
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of such Warrant. The Company is under no obligation to, nor will
it, purchase or take delivery from any Warrantholder of any
shares of any of the Portfolio Securities or any other securities
in connection with the exercise of any Warrants. Warrantholders
will not receive any interest on any Cash Settlement Value, and
the Warrants will not entitle the Warrantholders to any of the
rights of holders of any of the Portfolio Securities (as defined
herein) or other securities.
Subject to the terms and conditions set forth herein
and in the Warrant Agreement, each Warrant may be exercised, on
any Business Day during the period from its date of issuance
until 3:00 P.M., New York City time, on the earlier of (i) the
third Business Day immediately preceding the Expiration Date (as
defined below) and (ii) the Business Day immediately preceding
any Delisting Date (as defined herein). The "Expiration Date"
shall be August 20, 1997. Except under certain circumstances
following an Extension Event, any Warrant not exercised
(including by reason of any postponed exercise as described on
the reverse hereof or in the Warrant Agreement) at or before 3:00
P.M., New York City time, on the earlier of (i) the third
Business Day immediately preceding the Expiration Date and (ii)
the Business Day immediately preceding any Delisting Date, will
be automatically exercised.
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and such
further provisions shall for all purposes have the same effect as
though fully set forth in this place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
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IN WITNESS WHEREOF, The Bear Stearns Companies Inc. has
caused this instrument to be duly executed.
Dated:_________________ THE BEAR STEARNS COMPANIES INC.
By________________________
Name:
Title:
Attest:
By_____________________
Secretary
Countersigned as of the
date above written:
CHEMICAL BANK
as Warrant Agent
By_____________________
Authorized Officer
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[REVERSE]
THE BEAR STEARNS COMPANIES INC.
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants issued by the Company
pursuant to a Warrant Agreement, dated as of February 23, 1996
(the "Warrant Agreement"), among the Company, Chemical Bank (the
"Warrant Agent") and Bear, Stearns & Co. Inc. (the "Determination
Agent") and are subject to the terms and provisions contained in
the Warrant Agreement, to all of which terms and provisions each
Warrantholder consents by acceptance of this Warrant Certificate
and which Warrant Agreement is hereby incorporated by reference
in and made a part of this Warrant Certificate. A copy of the
Warrant Agreement is on file at the Warrant Agent's Office.
The Warrants are unsecured contractual obligations of
the Company and rank on a parity with the Company's other
unsecured contractual obligations and with the Company's
unsecured and unsubordinated debt.
Subject to the provisions hereof and the Warrant
Agreement, each Warrant may be exercised during the period from
its date of issuance until 3:00 P.M., New York City time, on the
earlier of (i) the third Business Day immediately preceding the
Expiration Date and (ii) the Business Day immediately preceding
any Delisting Date by delivering or causing to be delivered this
Warrant Certificate and attached Exercise Notice (or an Exercise
Notice in substantially identical form), duly completed and
executed, to the Warrant Agent's Window, in the Borough of
Manhattan, The City of New York (the "Warrant Agent's Window"),
which is, on the date hereof (unless otherwise specified herein),
Chemical Bank/Geoserve, Corporate Trust Securities Window, 55
Water Street, Room 234, North Building, New York, New York 10041,
Attention: Tender Department, or at such other address as the
Warrant Agent may specify from time to time.
Each Warrant entitles the Warrantholder to receive,
upon exercise (including automatic exercise), the Cash Settlement
Value of such Warrant, except that, under the circumstances
described below, such Warrantholder may instead receive the
Alternative Settlement Amount for such Warrant or, in certain
circumstances following an Extension Event, the Warrants will be
deemed to be worthless. The "Cash Settlement Value" of an
Exercised Warrant will be an amount equal to the product (rounded
down to the nearest cent) of (A) the quotient obtained by
dividing (i) the amount, if any, by which the Spot Portfolio
Value for the applicable Valuation Date for such Warrant exceeds
the Original Portfolio Value (as defined herein) by (ii) the
Original Portfolio Value and (B) $35. The Original Portfolio
Value has been set at 100.
The Cash Settlement Value is calculated using the
following formula:
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Cash Settlement Value = the greater of
(i) $0 and (ii) (Spot Portfolio Value - 100) X $35
----------------------------
100
The Company has appointed Bear, Stearns & Co. Inc. to
be its Determination Agent to determine the Spot Portfolio Value
as provided in the Warrant Agreement and herein and to make such
calculations as may be required upon the occurrence of certain
circumstances, as described in the Warrant Agreement and herein.
The Determination Agent shall act as an independent expert and
not as an agent of the Company, and, unless otherwise provided by
the Warrant Agreement, its calculations and determinations under
the Warrant Agreement and this Warrant Certificate shall, absent
manifest error, be final and binding on the Company, the Warrant
Agent and the Warrantholders. Any such calculations will be made
available to a Warrantholder for inspection at the Warrant
Agent's office. The Determination Agent will have no
responsibility for good faith errors or omissions in calculating
or disseminating information regarding the Spot Portfolio Value,
the Cash Settlement Value or the Alternative Settlement Amount,
as applicable.
The "Spot Portfolio Value" will be determined by the
Determination Agent, and will equal the sum of the products of
the Market Price (as defined herein) of each Portfolio Security
(as defined herein) and the then applicable Multiplier (as
defined herein) for that Portfolio Security. The applicable
multiplier (the "Multiplier") for each Portfolio Security is as
specified under the caption "Description of Warrants -- Portfolio
Securities" in the Company's Prospectus Supplement dated February
20, 1996 relating to the Warrants (the "Prospectus Supplement")
and indicates the number of shares (or fraction of one share) of
that Portfolio Security included in the calculation of the Spot
Portfolio Value. The "Portfolio Securities" are the common
stocks or American Depositary Receipts ("ADRs") of the 43
corporations which are listed under the caption "Description of
Warrants -- Portfolio Securities" in the Prospectus Supplement.
Each Multiplier will remain constant for the term of the Warrants
unless adjusted for certain corporate events described herein.
If a Market Disruption Event (as defined herein) occurs or is
continuing with respect to a Portfolio Security on a Valuation
Date, then the calculation of the Market Price of that Portfolio
Security will be based on the Business Day immediately preceding
that Valuation Date that does not have a Market Disruption Event
with respect to that Portfolio Security.
"Market Price," which will be determined by the
Determination Agent based on information reasonably available to
it, means (i) for a Valuation Date on or prior to the third
Business Day immediately preceding the Expiration Date, the
following:
A. If the Portfolio Security is listed on a national
securities exchange or is a NASDAQ security, Market Price
means the last reported sale price of that Portfolio
Security on the Valuation Date (or the preceding Business
Day if that Portfolio Security is not traded on the
Valuation Date) on the principal national securities
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exchange on which such Portfolio Security is listed or
admitted to trading or on NASDAQ, as the case may be.
B. If the Portfolio Security is not listed on a
national securities exchange and is not a NASDAQ security,
Market Price means the last reported bid price of that
Portfolio Security in the over-the-counter market on the
Valuation Date,
and (ii) for any Valuation Date after the third Business Day
immediately preceding the Expiration Date, the following:
A. If the Portfolio Security is listed on a national
securities exchange or is a NASDAQ security, Market Price
means the opening reported sale price of that Portfolio
Security on the Valuation Date (or the preceding Business
Day if that Portfolio Security is not traded on the
Valuation Date) on the principal national securities
exchange on which such Portfolio Security is listed or
admitted to trading or on NASDAQ, as the case may be.
B. If the Portfolio Security is not listed on a
national securities exchange and is not a NASDAQ security,
Market Price means the first reported bid price of that
Portfolio Security in the over-the-counter market on the
Valuation Date.
"Market Disruption Event" with respect to a Portfolio
Security means any of the following events, in each case as
determined by the Determination Agent:
(i) the suspension of or material limitation in
trading in that Portfolio Security for more than two hours
of trading or during the one-half hour period immediately
preceding the time that Portfolio Security is to be priced
(for purposes of this definition, limitations pursuant to
New York Stock Exchange ("NYSE") Rule 80A (or any applicable
rule or regulation enacted or promulgated by the NYSE, any
other self-regulatory organization ("SRO") or the Securities
and Exchange Commission that is deemed of similar scope by
the Determination Agent) on trading during significant
market fluctuations shall be considered "material"),
(ii) the suspension of or material limitation (whether
by reason of movements in price that exceed levels permitted
by the relevant exchange or otherwise) in trading in option
contracts related to a Portfolio Security traded on any
exchange for more than two hours of trading or during the
one-half hour period immediately preceding the time that
Portfolio Security is to be priced.
(iii) a banking moratorium has been declared by federal
or any state authorities.
For purposes of this definition, a limitation on the hours in a
trading day and/or number of days of trading will not constitute
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a Market Disruption Event if it results from an announced change
in the regular business hours of the relevant exchange.
The Multiplier with respect to any Portfolio Security
and the Portfolio will be adjusted by the Determination Agent
(and with respect to the events described in paragraphs 4, 5 and
7 below, with the consent of the AMEX) as follows:
1. If a Portfolio Security is subject to a stock
split or reverse stock split (or similar adjustment in the
case of ADRs) then, once the split has become effective, the
Multiplier relating to that Portfolio Security will be
adjusted to equal the product of (i) the number of shares of
the Portfolio Security outstanding after the split has
become effective with respect to each share of such
Portfolio Security outstanding immediately prior to the
effectiveness of such split (or the number of receipts
outstanding with respect to each ADR if a Portfolio Security
is an ADR) and (ii) the prior Multiplier.
2. If a Portfolio Security is subject to a stock
dividend or stock distribution (other than a stock dividend
elected by a holder of that Portfolio Security in lieu of an
ordinary cash dividend) that is given equally to all holders
of that Portfolio Security, then, once that Portfolio
Security is trading ex-dividend, the Multiplier will be
adjusted so that the new Multiplier shall equal the former
Multiplier plus the product of (i) the number of shares of
that Portfolio Security issued with respect to one such
share of that Portfolio Security and (ii) the prior
Multiplier.
3. If the issuer of a Portfolio Security is being
liquidated or dissolved or is subject to a proceeding under
any applicable bankruptcy, insolvency or similar law, that
Portfolio Security will continue to be included in the
Portfolio so long as a Market Price for that Portfolio
Security is available. Subject to paragraph 6 below, if a
Market Price is no longer available for a Portfolio Security
for whatever reason, including the liquidation or
dissolution of the issuer of that Portfolio Security or the
subjection of the issuer to a proceeding under any
applicable bankruptcy, insolvency or similar law, then, for
so long as a Market Price is unavailable for that Portfolio
Security, the value of that Portfolio Security will be
deemed to be zero for the purposes of calculating the Spot
Portfolio Value, and no attempt will be made to find a
replacement Portfolio Security or increase the value of the
Portfolio to compensate for the deletion of such Portfolio
Security.
4. If all the Portfolio Securities of any class or
series of an issuer are converted into or exchanged for the
same or a different number of shares of any class or classes
of equity security of that issuer other than such Portfolio
Security, whether by capital reorganization,
recapitalization, reclassification or otherwise, then, once
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that conversion or exchange has become effective, the former
Portfolio Security will be removed from the Portfolio and
the new equity securities will be added to the Portfolio as
new Portfolio Securities. The Multiplier relating to each
such new Portfolio Security will equal the product of
(i) the last value of the Multiplier with respect to the
former Portfolio Security and (ii) the number of shares of
the new Portfolio Security issued with respect to one share
of the former Portfolio Security.
5. If the issuer of a Portfolio Security distributes
to all of its shareholders equity securities of any other
issuer, then such new equity securities will be added to the
Portfolio as a new Portfolio Security. The Multiplier for
the new Portfolio Security will equal the product of (i) the
last value of the Multiplier relating to the Portfolio
Security in respect of which the new Portfolio Security is
being distributed and (ii) the number of shares of the new
Portfolio Security distributed with respect to one share of
the former Portfolio Security.
6. If a Portfolio Security is subject to an
extraordinary dividend or an extraordinary distribution
(including upon liquidation or dissolution) of cash or other
property of any kind (other than any such dividend or
distribution otherwise addressed in the preceding
paragraphs) that is received equally by all holders of that
Portfolio Security, then the Determination Agent shall
determine the fair market value, if any, of the cash or
other property received in respect of each share of that
Portfolio Security and the Portfolio shall thereafter be
deemed to include an amount equal to the product of the
Multiplier relating to that Portfolio Security on that date
and the fair market value as so determined.
7. If the issuer of a Portfolio Security (or, if a
Portfolio Security is an ADR, the Foreign Issuer of such
Underlying Shares) has been subject to a merger or
consolidation (a "Consolidation Event")and is not the
surviving entity and holders of that Portfolio Security are
entitled to receive cash or securities in exchange for that
Portfolio Security, then a value for that Portfolio Security
will be determined (i) in the case of cash, at the time of
receipt by those holders and will equal the amount of such
cash, and (ii) in the case of securities, on the first
Business Day on which those securities are traded regular
way, and will equal the Market Price of those securities
(the values in each of (i) and (ii), and the values defined
in paragraphs 8 and 9 below, each being a "Cash Component");
provided, that if those securities do not have a Market
Price, the Cash Component shall be the fair market value of
those securities, as determined by the Determination Agent.
The Cash Component, as adjusted for the accrual of interest
described below, will be constant for the remaining term of
the Warrants. No adjustment will be made to the Multiplier
relating to the Portfolio Security.
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8. If a Portfolio Security that is an ADR is no
longer listed or admitted for trading on any of the AMEX,
NYSE, or NASDAQ (an "ADR Termination Event"), then a value
for that Portfolio Security will be determined based upon
the last reported trading price of such ADR on the last
trading day immediately prior to its ceasing to be listed or
admitted for trading on the AMEX, NYSE, or NASDAQ, as the
case may be, (such value being a "Cash Component"). The
Cash Component, as adjusted for the accrual of interest
described below, will be constant for the remaining term of
the Warrants. No adjustment will be made to the Multiplier
relating to the Portfolio Security.
9. If the average daily trading volume of a Portfolio
Security during any six months is less than 20,000 shares
per trading day (a "Liquidity Event"), then such Portfolio
Security will no longer be included in the Portfolio and a
value for that Portfolio Security will be determined based
upon the last reported trading price for such Portfolio
Security on the last trading day immediately prior to the
occurrence of the Liquidity Event (such value being a "Cash
Component"). The Cash Component, as adjusted for the
accrual of interest described below, will be constant for
the remaining term of the Warrants. No adjustment will be
made to the Multiplier relating to the Portfolio Security.
The applicable Cash Component in the event of a
Consolidation Event, ADR Termination Event or Liquidity Event, as
the case may be, will accrue interest at a rate equal to the
London Inter-Bank Offered Rate ("LIBOR"), with a term equal to
the period of time from the applicable Interest Commencement Date
(as defined herein) to the Expiration Date (the "Specified
Maturity"), determined and fixed on the first London Business Day
(the "LIBOR Determination Date") that is immediately following
the date of determination of such Cash Component. Interest will
accrue on such Cash Component commencing (i) in the case of cash
or in the event of an ADR Termination Event or a Liquidity Event,
on the second London Business Day following such LIBOR
Determination Date and (ii) in the case of securities, on the
third London Business Day following such LIBOR Determination Date
(in each of (i) and (ii), the "Interest Commencement Date") up to
and including the Specified Maturity.
LIBOR will be determined by the Determination Agent in
accordance with the following provisions:
(i) On the relevant LIBOR Determination Date, LIBOR
will be determined through the application of linear
interpolation by reference to the offered rates for deposits
of not less than $1,000,000 having a maturity immediately
before and immediately after the Specified Maturity,
commencing on the Interest Commencement Date, which appear
either (a) if the Specified Maturity is one year or less
from the relevant LIBOR Determination Date, on the display
designated as Page 3750 on the Dow Jones Tolerate Service
(or such other page as may replace Page 3750 on that service
for the purpose of displaying London Interbank offered rates
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of major banks) ("Tolerate Page 3750"), or (b) if the
Specified Maturity is more than one year from the relevant
LIBOR Determination Date, on each of Tolerate Page 3750 and
on the display designated as page "SWAP" on the Reuters
Monitor Money Rates Service (or such other page as may
replace the SWAP page on that service for the purpose of
displaying London Interbank offered rates of major banks)
("Reuters-SWAP"), in each case as of 11:00 A.M., London
time; provided that if there is an offered rate for the
Specified Maturity, then LIBOR will be such offered rate.
If such offered rates do not appear, LIBOR with respect to
such LIBOR Determination Date will be determined as
described in (ii) below.
(ii) With respect to a LIBOR Determination Date on
which no such offered rates appear on Tolerate Page 3750 or
Reuters SWAP as described in (i) above, LIBOR will be
determined on the basis of the rates at approximately
11:00 A.M., London time, on such LIBOR Determination Date,
at which deposits in U.S. dollars having the Specified
Maturity are offered to prime banks in the London Interbank
market by four major banks in the London Interbank market
selected by the Determination Agent commencing on the
Interest Commencement Date and in a principal amount equal
to an amount not less than $1,000,000 that in the
Determination Agent's judgment is representative for a
single transaction in such market at such time (a
"Representative Amount"). The Determination Agent will
request the principal London office of each of such banks to
provide a quotation of its rate. If at least two such
quotations are provided, LIBOR with respect to such LIBOR
Determination Date will be calculated by reference to the
arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR with respect to such LIBOR
Determination Date will be calculated by reference to the
arithmetic mean of the rates quoted at approximately 11:00
A.M., New York City time, on such LIBOR Determination Date
by three major banks in New York City, selected by the
Determination Agent, for loans in U.S. dollars to leading
European banks having the Specified Maturity commencing on
the Interest Commencement Date and in a Representative
Amount; provided, however, that if fewer than three banks
selected as aforesaid by the Determination Agent are quoting
as mentioned in this sentence, LIBOR with respect to such
Cash Component will be the LIBOR as last in effect.
"London Business Day" means any day on which dealings
in U.S. dollars are transacted in the London interbank
market.
The value as of any given day of any Portfolio Security
converted into a Cash Component will equal the sum of the Cash
Component and all interest accrued thereon through that day. The
interest that has accrued on any given day will be reflected only
in the Spot Portfolio Value quoted by the AMEX at the end of that
day and not in the values disseminated at interim periods during
the day. Interest will be compounded daily.
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No adjustments of any Multiplier of a Portfolio
Security will be required unless that adjustment would require a
change of at least 1% in the Multiplier in effect. The
Multiplier resulting from any of the adjustments specified above
will be rounded to the nearest one thousandth with five ten-
thousandths being rounded upward.
Except with respect to certain adjustments to the
Portfolio described in paragraphs 4, 5 and 7 above, which shall
be made with the consent of the AMEX, all determinations made by
the Determination Agent shall be at the sole discretion of the
Determination Agent and, in the absence of manifest error, shall
be conclusive for all purposes and binding on the Company and the
holders of the Warrants, and the Determination Agent shall have
no liability therefor.
Subject to the Warrant Agreement and this Warrant
Certificate, the "Valuation Date" for a Warrant shall be the
first Business Day following the applicable Exercise Date,
subject to postponement upon the occurrence of an Extraordinary
Event or Exercise Limitation Event or as a result of the exercise
of a number of Warrants exceeding the limits on exercise, all as
described below. Except for Warrants subject to automatic
exercise, or Warrants subject to the Limit Option or following an
Extension Event, the "Exercise Date" for a Warrant will be (A) in
the case of Warrants other than those held through the facilities
of Centrale de Livraison de Valeris Mobiliees S.A. ("CEDEL") or
Euroclear System ("Euroclear") (i) the Business Day on which the
Warrant Agent receives at the Warrant Agent's Window, Attention:
Tender Department, the Warrant (or transfer of such Warrant
through the Depository in the case of Book-entry Warrants) and
Exercise Notice (by facsimile transmission in accordance with the
Warrant Agreement in the case of Exercise Notices for Book-entry
Warrants) in proper form with respect to such Warrant, if
received at or prior to 3:00 P.M., New York City time, on such
day, or (ii) if the Warrant Agent receives such Warrant
Certificate (or transfer of such Warrant through the Depository
in the case of Book-entry Warrants) or Exercise Notice after 3:00
P.M., New York City time, on a Business Day, then the Business
Day next succeeding the Business Day on which such Warrant or
Exercise Notice is received (B) in the case of Warrants held
through the facilities of CEDEL or Euroclear, (i) the Business
Day on which the Warrant Agent receives the Exercise Notice in
proper form with respect to such Warrant if such Exercise Notice
is received at or prior to 3:00 P.M., New York City time, on such
day, provided that the Warrant Certificate (or transfer of such
Warrant through the Depository in the case of Book-entry
Warrants) is received by the Warrant Agent by 3:00 P.M., New York
City time, on the Valuation Date, or (ii) if the Warrant Agent
receives such Exercise Notice after 3:00 P.M., New York City
time, on a Business Day, then the Business Day next succeeding
such Business Day, provided that the Warrant Certificate (or
transfer of such Warrant through the Depository in the case of
Book-entry Warrants) is received by 3:00 P.M., New York City
time, on the Valuation Date relating to exercises of Warrants on
such succeeding Business Day. In the event that the Warrant
Certificate (or transfer of such Warrant through the Depository
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in the case of Book-entry Warrants) is received after 3:00 P.M.,
New York City time, on the Valuation Date, then the Exercise Date
for such Warrant will be the day on which such Warrant
Certificate (or transfer of such Warrant through the Depository
in the case of Book-entry Warrants) is received or, if such day
is not a Business Day, the next succeeding Business Day;
provided, further, however, in the case of exercises by Euroclear
Participants, Euroclear must by facsimile to the Warrant Agent by
9:00 a.m., New York City time, on the Valuation Date confirm that
the Warrants will be received by the Warrant Agent on such date,
provided, that if such facsimile is received after 9:00 a.m., New
York City time, on the Valuation Date, the Company will be
entitled to direct the Warrant Agent to reject the related notice
of exercise or waive the requirement for timely delivery of such
facsimile.
Subject to the provisions of the Warrant Agreement
relating to Extension Events, all Warrants for which the Warrant
Agent has not received a valid Exercise Notice in proper form at
or prior to 3:00 P.M., New York City time, on (i) the third
Business Day immediately preceding the Expiration Date or
(ii) the Business Day immediately preceding any Delisting Date
prior to the Expiration Date, as the case may be, or for which
the Warrant Agent has received a valid Exercise Notice but with
respect to which timely delivery of the relevant Warrants has not
been made, together with any Warrants the Valuation Date for
which has as of such time been postponed as described below, will
be automatically exercised as of such Expiration Date or
Delisting Date, as the case may be; without any requirement of
delivery of an Exercise Notice to the Warrant Agent. The
"Delisting Date" shall be the last Business Day prior to the
effective date on which the Warrants are delisted from, or
permanently suspended from trading (within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations of the Securities and Exchange Commission
thereunder) on the AMEX, and not accepted prior thereto or at the
same time for trading pursuant to the rules of another SRO that
are filed with the Securities and Exchange Commission under the
Exchange Act. However, if the Company first receives notice of
the delisting or suspension of the Warrants on the same day on
which such Warrants are delisted or suspended, such day will be
deemed a Delisting Date. The Exercise Date for such Warrants
will be the Expiration Date or any Delisting Date, as the case
may be, or, if such date is not a Business Day, the next
succeeding Business Day. The Warrant Agent will obtain the Spot
Portfolio Value (determined as of the first Business Day
following such date, which will be the Valuation Date for such
Warrants except in the case of a postponed exercise following the
occurrence of an Extraordinary Event or an Exercise Limitation
Event) and will determine the Cash Settlement Value, if any, of
such Warrants.
No fewer than 500 Warrants may be exercised by or on
behalf of any one Warrantholder at any one time, except that no
such minimum exercise amount shall apply in the case of automatic
exercise on or following the Expiration Date or on any Delisting
Date or in the case of cancellation of the Warrants as a result
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of an Extraordinary Event. With the exception of the Limit
Option, an Exercise Notice shall be unconditional. Except as
provided in the Warrant Agreement, the Warrant Agent shall be
entitled, with no duty of inquiry, to rely conclusively on any
Exercise Notice received by it and on any representation of the
exercising Warrantholder contained therein. A Warrantholder
shall not combine Definitive Warrants and Book-entry Warrants or
Book-entry Warrants held through more than one Participant to
meet the 500 Warrant minimum exercise requirement provided in the
Warrant Agreement and herein.
If the Exercise Notice is not rejected as provided in
the Warrant Agreement, then the Warrant Agent or the Determi-
nation Agent, as the case may be, will determine the Cash
Settlement Value of the exercised Warrants in accordance with the
terms of the Warrant Agreement. Except in the case of Warrants
subject to automatic exercise, Warrants that upon exercise
entitle the holder thereof to receive an Alternative Settlement
Amount in lieu of the Cash Settlement Value and Warrants deemed
worthless following an Extension Event, if on any Valuation Date
the Cash Settlement Value for any Warrants then exercised would
be zero, then the attempted exercise of any such Warrants shall
be void and of no effect and the Warrant Certificate evidencing
such Warrants will be returned to the Registered Holder of the
Warrant by first class mail at the Company's expense and such
holder shall be permitted to re-exercise such Warrants prior to
the earlier of (i) the third Business Day immediately prior to
the Expiration Date, and (ii) the Business Day immediately
preceding any Delisting Date, as the case may be.
Except in the case of Warrants subject to automatic
exercise, Warrants that upon exercise entitle the holder thereof
to receive an Alternative Settlement Amount and Warrants deemed
worthless following an Exercise Event, if the Company has made
adequate New York Clearing House or next day funds available to
the Warrant Agent in a timely manner, which shall in no event be
later than 3:00 P.M., New York City time on the second Business
Day following the Valuation Date (the "Funding Date"), the
Warrant Agent will be responsible for making its payment
available to each Registered Holder of an Exercised Warrant in
the form of a cashier's check or an official bank check, or (in
the case of payments of at least $100,000) by wire transfer to a
U.S. Dollar account maintained by such Registered Holder in the
United States (at the Registered Holder's election as specified
in the applicable Exercise Notice) prior to the close of business
on the first Business Day immediately succeeding such Funding
Date (the "Settlement Date") against receipt by the Warrant Agent
at the Warrant Agent's Window, of such Registered Holder's
Warrant Certificates. Such payment shall be in an amount equal
to the aggregate Cash Settlement Value of such holder's exercised
Warrants.
With respect to automatically exercised Warrants (other
than Warrants subject to postponed exercise following the
occurrence of an Extraordinary Event or an Exercise Limitation
Event) if the Company has made adequate New York Clearing House
or next day funds available to the Warrant Agent in a timely
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manner, which shall in no event be later than 3:00 P.M., New York
City time on the second Business Day following the Valuation Date
for such automatically exercised Warrants (the "Automatic Funding
Date"), the Warrant Agent will be responsible for making its
payment available to each Registered Holder of an Exercised
Warrant in the form of a cashier's check or an official bank
check, or (in the case of payments of at least $100,000) by wire
transfer to a U.S. Dollar bank account maintained by such
Registered Holder in the United States (at such holder's election
and upon proper notice being given to the Company and the Warrant
Agent) prior to the close of business on such Automatic Funding
Date (or in the case of payments made by wire transfer, prior to
the close of business on the Business Day next succeeding the
Automatic Funding Date), against receipt by the Warrant Agent at
the Warrant Agent's Window of such Registered Holder's Warrant
Certificates. Such payment shall be in the amount equal to the
aggregate Cash Settlement Value in respect of the Warrants
evidenced by such Warrant Certificates. Warrant Certificates
delivered to the Warrant Agent shall thereafter be promptly
cancelled by the Warrant Agent.
Neither the Warrant Agent nor the Determination Agent
will be responsible for any losses resulting from a failure of a
brokerage firm or a Participant to properly exercise Warrants on
behalf of a Warrantholder.
Subject to the provisions of Section 2.03(b)(ii) of the
Warrant Agreement, if the Company determines that an Extra-
ordinary Event or an Exercise Limitation Event has occurred and
is continuing on any Business Day that would otherwise be the
Valuation Date with respect to an exercise of Warrants (the
"Applicable Business Day"), then the Cash Settlement Value with
respect to such exercise of Warrants shall be calculated on the
basis that the Valuation Date shall be the next Business Day
following such Applicable Business Day on which there is no
Extraordinary Event or Exercise Limitation Event; provided that
if the Valuation Date has not occurred on or prior to the
Expiration Date or any Delisting Date, then the Warrantholders
will receive, in lieu of the Cash Settlement Amount, the
Alternative Settlement Amount which shall be calculated as if the
Warrants had been cancelled on the Expiration Date or such
Delisting Date, as the case may be.
Upon the occurrence of an Extraordinary Event or an
Exercise Limitation Event, the Company shall use its best efforts
to notify the Warrant Agent and the Determination Agent promptly
that an Extraordinary Event or Exercise Limitation Event, as the
case may be, has occurred and shall promptly give notice to the
Warrantholders by publication in a United States newspaper with a
national circulation (currently expected to be The Wall Street
Journal), that an Extraordinary Event or an Exercise Limitation
Event has occurred.
If the Company determines that an Extraordinary Event
or an Exercise Limitation Event has occurred and is continuing on
the Expiration Date or on any earlier Delisting Date, the Company
shall so notify the Warrant Agent and the Determination Agent,
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and the Cash Settlement Value with respect to the exercised
Warrants shall be equal to, and be calculated in the same manner
as, an Alternative Settlement Amount, in accordance with the
Warrant Agreement (treating the Expiration Date or such Delisting
Date, as the case may be, as the date on which the Warrants were
cancelled).
If the Company determines that an Extraordinary Event
has occurred and is continuing, and if the Extraordinary Event is
expected by the Company to continue, the Company, prior to the
Expiration Date, may immediately cancel the Warrants by notifying
the Warrant Agent of such cancellation (the date such notice is
given being the "Cancellation Date"), and each Warrantholder's
rights under the Warrants and the Warrant Agreement shall
thereupon cease; provided, that, subject to an automatic
extension of the term of the Warrants or to a determination that
the Warrants are worthless, each Warrant shall be exercised (even
if such Warrant would not otherwise be exercisable on such date
because of the Limit Option) on the basis that the Valuation Date
for such Warrant shall be the Cancellation Date and the holder of
each such Warrant will receive the Alternative Settlement Amount
determined by the Determination Agent.
With respect to all Warrant Certificates as to which
the Valuation Date has been postponed (other than Warrants that
have been deemed worthless following an Extension Event) or which
have been cancelled as described above, the Company shall make
available to the Warrant Agent in a timely manner, which shall in
no event be later than 3:00 P.M., New York City time, on the
second Business Day following the date on which the Cash
Settlement Value or Alternative Settlement Amount, as the case
may be, has been calculated (the "Alternative Funding Date") New
York Clearing House Funds or next day funds in an amount equal
to, and for the payment of, the aggregate Cash Settlement Value
or Alternative Settlement Amount, as applicable, of such
Warrants. Subject to such funds having been made available as
provided in the preceding sentence, the Warrant Agent will
thereafter be responsible for making its payment available to
each Registered Holder of the Warrants that submitted a Warrant
Certificate (and in the case of cancellation to each Registered
Holder) in the form of a cashier's check or an official bank
check, or (in the case of payments of at least $100,000) by wire
transfer to a U.S. Dollar bank account maintained by the
Registered Holder in the United States (at such holder's election
and upon proper notice being given to the Company and the Warrant
Agent) prior to the close of business on the Alternative Funding
Date (or, in the case of payments made by wire transfer, prior to
the close of business on the Business Day next succeeding the
Alternative Funding Date) against receipt by the Warrant Agent at
the Warrant Agent's Window, of such Registered Holder's Warrant
Certificates. Such payment shall be in the amount equal to the
aggregate Cash Settlement Value or Alternative Settlement Amount,
as the case may be, of the Warrants evidenced by such Warrant
Certificates.
If the Company determines that an event described in
clause (i) of the definition of Exercise Limitation Event below
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has occurred and is continuing on the Expiration Date (an
"Extension Event") then the term of any outstanding Warrants
shall be automatically extended for a period of 30 days (the
thirtieth day following the Expiration Date being the "Extended
Expiration Date"), provided, however, that if the Cash Settlement
Value or the Intrinsic Value used in calculating the Alternative
Settlement Amount, as the case may be, of such Warrants would
have been zero if the Warrants had been exercised such that the
Valuation Date for such exercise was the Measurement Date (as
defined below), then the term of the Warrants shall not be
extended, the Warrants shall be deemed to be worthless and the
Company shall not be required to make any payments in respect
thereof. Any such automatic extension shall be deemed to have
been revoked and the Warrants shall expire on the earlier of (i)
the next Business Day on which there is no Extension Event (the
"Early Extended Expiration Date") and (ii) any Delisting Date
occurring after the Expiration Date. The Company will give the
Warrant Agent prompt notice by telephone or facsimile
transmission and will give prompt notice to the Warrantholders by
publication in a United States newspaper with a national
circulation (currently expected to be The Wall Street Journal) of
the occurrence of an Extension Event, any Extended Expiration
Date, any Early Extended Expiration Date and any Delisting Date
referred to in clause (ii) above, but in no event will such
notice to the Warrant Agent be given later than 9:30 A.M., New
York City time, the Business Day following the Expiration Date,
on the Extended Expiration Date, Early Extended Expiration Date
or Delisting Date, as applicable.
Any Warrants that expire on an Early Extended
Expiration Date, as described in clause (i) of the preceding
paragraph, will be deemed to be exercised on such Early Extended
Expiration Date (even if such Warrants would not otherwise be
exercisable on such date because of the Limit Option) on the
basis that the Valuation Date for such exercise shall be such
Early Extended Expiration Date and the holder of each such
Warrant will receive an Alternative Settlement Amount, whether or
not an Extraordinary Event or an 9:30 A.M., Exercise Limitation
Event is continuing on such Early Extended Expiration Date. Any
Warrants that expire on a Delisting Date occurring on or after
the Expiration Date and prior to the Extended Expiration Date, as
described in clause (ii) of the preceding paragraph, shall be
deemed to be worthless and the Company shall not be required to
make any payments in respect thereof.
If the term of the Warrants has been extended pursuant
to the second preceding paragraph but the Company determines that
an Extension Event is continuing when the Warrants expire on the
Extended Expiration Date, the Warrants shall be deemed to be
worthless and the Company shall not be required to make any
payments in respect thereof. The Company shall give prompt
notice of any such determination to the Warrant Agent by
telephone or facsimile transmission and to the Warrantholders by
publication in a United States newspaper with a national
circulation (currently expected to be The Wall Street Journal).
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"Measurement Date" means the Business Day occurring
most recently prior to the Expiration Date on which none of the
events described in clause (i) of the definition of Exercise
Limitation Event below had occurred or was continuing.
The "Alternative Settlement Amount" is the amount
calculated using the formula set forth below:
Alternative Settlement Amount = Intrinsic Value +
(T/2 x A/B)
where
Intrinsic the Cash Settlement Value of the
Value = Warrants determined as described above, but
calculated with a Spot Portfolio Value
determined by the Determination Agent which,
subject to approval by the Company (such
approval not to be unreasonably withheld), in
the reasonable opinion of the Determination
Agent, fairly reflects the value of the
Portfolio Securities on the Cancellation
Date, Expiration Date, Delisting Date or
Early Extended Expiration Date, whichever has
given rise to the payment of the Alternative
Settlement Amount;
T = U.S. $5.25, the maximum initial offering
price per Warrant;
A = the total number of days from but excluding
the Cancellation Date or Delisting Date,
whichever has given rise to the payment of
the Alternative Settlement Amount for such
Warrants, to and including the Expiration
Date; and
B = the total number of days from, but excluding
the date on which sales of the Warrants were
initially confirmed, to and including the
Expiration Date.
Where an Expiration Date or an Early Extended
Expiration Date has given rise to the payment of the Alternative
Settlement Amount, such Alternative Settlement Amount shall equal
the Intrinsic Value.
For the purposes of determining "Intrinsic Value" in
the above formula, in the event that the Determination Agent and
the Company are required, but have not, after good faith
consultation with each other and within five days following the
first day upon which such Alternative Settlement Amount may be
calculated in accordance with the above formula, agreed upon a
Spot Portfolio Value which fairly reflects the value of the
Portfolio Securities on the Cancellation Date, Expiration Date,
Delisting Date or Early Extended Expiration Date, whichever gives
rise to the payment of the Alternative Settlement Amount, then
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the Determination Agent shall promptly nominate a third party,
subject to approval by the Company (such approval not to be
unreasonably withheld), to determine such figure and calculate
the Alternative Settlement Amount in accordance with the above
formula. Such party shall act as an independent expert and not
as an agent of the Company or the Determination Agent, and its
calculation and determination of the Alternative Settlement
Amount shall, absent manifest error, be final and binding on the
Company, the Warrant Agent, the Determination Agent and the
Warrantholders. Any such calculations will be made available to
a Warrantholder for inspection at the Warrant Agent's Office.
Neither the Company nor such third party shall have any respon-
sibility for good faith errors or omissions in calculating the
Alternative Settlement Amount.
An "Extraordinary Event" means any of the following
events:
(i) a suspension, material limitation or absence of
trading of all of the Portfolio Securities;
(ii) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of
any court of any jurisdiction, any administrative agency or
any other governmental authority that would make it unlawful
for the Company to perform any of its obligations under the
Warrant Agreement or the Warrants or that has had or is
reasonably expected to have a material adverse effect on the
ability of (A) the Company to perform its obligations under
the Warrants or to hedge or modify the hedge of its position
with respect to the Portfolio; or (B) any affiliate of the
Company to hedge or modify the hedge of its position with
respect to any hedging transaction entered into with the
Company in connection with the Company's obligations under
the Warrants; or
(iii)any outbreak or escalation of hostilities or other
national or international calamity or crisis (including,
without limitation, natural calamities that in the opinion
of the Company may materially and adversely affect the
economy of the United States or the trading of securities
generally on the AMEX, NYSE or NASDAQ, or any other
securities exchange) that has had or is reasonably expected
to have a material adverse effect on the ability of (A) the
Company to perform its obligations under the Warrants or to
modify the hedge of its position with respect to the
Portfolio or (B) any affiliate of the Company to hedge or
modify the hedge of its position with respect to any hedging
transaction entered into with the Company in connection with
the Company's obligations under the Warrants.
For the purposes of determining whether an Extra-
ordinary Event has occurred: (1) a limitation on the hours or
number of days of trading will not constitute an Extraordinary
Event if it results from an announced change in the regular
business hours of the AMEX, NYSE, NASDAQ or other securities
exchange on which a Portfolio Security is traded, as the case may
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be, and (2) an "absence of trading" on the AMEX, NYSE, NASDAQ or
other securities exchange on which a Portfolio security is
traded, as the case may be, will not include any time when the
AMEX, NYSE, NASDAQ or such other securities exchange is closed
for trading under ordinary circumstances.
"Exercise Limitation Event" means either of the follow-
ing events:
(i) a suspension, material limitation or absence of
trading on the AMEX, NYSE, NASDAQ or other securities
exchange on which a Portfolio security is traded of 20% or
more in number of the Portfolio Securities; or
(ii)the suspension or material limitation on the AMEX
or any other major futures, options or securities market of
trading in futures or options contracts related to the
Portfolio.
For the purposes of determining whether an Exercise
Limitation Event has occurred: (1) a limitation on the hours or
number of days of trading will not constitute an Exercise
Limitation Event if it results from an announced change in the
regular business hours of the relevant exchange, (2) a decision
to permanently discontinue trading in the relevant futures or
options contract will not constitute an Exercise Limitation
Event, (3) a suspension of trading in a Portfolio Security or in
a futures or options contract referred to in clauses (i) and (ii)
above, by reason of (x) a price change violating limits set by
the AMEX or other futures or securities market on which futures
or options contracts related to the Portfolio are traded or such
other futures or securities market or (y) an imbalance of orders
relating to a Portfolio Security or such contracts will
constitute a suspension or material limitation of trading, (4) an
"absence of trading" on the AMEX, NYSE or NASDAQ or other
securities exchange will not include any time when the AMEX, NYSE
or NASDAQ or other securities exchange is closed for trading
under ordinary circumstances and (5) the occurrence of an
Extraordinary Event described in clause (i) of the definition of
Extraordinary Event will not constitute, and will supersede the
occurrence of, an Exercise Limitation Event.
All exercises of Warrants (other than on automatic
exercise or following an Extension Event) are subject, at the
Company's option, to the limitation that not more than 750,000
Warrants in total may be exercised on any Exercise Date and not
more than 250,000 Warrants may be exercised by or on behalf of
any beneficial owner, either individually or in concert with any
other beneficial owner, on any Exercise Date. If any Business
Day would otherwise, under the terms hereof, be the Exercise Date
in respect of more than 750,000 Warrants, then at the Company's
election (by giving notice thereof to the Warrant Agent not later
than by 11:00 A.M., New York City time on the Business Day
immediately following such Exercise Date), 750,000 of such
Warrants shall be deemed exercised on such Exercise Date
(selected by the Warrant Agent on a pro rata basis, but if, as a
result of such pro rata selection, any Registered Holders of
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Warrants would be deemed to have exercised less than 500
Warrants, then the Warrant Agent shall first select an additional
amount of such holders' Warrants so that no holder shall be
deemed to have exercised less than 500 Warrants), and the
remainder of such Warrants (the "Remaining Warrants") shall be
deemed exercised on the following Business Day (notwithstanding
the minimum exercise requirement and subject to successive
applications of this paragraph); provided that any Remaining
Warrants for which an Exercise Notice was delivered on a given
Exercise Date shall be deemed exercised before any other Warrants
for which an Exercise Notice was delivered on a later Exercise
Date. If any beneficial owner of Warrants attempts to exercise
more than 250,000 Warrants on any Business Day individually or in
concert, then at the Company's election (as notified to the
Warrant Agent by giving notice thereof to the Warrant Agent not
later than 11:00 A.M., New York City time, on the Business Day
following such Business Day), 250,000 of such Warrants shall be
deemed exercised on such Business Day and the remainder shall be
deemed exercised on the following Business Day (notwithstanding
the minimum exercise requirements and subject to successive
applications of this paragraph). The date on which any Warrant
is deemed exercised under the preceding two sentences shall for
all purposes of this Warrant Certificate be deemed to be the
"Exercise Date" in respect of such Warrants.
Prior to due presentment for registration of transfer,
the Company, the Warrant Agent, and any agent of the Company or
the Warrant Agent, may deem and treat the registered owner hereof
as the absolute owner of the Warrants evidenced hereby (notwith-
standing any notation of ownership or other writing hereon) for
any purpose whatsoever, and as the person entitled to exercise
the rights represented by the Warrants evidenced hereby, and
neither the Company nor the Warrant Agent, nor any agent of the
Company or the Warrant Agent, shall be affected by any notice to
the contrary.
The Warrant Agent will, in accordance with the Warrant
Agreement, from time to time register the transfer of this
Warrant Certificate upon surrender hereof at the Warrant Agent's
Window, Attention: Transfer Department, accompanied by a written
instrument or instruments of transfer in form satisfactory to the
Warrant Agent and the Company duly executed by the Registered
Holder(s) hereof, a duly appointed legal representative thereof
or by its duly authorized attorney. Such signature shall be
guaranteed by a bank or trust company having a correspondent
office in The City of New York or by a broker or dealer which is
a member of the National Association of Securities Dealers, Inc.
(the "NASD") or by a member of a national securities exchange. A
new Warrant Certificate shall be issued to the transferee(s) upon
any such registration of transfer, and this Warrant Certificate
shall be cancelled by the Warrant Agent.
Commencing on the one hundred eightieth calendar day
following February 23, 1996 each Warrantholder will have the
option (the "Conversion Option") to convert the form in which
such Warrantholder holds his Warrants from definitive to book-
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entry form. The Conversion Option will be available for 45
calendar days (the "Conversion Option Period").
In order to be exchanged for a Warrant in book-entry
form, a Warrant Certificate must be delivered to the Depository
Trust Company (the "Depository"), in proper form for deposit, by
a Participant. Accordingly, a Warrantholder who is not a
Participant (other than a Warrantholder holding Warrants through
CEDEL or Euroclear) must deliver his Warrant Certificate, in
proper form for deposit, to a Participant, either directly or
through an indirect participant (such as a bank, brokerage firm,
dealer or trust company that clears through, or maintains a
custodial relationship with, a Participant) or brokerage firm
which maintains an account with a Participant, in order to have
its Warrant Certificate exchanged for a Warrant in book-entry
form.
Warrant Certificates received by the Depository for
exchange during the Conversion Option Period will be exchanged
for Warrants in book-entry form by the close of business on the
Business Day that such Certificates are received by the
Depository (if received by the Depository by its then applicable
cut-off time for same day credit) or on the following Business
Day (if received by the Depository by its then applicable cut-off
time for next day credit). Warrants surrendered at any time for
exchange for book-entry Warrants may not be exercised or
delivered for settlement or transfer until such exchange has been
effected. Once a Warrantholder has elected the Conversion
Option, such Warrantholder may hold his Warrants only in book-
entry form and will not be able to change his election or
withdraw from the book-entry system during the Conversion Option
Period or thereafter.
Except for Warrants subject to automatic exercise,
Warrants with respect to which payments of any Alternative
Settlement Amount are made and Warrants deemed worthless
following an Extension Event, each Warrantholder, in connection
with any exercise of Warrants (including a postponed exercise
following an Extraordinary Event or an Exercise Limitation
Event), shall have the option (the "Limit Option") to specify in
the related Exercise Notice that such Warrants are not to be
exercised if the Spot Portfolio Value that would otherwise be
used to determine the Cash Settlement Value of such Warrants is
three or more points lower than the Limit Option Reference Index.
A Warrantholder's election of the Limit Option must be specified
in the applicable Exercise Notice delivered to the Warrant Agent.
The Limit Option Reference Index will be the Spot Portfolio Value
on the relevant Exercise Date. If an Exercise Notice and the
related Warrants are received after 3:00 P.M., New York City
time, on a given day, the applicable Limit Option Reference Index
will be determined as of the next day that is also a Business
Day.
Following receipt of an Exercise Notice and the related
Warrants subject to the Limit Option, the Warrant Agent shall
obtain from the Determination Agent the applicable Limit Option
Reference Index and will determine whether such Warrants will not
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be exercised because of the Limit Option. Warrants that are not
exercised will be treated as not having been tendered for
exercise and the Warrant Certificate evidencing such Warrants
will be returned to the Registered Holder by first class mail at
the Company's expense. To exercise such Warrants, a Warrant-
holder will be required to cause an Exercise Notice and the
related Warrants to be submitted again to the Warrant Agent. In
the case of a postponed Valuation Date, the Limit Option will
continue to apply once elected by a Warrantholder in connection
with an exercise of Warrants on the basis of the Limit Option
Reference Index as initially determined for such Warrants, except
when such Valuation Date is postponed until the Expiration Date,
any Delisting Date or the Cancellation Date or following an
Extension Event. Such Warrants will either (i) be exercised on a
delayed basis if the applicable Spot Portfolio Value on the
postponed Valuation Date is not three or more points less than
the Limit Option Reference Index or (ii) be excluded from being
exercised if, on any applicable postponed Valuation Date, the
applicable Spot Portfolio Value is three or more points less than
the Limit Option Reference Index. In connection with any exer-
cise of 1,000 or more Warrants, a Warrantholder may elect to
subject the exercise of only a portion of such Warrants to the
Limit Option; provided that the number of Warrants subject to the
Limit Option and the number of Warrants not subject to the Limit
Option shall in each case not be less than 500.
As provided in the Warrant Agreement and subject to
certain limitations, this Warrant Certificate may be exchanged
for other Warrant Certificates, representing a like number of
Warrants, upon surrender to the Warrant Agent at the Warrant
Agent's Window, Attention: Transfer Department, of this Warrant
Certificate. The Company will thereupon execute, and the Warrant
Agent will countersign and deliver, one or more new Warrant
Certificates representing such like number of Warrants. Upon
surrender of this Warrant Certificate for exchange, the Warrant
Agent shall cancel this Warrant Certificate.
No service charge will be made for any registration of
transfer or exchange of this Warrant Certificate, but the Company
may require the payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in relation thereto,
other than exchanges not involving any transfer.
Capitalized terms included herein but not defined
herein have the meanings assigned thereto in the Warrant
Agreement.
As used herein, "Business Day" means any day other than
a Saturday, Sunday or a day on which either the American Stock
Exchange, Inc. is not open for securities trading or commercial
banks in New York City are required or authorized by law or
executive order to remain closed. References in this Certificate
to "U.S. Dollar", "U.S.$" or "$" are to the lawful currency of
the United States of America.
The Warrant Agreement and the terms of the Warrants are
subject to amendment, as provided in the Warrant Agreement.
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This Warrant Certificate shall be governed by, and
interpreted in accordance with, the laws of the State of New
York.
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Exercise Notice
Chemical Bank/Geoserve
Corporate Trust Securities Window
55 Water Street, Room 234
North Building
New York, New York 10041
Attention: Tender Department
1. This Notice DOES / DOES NOT relate to
"Contingently Tendered Warrants" subject to a Limit Option, as
provided for in the Warrant Agreement. If this Exercise Notice
relates to any Contingently Tendered Warrants, ______ of such
Warrants are Contingently Tendered Warrants and ______ are not.
If the Spot Portfolio Value used to determine the Cash Settlement
Value of Contingently Tendered Warrants is less than the Limit
Option Reference Index by three points or more, an Exercise
Notice with respect to such Contingently Tendered Warrants shall
be void and of no effect (and shall be disregarded for all
purposes of the Warrant Agreement).
2. Subject to paragraph 1, the undersigned (the
"Owner") hereby irrevocably exercises Warrants (the "Exercised
Warrants") and delivers to you herewith a Warrant Certificate or
Certificates, registered in the Owner's name, representing a
number of Warrants at least equal to the number of Exercised
Warrants. Each Owner of Warrants that is exercising Warrants
pursuant to this Exercise Notice is exercising no fewer than 500
Warrants and no Owner is acting in concert with any other Owner
in relation to the exercise of the Exercised Warrants.
3. Each Owner of Warrants that is exercising Warrants
pursuant to this Exercise Notice is exercising no more than
250,000 Warrants on the date of this Exercise Notice individually
or in concert.
4. Each Owner that is exercising Warrants pursuant to
this Exercise Notice certifies that the number of Contingently
Tendered Warrants and the number of Warrants not subject to the
Limit Option shall in each case be not less than 500; provided
that, such Owner has not combined Definitive Warrants and Book-
entry Warrants or Book-entry Warrants held through more than one
Participant to meet such requirement.
5. The Owner hereby directs the Warrant Agent (a) to
pay the Cash Settlement Value, if any, with respect to the
Exercised Warrants:
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By cashier's check or an official bank check:
or
By wire transfer to the following U.S. dollar bank
account in the United States:
(Minimum payments of $100,000 only)
Bank: _________________________________
ABA Routing No.: ______________________
Account No.: ______________ Reference: ________
and (b) if the number of Exercised Warrants is less than the
number of Warrants represented by the enclosed Warrant
Certificate, to deliver a Warrant Certificate representing the
unexercised Warrants to
Dated: , 19
___________________________
(Owner)
by _______________________
Authorized Signature
Address:
Telephone ( )
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EXHIBIT A-1
FORM OF GLOBAL WARRANT CERTIFICATE
No. _____-1
CUSIP No. 073902 32 2
Unless this Global Warrant Certificate is presented by
an authorized representative of The Depository Trust Company
(55 Water Street, New York, New York) to the Company or its agent
for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of
The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.
THE BEAR STEARNS COMPANIES INC.
Global Warrant Certificate Representing
Vantage Point Portfolio Call Warrants
Expiring August __, 1997
This certifies that CEDE & CO., or registered assigns,
is the Registered Holder of the number of Vantage Point Portfolio
Call Warrants Expiring August 20, 1997 (the "Warrants") set forth
from time to time on Schedule A hereto. Each Warrant entitles
the beneficial owner thereof (each a "Warrantholder") to receive,
subject to the conditions set forth herein and in the Warrant
Agreement referred to below, from The Bear Stearns Companies Inc.
(the "Company") the Cash Settlement Value of such Warrant, except
that, under the circumstances described below, such Warrantholder
may instead receive the Alternative Settlement Amount for such
Warrant or, in certain circumstances following an Extension
Event, the Warrants will be deemed to be worthless. The Cash
Settlement Value of an Exercised Warrant will be an amount (the
"Cash Settlement Value") equal to the greater of (i) zero and
(ii) the product (rounded down to the nearest cent) of (A) the
quotient obtained by dividing (i) the amount, if any, by which
the Spot Portfolio Value for the applicable Valuation Date for
such Warrant exceeds the Original Portfolio Value (as defined
herein) by (ii) the Original Portfolio Value and (B) $35. The
Original Portfolio Value has been set at 100. The Cash
Settlement Value is calculated using the following formula:
Cash Settlement Value = the greater of
(i) $0 and (ii) (Spot Portfolio Value - 100)
---------------------------- x $35
100
A Warrant will not require or entitle a Warrantholder
to sell or deliver to the Company any shares of any component
stocks of the Portfolio (the "Portfolio Securities"), or any
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other securities. Upon exercise of a Warrant, the Company will
make only a cash payment in the amount of the Cash Settlement
Value or Alternative Settlement Amount, if any and as applicable,
of such Warrant. The Company is under no obligation to, nor will
it, purchase or take delivery from any Warrantholder of any
shares of any of the Portfolio Securities or any other securities
in connection with the exercise of any Warrants. Warrantholders
will not receive any interest on any Cash Settlement Value, and
the Warrants will not entitle the Warrantholders to any of the
rights of holders of any of the Portfolio Securities or other
securities.
Subject to the terms and conditions set forth herein
and in the Warrant Agreement, each Warrant may be exercised, on
any Business Day during the period from its date of issuance
until 3:00 P.M., New York City time, on the earlier of (i) the
third Business Day immediately preceding the Expiration Date (as
defined below) and (ii) the Business Day immediately preceding
any Delisting Date. Except under certain circumstances following
an Extension Event, any Warrant not exercised (including by
reason of any postponed exercise as described herein and in the
Warrant Agreement) at or before 3:00 P.M., New York City time, on
the earlier of the (i) third Business Day immediately preceding
the Expiration Date and (ii) the Business Day immediately
preceding any Delisting Date, shall be automatically exercised.
The "Expiration Date" shall be August 20, 1997.
This Global Warrant Certificate shall not be valid
unless countersigned by the Warrant Agent.
The Warrants evidenced by this Global Warrant
Certificate are part of a duly authorized issue of Warrants
issued by the Company pursuant to a Warrant Agreement, dated as
of February 23, 1996 (the "Warrant Agreement") among the Company,
Chemical Bank (the "Warrant Agent") and Bear, Stearns & Co. Inc.
(the "Determination Agent"), and is subject to the terms and
provisions contained in the Warrant Agreement, to all of which
terms and provisions the Warrantholders, the entities through
which such Warrantholders hold their beneficial interests in the
Warrants and the Registered Holder of this Global Warrant
Certificate consent by acceptance of this Global Warrant
Certificate by the Depository and which Warrant Agreement is
hereby incorporated by reference in and made a part of this
Global Warrant Certificate. A copy of the Warrant Agreement is
on file at the Warrant Agent's Office.
The Warrants are unsecured contractual obligations of
the Company and rank on a parity with the Company's other
unsecured
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contractual obligations and with the Company's unsecured and
unsubordinated debt.
Subject to the provisions hereof and the Warrant
Agreement, each Warrant represented by this Global Warrant
Certificate (each a "Book-entry Warrant") may be exercised on any
New York Business Day during the period from the Initial
Conversion Date until 3:00 P.M., New York City time, on the
earlier of the Business Day immediately preceding (i) the
Expiration Date and (ii) any Delisting Date, by causing (x) such
Warrant to be transferred free to the Warrant Agent on the
records of the Depository in accordance with the Depository's
Deposit/Withdrawal at Custodian procedures, as provided in the
Representations Letter, and (y) a duly completed and executed
Exercise Notice to be received by the Warrant Agent from a
Participant, in the case of Book-entry Warrants held through the
Depository, or a Centrale de Livraison de Valeris Mobiliees S.A.
("CEDEL") or Euroclear System ("Euroclear") Participant, in the
case of such Warrants held through CEDEL or Euroclear, acting,
directly or indirectly, on behalf of the Warrantholder; provided,
however, that Exercise Notices are subject to rejection by the
Warrant Agent as provided herein and in the Warrant Agreement.
Bear, Stearns & Co. Inc., as Determination Agent, shall
determine the Spot Portfolio Value as provided in the Warrant
Agreement and herein and shall make such calculations as may be
required upon the occurrence of certain circumstances, as
described in the Warrant Agreement and herein. The Determination
Agent shall act as an independent expert and not as an agent of
the Company, and, unless otherwise provided by the Warrant
Agreement, its calculations and determinations under the Warrant
Agreement and this Global Warrant Certificate shall, absent
manifest error, be final and binding on the Company, the Warrant
Agent and the Warrantholders. Any such calculations will be made
available to a Warrantholder for inspection at the Warrant
Agent's Office. The Determination Agent will have no
responsibility for good faith errors or omissions in calculating
or disseminating information regarding the Spot Portfolio Value,
the Cash Settlement Value or the Alternative Settlement Amount,
as applicable.
The "Spot Portfolio Value" will be determined by the
Determination Agent, and will equal the sum of the products of
the Market Price (as defined herein) of each Portfolio Security
(as defined herein) and the then applicable Multiplier (as
defined herein) for that Portfolio Security. The applicable
multiplier (the "Multiplier") for each Portfolio Security is as
specified under the caption "Description of Warrants -- Portfolio
Securities" in the Company's Prospectus Supplement dated February
20, 1996 relating to the Warrants (the "Prospectus Supplement")
and indicates the number of shares (or fraction of one share) of
that Portfolio Security included in the calculation of the Spot
Portfolio Value. The "Portfolio Securities" are the common
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stocks or American Depository Receipts ("ADRs") of the 43
corporations which are listed under the caption "Description of
Warrants -- Portfolio Securities" in the Prospectus Supplement.
Each Multiplier will remain constant for the term of the Warrants
unless adjusted for certain corporate events described herein.
If a Market Disruption Event (as defined herein) occurs or is
continuing with respect to a Portfolio Security on a Valuation
Date, then the calculation of the Market Price of that Portfolio
Security will be based on the Business Day immediately preceding
that Valuation Date that does not have a Market Disruption Event
with respect to that Portfolio Security.
"Market Price," which will be determined by the
Determination Agent based on information reasonably available to
it, means: (i) for a Valuation Date on or prior to the third
Business Day immediately preceding the Expiration Date the
following:
A. If the Portfolio Security is listed on a national
securities exchange or is a NASDAQ security, Market Price
means the last reported sale price of that Portfolio
Security on the Valuation Date (or the preceding Business
Day if that Portfolio Security is not traded on the
Valuation Date) on the principal national securities
exchange on which such Portfolio Security is listed or
admitted to trading or on NASDAQ, as the case may be.
B. If the Portfolio Security is not listed on a
national securities exchange and is not a NASDAQ security,
Market Price means the last reported bid price of that
Portfolio Security in the over-the-counter market on the
Valuation Date.
and (ii) for any Valuation Date after the third Business Day
immediately preceding the Expiration Date, the following:
A. If the Portfolio Security is listed on a national
securities exchange or is a NASDAQ security, Market Price
means the opening reported sale price of that Portfolio
Security on the Valuation Date (or the preceding Business
Day if that Portfolio Security is not traded on the
Valuation Date) on the principal national securities
exchange on which such Portfolio Security is listed or
admitted to trading or on NASDAQ, as the case may be.
B. If the Portfolio Security is not listed on a
national securities exchange and is not a NASDAQ security,
Market Price means the first reported bid price of that
Portfolio Security in the over-the-counter market on the
Valuation Date.
"Market Disruption Event" with respect to a Portfolio
Security means any of the following events, in each case as
determined by the Determination Agent:
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(i) the suspension of or material limitation in
trading in that Portfolio Security for more than two hours
of trading or during the one-half hour period immediately
preceding the time that Portfolio Security is to be priced
(for purposes of this definition, limitations pursuant to
New York Stock Exchange ("NYSE") Rule 80A (or any applicable
rule or regulation enacted or promulgated by the NYSE, any
other self regulatory organization ("SRO") or the Securities
and Exchange Commission that is deemed of similar scope by
the Determination Agent) on trading during significant
market fluctuations shall be considered "material"),
(ii) the suspension of or material limitation (whether
by reason of movements in price that exceed levels permitted
by the relevant exchange or otherwise) in trading in option
contracts related to a Portfolio Security traded on any
exchange for more than two hours of trading or during the
one-half hour period immediately preceding the time that
Portfolio Security is to be priced,
(iii) a banking moratorium has been declared by federal
or any state authorities.
For purposes of this definition, a limitation on the hours
in a trading day and/or number of days of trading will not
constitute a Market Disruption Event if it results from an
announced change in the regular business hours of the relevant
exchange.
The Multiplier with respect to any Portfolio Security
and the Portfolio will be adjusted by the Determination Agent
(and, with respect to the events described in paragraphs 4, 5 and
7 below, with the consent of the AMEX) as follows:
1. If a Portfolio Security is subject to a stock
split or reverse stock split (or similar adjustment in the
case of ADRs) then, once the split has become effective, the
Multiplier relating to that Portfolio Security will be
adjusted to equal the product of (i) the number of shares of
the Portfolio Security outstanding after the split has
become effective with respect to each share of such
Portfolio Security outstanding immediately prior to the
effectiveness of such split (or the number of receipts
outstanding with respect to each ADR if a Portfolio Security
is an ADR) and (ii) the prior Multiplier.
2. If a Portfolio Security is subject to a stock
dividend or stock distribution (other than a stock dividend
elected by a holder of that Portfolio Security in lieu of an
ordinary cash dividend) that is given equally to all holders
of that Portfolio Security, then, once that Portfolio
Security is trading ex-dividend, the Multiplier will be
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adjusted so that the new Multiplier shall equal the former
Multiplier plus the product of (i) the number of shares of
that Portfolio Security issued with respect to one such
share of that Portfolio Security and (ii) the prior
Multiplier.
3. If the issuer of a Portfolio Security is being
liquidated or dissolved or is subject to a proceeding under
any applicable bankruptcy, insolvency or similar law, that
Portfolio Security will continue to be included in the
Portfolio so long as a Market Price for that Portfolio
Security is available. Subject to paragraph 6 below, if a
Market Price is no longer available for a Portfolio Security
for whatever reason, including the liquidation or
dissolution of the issuer of that Portfolio Security or the
subjection of the issuer to a proceeding under any
applicable bankruptcy, insolvency or similar law, then, for
so long as a Market Price is unavailable for that Portfolio
Security, the value of that Portfolio Security will be
deemed to be zero for the purposes of calculating the Spot
Portfolio Value, and no attempt will be made to find a
replacement Portfolio Security or increase the value of the
Portfolio to compensate for the deletion of such Portfolio
Security.
4. If all the Portfolio Securities of any class or
series of an issuer are converted into or exchanged for the
same or a different number of shares of any class or classes
of equity security of that issuer other than such Portfolio
Security, whether by capital reorganization,
recapitalization, reclassification or otherwise, then, once
that conversion or exchange has become effective, the former
Portfolio Security will be removed from the Portfolio and
the new equity securities will be added to the Portfolio as
new Portfolio Securities. The Multiplier relating to each
such new Portfolio Security will equal the product of
(i) the last value of the Multiplier with respect to the
former Portfolio Security and (ii) the number of shares of
the new Portfolio Security issued with respect to one share
of the former Portfolio Security.
5. If the issuer of a Portfolio Security distributes
to all of its shareholders equity securities of any other
issuer, then such new equity securities will be added to the
Portfolio as a new Portfolio Security. The Multiplier for
the new Portfolio Security will equal the product of (i) the
last value of the Multiplier relating to the Portfolio
Security in respect of which the new Portfolio Security is
being distributed and (ii) the number of shares of the new
Portfolio Security distributed with respect to one share of
the former Portfolio Security.
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6. If a Portfolio Security is subject to an
extraordinary dividend or an extraordinary distribution
(including upon liquidation or dissolution) of cash or other
property of any kind (other than any such dividend or
distribution otherwise addressed in the preceding
paragraphs) that is received equally by all holders of that
Portfolio Security, then the Determination Agent shall
determine the fair market value, if any, of the cash or
other property received in respect of each share of that
Portfolio Security and the Portfolio shall thereafter be
deemed to include an amount equal to the product of the
Multiplier relating to that Portfolio Security on that date
and the fair market value as so determined.
7. If the issuer of a Portfolio Security (or, if a
Portfolio Security is an ADR, the Foreign Issuer of such
Underlying Shares) has been subject to a merger or
consolidation (a "Consolidation Event") and is not the
surviving entity and holders of that Portfolio Security are
entitled to receive cash or securities in exchange for that
Portfolio Security, then a value for that Portfolio Security
will be determined (i) in the case of cash, at the time of
receipt by those holders and will equal the amount of such
cash, and (ii) in the case of securities, on the first
Business Day on which those securities are traded regular
way, and will equal the Market Price of those securities
(the values in each of (i) and (ii), and the values defined
in paragraphs 8 and 9 below, each being a "Cash Component");
provided, that if those securities do not have a Market
Price, the Cash Component shall be the fair market value of
those securities, as determined by the Determination Agent.
The Cash Component, as adjusted for the accrual of interest
described below, will be constant for the remaining term of
the Warrants. No adjustment will be made to the Multiplier
relating to the Portfolio Security.
8. If a Portfolio Security that is an ADR is no
longer listed or admitted for trading on any of the AMEX,
NYSE, or NASDAQ (an "ADR Termination Event"), then a value
for that Portfolio Security will be determined based upon
the last reported trading price of such ADR on the last
trading day immediately prior to its ceasing to be listed or
admitted for trading on the AMEX, NYSE, or NASDAQ, as the
case may be, (such value being a "Cash Component"). The
Cash Component, as adjusted for the accrual of interest
described below, will be constant for the remaining term of
the Warrants. No adjustment will be made to the Multiplier
relating to the Portfolio Security.
9. If the average daily trading volume of a Portfolio
Security during any six months is less than 20,000 shares
per trading day (a "Liquidity Event"), then such Portfolio
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Security will no longer be included in the Portfolio and a
value for that Portfolio Security will be determined based
upon the last reported trading price for such Portfolio
Security on the last trading day immediately prior to the
occurrence of the Liquidity Event (such value being a "Cash
Component"). The Cash Component, as adjusted for the
accrual of interest described below, will be constant for
the remaining term of the Warrants. No adjustment will be
made to the Multiplier relating to the Portfolio Security.
The applicable Cash Component in the event of a
Consolidation Event, ADR Termination Event or Liquidity Event, as
the case may be, will accrue interest at a rate equal to the
London Inter-Bank Offered Rate ("LIBOR"), with a term equal to
the period of time from the applicable Interest Commencement Date
(as defined herein) to the Expiration Date (the "Specified
Maturity"), determined and fixed on the first London Business Day
(the "LIBOR Determination Date") that is immediately following
the date of determination of such Cash Component. Interest will
accrue on such Cash Component commencing (i) in the case of cash
or in the event of an ADR Termination Event or a Liquidity Event,
on the second London Business Day following such LIBOR
Determination Date and (ii) in the case of securities, on the
third London Business Day following such LIBOR Determination Date
(in each of (i) and (ii), the "Interest Commencement Date") up to
and including the Specified Maturity.
LIBOR will be determined by the Determination Agent in
accordance with the following provisions:
(i) On the relevant LIBOR Determination Date, LIBOR
will be determined through the application of linear
interpolation by reference to the offered rates for deposits
of not less than $1,000,000 having a maturity immediately
before and immediately after the Specified Maturity,
commencing on the Interest Commencement Date, which appear
either (a) if the Specified Maturity is one year or less
from the relevant LIBOR Determination Date, on the display
designated as Page 3750 on the Dow Jones Tolerate Service
(or such other page as may replace Page 3750 on that service
for the purpose of displaying London Interbank offered rates
of major banks) ("Tolerate Page 3750"), or (b) if the
Specified Maturity is more than one year from the relevant
LIBOR Determination Date, on each of Tolerate Page 3750 and
on the display designated as page "SWAP" on the Reuters
Monitor Money Rates Service (or such other page as may
replace the SWAP page on that service for the purpose of
displaying London Interbank offered rates of major banks)
("Reuters-SWAP"), in each case as of 11:00 A.M., London
time; provided that if there is an offered rate for the
Specified Maturity, then LIBOR will be such offered rate.
If such offered rates do not appear, LIBOR with respect to
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such LIBOR Determination Date will be determined as
described in (ii) below.
(ii) With respect to a LIBOR Determination Date on
which no such offered rates appear on Tolerate Page 3750 or
Reuters SWAP as described in (i) above, LIBOR will be
determined on the basis of the rates at approximately
11:00 A.M., London time, on such LIBOR Determination Date,
at which deposits in U.S. dollars having the Specified
Maturity are offered to prime banks in the London Interbank
market by four major banks in the London Interbank market
selected by the Determination Agent commencing on the
Interest Commencement Date and in a principal amount equal
to an amount not less than $1,000,000 that in the
Determination Agent's judgment is representative for a
single transaction in such market at such time (a
"Representative Amount"). The Determination Agent will
request the principal London office of each of such banks to
provide a quotation of its rate. If at least two such
quotations are provided, LIBOR with respect to such LIBOR
Determination Date will be calculated by reference to the
arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR with respect to such LIBOR
Determination Date will be calculated by reference to the
arithmetic mean of the rates quoted at approximately 11:00
A.M., New York City time, on such LIBOR Determination Date
by three major banks in New York City, selected by the
Determination Agent, for loans in U.S. dollars to leading
European banks having the Specified Maturity commencing on
the Interest Commencement Date and in a Representative
Amount; provided, however, that if fewer than three banks
selected as aforesaid by the Determination Agent are quoting
as mentioned in this sentence, LIBOR with respect to such
Cash Component will be the LIBOR as last in effect.
"London Business Day" means any day on which dealings
in U.S. dollars are transacted in the London interbank
market.
The value as of any given day of any Portfolio Security
converted into a Cash Component will equal the sum of the Cash
Component and all interest accrued thereon through that day. The
interest that has accrued on any given day will be reflected only
in the Spot Portfolio Value quoted by the AMEX at the end of that
day and not in the values disseminated at interim periods during
the day. Interest will be compounded daily.
No adjustments of any Multiplier of a Portfolio
Security will be required unless that adjustment would require a
change of at least 1% in the Multiplier in effect. The
Multiplier resulting from any of the adjustments specified above
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will be rounded to the nearest one thousandth with five ten-
thousandths being rounded upward.
Except with respect to certain adjustments to the
Portfolio described in paragraphs 4, 5 and 7 above, which shall
be made with the consent of AMEX, all determinations made by the
Determination Agent shall be at the sole discretion of the
Determination Agent and, in the absence of manifest error, shall
be conclusive for all purposes and binding on the Company and the
holders of the Warrants, and the Determination Agent shall have
no liability therefor.
Subject to the Warrant Agreement and this Global
Warrant Certificate, the "Valuation Date" for a Warrant shall be
the first Business Day following the applicable Exercise Date
(subject to postponement upon the occurrence of an Extraordinary
Event or Exercise Limitation Event or as a result of the exercise
of a number of Warrants exceeding the limits on exercise set
forth herein).
Except for Warrants subject to automatic exercise, or
Warrants subject to the Limit Option and except following an
Extension Event, the "Exercise Date" for a Warrant will be (A) in
the case of Warrants other than those held through the facilities
of CEDEL or Euroclear (i) the Business Day on which the Warrant
Agent receives at the Warrant Agent's Window, Attention: Tender
Department, the Warrant (or transfer of such Warrant through the
Depository in the case of Book-entry Warrants) and Exercise
Notice (by facsimile transmission in accordance with the Warrant
Agreement in the case of Exercise Notices for Book-entry
Warrants) in proper form with respect to such Warrant, if
received at or prior to 3:00 P.M., City time, on such day, or
(ii) if the Warrant Agent receives such Warrant Certificate (or
transfer of such Warrant through the Depository in the case of
Book-entry Warrants) or Exercise Notice after 3:00 P.M., New York
City time, on a Business Day, then the Business Day next
succeeding the Business Day on which such Warrant or Exercise
Notice is received (B) in the case of Warrants held through the
facilities of CEDEL or Euroclear, (i) the Business Day on which
the Warrant Agent receives the Exercise Notice in proper form
with respect to such Warrant if such Exercise Notice is received
at or prior to 3:00 P.M., New York City time, on such day,
provided that the Warrant Certificate (or transfer of such
Warrant through the Depository in the case of Book-entry
Warrants) is received by the Warrant Agent by 3:00 P.M., New York
City time, on the Valuation Date, or (ii) if the Warrant Agent
receives such Exercise Notice after 3:00 P.M., New York City
time, on a Business Day, then the Business Day next succeeding
such Business Day, provided that the Warrant Certificate (or
transfer of such Warrant through the Depository in the case of
Book-entry Warrants) is received by 3:00 P.M., New York City
time, on the Valuation Date relating to exercises of Warrants on
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such succeeding Business Day. In the event that the Warrant
Certificate (or transfer of such Warrant through the Depository
in the case of Book-entry Warrants) is received after 3:00 P.M.,
New York City time, on the Valuation Date, then the Exercise Date
for such Warrant will be the day on which such Warrant
Certificate (or transfer of such Warrant through the Depository
in the case of Book-entry Warrants) is received or, if such day
is not a Business Day, the next succeeding Business Day;
provided, further, however, in the case of exercises by Euroclear
Participants, Euroclear must by facsimile to the Warrant Agent by
9:00 a.m., New York City time, on the Valuation Date confirm that
the Warrants will be received by the Warrant Agent on such date,
provided, that if such facsimile is received after 9:00 a.m., New
York City time, on the Valuation Date, the Company will be
entitled to direct the Warrant Agent to reject the related notice
of exercise or waive the requirement for timely delivery of such
facsimile.
Subject to the provisions of the Warrant Agreement
relating to Extension Events, all Warrants for which the Warrant
Agent has not received a valid Exercise Notice at or prior to
3:00 P.M., New York City time, on (i) the third Business Day
immediately preceding the Expiration Date or (ii) the Business
Day immediately preceding any Delisting Date prior to the
Expiration Date, as the case may be, or for which the Warrant
Agent has received a valid Exercise Notice but with respect to
which timely delivery of the relevant Warrants has not been made,
together with any Warrants the Valuation Date for which has as of
such time been postponed as described below, shall be auto-
matically exercised as of such Expiration Date or Delisting Date,
as the case may be; without any requirement of delivery of an
Exercise Notice to the Warrant Agent. The "Delisting Date" shall
be the last Business Day prior to the effective date on which the
Warrants are delisted from, or permanently suspended from trading
(within the meaning of the Securities Exchange Act of 1934 (the
"Exchange Act") and the rules and regulations of the Securities
and Exchange Commission thereunder) on the AMEX, and not accepted
prior thereto or at the same time for trading pursuant to the
rules of another SRO that are filed with the Securities and
Exchange Commission under the Exchange Act. However, if the
Company first receives notice of the delisting or suspension of
the Warrants on the same day on which such Warrants are delisted
or suspended, such day will be deemed a Delisting Date. The
Exercise Date for such Warrants will be the Expiration Date or
any Delisting Date, as the case may be, or, if such date is not a
Business Day, the next succeeding Business Day. The Warrant
Agent will obtain the Spot Portfolio Value (determined as of the
first Business Day following such date, which will be the
Valuation Date for such Warrants except in the case of a
postponed exercise following the occurrence of an Extraordinary
Event or an Exercise Limitation Event) and will determine the
Cash Settlement Value, if any, of such Warrants.
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No fewer than 500 Warrants may be exercised by or on
behalf of any one Warrantholder at any one time, except that no
such minimum exercise amount shall apply in the case of automatic
exercise on or following the Expiration Date or on any Delisting
Date or in the case of cancellation of the Warrants as a result
of an Extraordinary Event. A Warrantholder shall not combine
Definitive Warrants and Book-entry Warrants or Book-entry
Warrants held through more than one Participant to meet the 500
Warrant minimum exercise requirement. With the exception of the
Limit Option, an Exercise Notice shall be unconditional. Except
as provided in the Warrant Agreement, the Warrant Agent shall be
entitled, with no duty of inquiry, to rely conclusively on any
Exercise Notice received by it and on any representation of the
exercising Warrantholder contained therein.
If the Exercise Notice is not rejected as provided in
the Warrant Agreement, then the Warrant Agent or the Determi-
nation Agent, as the case may be, will determine the Cash
Settlement Value of the exercised Warrants in accordance with the
terms of the Warrant Agreement. Except in the case of Warrants
subject to automatic exercise, Warrants that upon exercise
entitle the holder thereof to receive an Alternative Settlement
Amount in lieu of the Cash Settlement Value and Warrants deemed
worthless following an Extension Event, if on any Valuation Date
the Cash Settlement Value for any Warrants then exercised would
be zero, then in such case, the attempted exercise of such
Warrants shall be void and of no effect and the Warrants will be
transferred by the Warrant Agent back to the Participant that
submitted them free on the records of the Depository and, in
either case such Warrantholder shall be permitted to re-exercise
such Warrants prior to the earlier of (i) the third Business Day
immediately preceding the Expiration Date, and (ii) the Business
Day immediately preceding any Delisting Date, as the case may be.
Except in the case of Warrants subject to automatic
exercise, Warrants that upon exercise entitle the holder thereof
to receive an Alternative Settlement Amount and Warrants deemed
worthless following an Extension Event, if the Company has made
adequate New York Clearing House or next day funds available to
the Warrant Agent in a timely manner which shall in no event be
later than 3:00 P.M., New York City time, on the second New York
Business Day following a Valuation Date (the "Funding Date"), the
Warrant Agent will be responsible for making its payment
available to each appropriate Participant in the form of a
cashier's check or an official bank check, or (in the case of
payments of at least $100,000) by wire transfer to a U.S. Dollar
account maintained by such Participant in the United States (at
the Participant's election as specified in the Exercise Notice)
prior to the close of business, on the first Business Day
immediately succeeding such Funding Date (the "Settlement Date").
Such payment shall be in an amount equal to the aggregate Cash
Settlement Value of such holder's exercised Warrants.
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With respect to automatically exercised Warrants (other
than Warrants subject to postponed exercise following the
occurrence of an Extraordinary Event or an Exercise Limitation
Event), if the Company has made adequate New York Clearing House
or next day funds available to the Warrant Agent in a timely
manner, which shall in no event be later than 3:00 P.M., New York
City time, on the Automatic Funding Date, the Warrant Agent will
be responsible for making funds available to the Depository,
against receipt of the Global Warrant Certificate, prior to the
close of business, on the Automatic Funding Date. Such funds are
to be in an amount equal to the aggregate Cash Settlement Value
of the Warrants subject to such automatic exercise.
Neither the Warrant Agent nor the Determination Agent
will be responsible for any losses resulting from a failure of a
brokerage firm or a Participant to properly exercise Warrants on
behalf of a Warrantholder.
Subject to the provisions of Section 2.03(b)(ii) of the
Warrant Agreement, if the Company determines that an Extra-
ordinary Event or Exercise Limitation Event has occurred and is
continuing on any Business Day that would otherwise be the
Valuation Date with respect to an exercise of Warrants (the
"Applicable Business Day"), then the Cash Settlement Value with
respect to such exercise of Warrants shall be calculated on the
basis that the Valuation Date shall be the next Business Day
following such Applicable Business Day on which there is no
Extraordinary Event or Exercise Limitation Event; provided, that
if the Valuation Date has not occurred on or prior to the
Expiration Date or any Delisting Date, then the Warrantholders
will receive, in lieu of the Cash Settlement Amount, the
Alternative Settlement Amount, which shall be calculated as if
the Warrants had been cancelled on the Expiration Date or such
Delisting Date, as the case may be.
Upon the occurrence of an Extraordinary Event or an
Exercise Limitation Event, the Company shall use its best efforts
to notify the Warrant Agent and the Determination Agent promptly
that an Extraordinary Event or Exercise Limitation Event, as the
case may be, has occurred and shall promptly give notice to the
Warrantholders by publication in a United States newspaper with a
national circulation (currently expected to be The Wall Street
Journal), that an Extraordinary Event or an Exercise Limitation
Event has occurred.
If the Company determines that an Extraordinary Event
or an Exercise Limitation Event has occurred and is continuing on
the Expiration Date or on any earlier Delisting Date, the Company
shall so notify the Warrant Agent and the Determination Agent,
and the Cash Settlement Value with respect to the exercised
Warrants shall be equal to, and be calculated in the same manner
as, an Alternative Settlement Amount, in accordance with the
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<PAGE>
Warrant Agreement (treating the Expiration Date or such Delisting
Date, as the case may be, as the date on which the Warrants were
cancelled).
If the Company determines that an Extraordinary Event
has occurred and is continuing, and if that Extraordinary Event
is expected by the Company, prior to the Expiration Date to
continue, the Company may immediately cancel the Warrants by
notifying the Warrant Agent of such cancellation (the date such
notice is given being the "Cancellation Date"), and each Warrant-
holder's rights with respect to the Warrants and under the
Warrant Agreement shall thereupon cease; provided, that, subject
to an automatic extension of the term of the Warrants or to a
determination that the Warrants are worthless, each Warrant shall
be exercised (even if such Warrant would not otherwise be
exercisable on such date because of the Limit Option) on the
basis that the Valuation Date for such Warrant shall be the
Cancellation Date and each Warrantholder shall have the right to
receive, in lieu of the Cash Settlement Value of such Warrant,
the Alternative Settlement Amount, determined by the
Determination Agent.
An "Extraordinary Event" means any of the following
events:
(i) a suspension, material limitation or absence of
trading of all the Portfolio Securities;
(ii) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of
any court of any jurisdiction, any administrative agency or
any other governmental authority that would make it unlawful
for the Company to perform any of its obligations under the
Warrant Agreement or the Warrants or that has had or is
reasonably expected to have a material adverse effect on the
ability of (A) the Company to perform its obligations under
the Warrants or to hedge or modify the hedge of its position
with respect to the Portfolio; or (B) any affiliate of the
Company to hedge or modify the hedge of its position with
respect to any hedging transaction entered into with the
Company in connection with the Company's obligations under
the Warrants; or
(iii)any outbreak or escalation of hostilities or other
national or international calamity or crises (including,
without limitation, natural calamities that in the opinion
of the Company may materially and adversely affect the
economy of the United States or the trading of securities
generally on the AMEX, NYSE or NASDAQ, or any other
securities exchange) that had or is reasonably expected to
have a material adverse effect on the ability of (A) the
Company to perform its obligations under the Warrants or to
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<PAGE>
modify the hedge of its position with respect to the
Portfolio; or (B) any affiliate of the Company to hedge or
modify the hedge of its position with respect to any hedging
transaction entered into with the Company in connection with
the Company's obligations under the Warrants.
For the purpose of determining whether an Extraordinary
Event has occurred: (1) a limitation on the hours or number of
days of trading will not constitute an Extraordinary Event if it
results from an announced change in the regular business hours of
the AMEX, NYSE, NASDAQ or other securities exchange or which a
Portfolio Security is traded, as the case may be, and (2) an
"absence of trading" on the AMEX, NYSE, NASDAQ or other
securities exchange or which a Portfolio Security is traded, as
the case may be, will not include any time when the AMEX, NYSE,
NASDAQ or such other securities exchange is closed for trading
under ordinary circumstances.
An "Exercise Limitation Event" means either of the
following events:
(i) a suspension, material limitation or absence of
trading on the AMEX, NYSE, NASDAQ or other securities
exchange or which a Portfolio Security is traded of 20% or
more in number of the Portfolio Securities; or
(ii) the suspension or material limitation on the AMEX
or any other major futures, options or securities market of
trading in futures or options contracts related to the
Portfolio.
For the purposes of determining whether an Exercise
Limitation Event has occurred: (1) a limitation on the hours or
number of days of trading will not constitute an Exercise
Limitation Event if it results from an announced change in the
regular business hours of the relevant exchange, (2) a decision
to permanently discontinue trading in the relevant futures or
options contract will not constitute an Exercise Limitation
Event, (3) a suspension of trading in a Portfolio Security or in
a futures or options contract referred to in clauses (i) and (ii)
above, by reason of (x) a price change violating limits set by
the AMEX or other futures or securities market on which futures
or options contracts related to the Portfolio are traded or such
other futures or securities market or (y) an imbalance of orders
relating to a Portfolio Security or such contracts will
constitute a suspension or material limitation of trading, (4) an
"absence of trading" on the AMEX, NYSE, NASDAQ or other
securities exchange or which a Portfolio Security is traded, as
the case may be, will not include any time when the AMEX, NYSE,
NASDAQ or other securities exchange or which a Portfolio Security
is traded, as the case may be, is closed for trading under
ordinary circumstances and (5) the occurrence of an Extraordinary
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<PAGE>
Event described in clause (i) of the definition of Extraordinary
Event will not constitute, and will supersede the occurrence of,
an Exercise Limitation Event.
The "Alternative Settlement Amount" is the amount
calculated using the formula set forth below:
Alternative Settlement Amount = Intrinsic Value +
(T/2 x A/B)
where
Intrinsic Value = the Cash Settlement Value of the Warrants
determined as described above but calculated
with a Spot Portfolio Value determined by the
Determination Agent which, subject to
approval by the Company (such approval not to
be unreasonably withheld), in the reasonable
opinion of the Determination Agent, fairly
reflects the value of the Portfolio
Securities on the Cancellation Date,
Expiration Date, Delisting Date or Early
Extended Expiration Date, whichever has given
rise to the payment of the Alternative
Settlement Amount;
T = U.S. $5.25, the maximum initial offering
price per Warrant;
A = the total number of days from but excluding
the Cancellation Date or Delisting Date,
whichever has given rise to the payment of
the Alternative Settlement Amount for such
Warrants, to and including the Expiration
Date; and
B = the total number of days from, but excluding
the date on which sales of the Warrants were
initially confirmed, to and including the
Expiration Date.
Where an Expiration Date or an Early Extended
Expiration Date has given rise to the payment of the Alternative
Settlement Amount, such Alternative Settlement Amount shall equal
the Intrinsic Value.
For the purposes of determining "Intrinsic Value" in
the above formula, in the event that the Determination Agent and
the Company are required, but have not, after good faith
consultation with each other and within five days following the
first day on which such Alternative Settlement Amount may be
calculated in accordance with the above formula, agreed upon a
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<PAGE>
Spot Portfolio Value which fairly reflects the value of the
Portfolio Securities on the Cancellation Date, Expiration Date,
Delisting Date or Early Extended Expiration Date, whichever gives
rise to the payment of the Alternative Settlement Amount, then
the Determination Agent shall promptly nominate a third party,
subject to approval by the Company (such approval not to be
unreasonably withheld), to determine such figure and calculate
the Alternative Settlement Amount in accordance with the above
formula. Such party shall act as an independent expert and not
as an agent of the Company or the Determination Agent, and its
calculation and determination of the Alternative Settlement
Amount shall, absent manifest error, be final and binding on the
Company, the Warrant Agent, the Determination Agent and the
Warrantholders. Any such calculations will be made available to
a Warrantholder for inspection at the Warrant Agent's Office.
Neither the Company nor such third party shall have any
responsibility for good faith errors or omissions in calculating
the Alternative Settlement Amount.
If the Company determines that an event described in
clause (i) of the definition of Exercise Limitation Event below
has occurred and is continuing on the Expiration Date (an
"Extension Event") then the term of any outstanding Warrants
shall be automatically extended for a period of 30 days (the
thirtieth day following the Expiration Date being the "Extended
Expiration Date"), provided, however, that if the Cash Settlement
Value or the Intrinsic Value used in calculating the Alternative
Settlement Amount, as the case may be, of such Warrants would
have been zero if the Warrants had been exercised such that the
Valuation Date for such exercise was the Measurement Date (as
defined below), then the term of the Warrants shall not be
extended, the Warrants shall be deemed to be worthless and the
Company shall not be required to make any payments in respect
thereof. Any such automatic extension shall be deemed to have
been revoked and the Warrants shall expire on the earlier of
(i) the next Business Day on which there is no Extension Event
(the "Early Extended Expiration Date") and (ii) any Delisting
Date occurring after the Expiration Date. The Company will give
the Warrant Agent prompt notice by telephone or facsimile
transmission and will give prompt notice to the Warrantholders by
publication in a United States newspaper with a national
circulation (currently expected to be The Wall Street Journal) of
the occurrence of an Extension Event, any Extended Expiration
Date, any Early Extended Expiration Date and any Delisting Date
referred to in clause (ii) above, but in no event will such
notice to the Warrant Agent be given later than 9:30 A.M., New
York City time, on the Business Day following the Expiration
Date, Extended Expiration Date, Early Extended Expiration Date or
Delisting Date, as applicable.
Any Warrants that expire on an Early Extended
Expiration Date, as described in clause (i) of the preceding
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paragraph, will be deemed to be exercised on such Early Extended
Expiration Date (even if such Warrants would not otherwise be
exercisable on such date because of the Limit Option) on the
basis that the Valuation Date for such exercise shall be such
Early Extended Expiration Date and the holder of each such
Warrant will receive an Alternative Settlement Amount, whether or
not an Extraordinary Event or an Exercise Limitation Event is
continuing on such Early Extended Expiration Date. Any Warrants
that expire on a Delisting Date occurring on or after the
Expiration Date and prior to the Extended Expiration Date, as
described in clause (ii) of the preceding paragraph, shall be
deemed to be worthless and the Company shall not be required to
make any payments in respect thereof.
If the term of the Warrants has been extended pursuant
to the second preceding paragraph but the Company determines that
an Extension Event is continuing when the Warrants expire on the
Extended Expiration Date the Warrants shall be deemed to be
worthless and the Company shall not be required to make any
payments in respect thereof. The Company shall give prompt
notice of any such determination to the Warrant Agent by
telephone or facsimile transmission and to the Warrantholders by
publication in a United States newspaper with a national
circulation (currently expected to be The Wall Street Journal).
"Measurement Date" means the Business Day occurring
most recently prior to the Expiration Date on which none of the
events described in clause (i) of the definition of Exercise
Limitation Event below had occurred or was continuing.
With respect to all Warrants as to which the Valuation
Date has been postponed (other than Warrants that have been
deemed worthless following an Extension Event) or which have been
cancelled as described above, the Company shall make available to
the Warrant Agent in a timely manner, which shall in no event be
later than 3:00 P.M., New York City time, on the second Business
Day following the date on which the Cash Settlement Value or
Alternative Settlement Amount, as the case may be, has been
calculated (the "Alternative Funding Date") New York Clearing
House or next day funds in an amount equal to, and for the
payment of, the aggregate Cash Settlement Value or Alternative
Settlement Amount, as applicable, of such Warrants. Subject to
such funds having been made available as provided in the
preceding sentence, the Warrant Agent will thereafter be
responsible for making its payment to the Depository prior to the
close of business on the Alternative Funding Date, in an amount
equal to the aggregate Cash Settlement Value or Alternative
Settlement Amount (as applicable) of such exercised Warrants (and
in the case of cancellation as described above, of all previously
unexercised Warrants).
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All exercises of Warrants (other than on automatic
exercise or following an Extension Event) are subject, at the
Company's option, to the limitation that not more than 750,000
Warrants in total may be exercised on any Exercise Date and not
more than 250,000 Warrants may be exercised by or on behalf of
any beneficial owner, either individually or in concert with any
other beneficial owner, on any Exercise Date. If any Business
Day would otherwise, under the terms hereof, be the Exercise Date
in respect of more than 750,000 Warrants, then at the Company's
election (by giving notice thereof to the Warrant Agent not later
than 11:00 A.M., New York City time, on the Business Day
immediately following such Exercise Date), 750,000 of such
Warrants shall be deemed exercised on such Exercise Date
(selected by the Warrant Agent on a pro rata basis, but if, as a
result of such pro rata selection, any Registered Holders would
be deemed to have exercised less than 500 Warrants, then the
Warrant Agent shall first select additional amounts of such
holders' Warrants so that no holder shall be deemed to have
exercised less than 500 Warrants), and the remainder of such
Warrants (the "Remaining Warrants") shall be deemed exercised on
the following Business Day (notwithstanding the minimum exercise
requirement and subject to successive applications of this
paragraph); provided that any Remaining Warrants for which an
Exercise Notice was delivered on a given Exercise Date shall be
deemed exercised before any other Warrants in respect of which an
Exercise Notice was delivered on a later Exercise Date. If any
beneficial owner of Warrants attempts to exercise more than
250,000 Warrants on any Business Day individually or in concert,
then at the Company's election (as notified to the Warrant Agent
by giving notice thereof to the Warrant Agent not later than
11:00 A.M., New York City time, on the Business Day following
such Business Day), 250,000 of such Warrants shall be deemed
exercised on such Business Day and the remainder shall be deemed
exercised on the following Business Day (notwithstanding the
minimum exercise requirement and subject to successive
applications of this paragraph). The date on which any Warrant
is deemed exercised under the preceding two sentences shall for
all purposes of this Global Warrant Certificate be the "Exercise
Date" in respect of such Warrants.
Prior to due presentment for registration of transfer,
the Company, the Warrant Agent, and any agent of the Company or
the Warrant Agent, may deem and treat the registered owner hereof
as the absolute owner of the Warrants evidenced hereby (notwith-
standing any notation of ownership or other writing hereon) for
any purpose whatsoever, and as the person entitled to exercise
the rights represented by the Warrants evidenced hereby, and
neither the Company nor the Warrant Agent, nor any agent of the
Company or the Warrant Agent, shall be affected by any notice to
the contrary.
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<PAGE>
The Warrant Agent will, in accordance with the Warrant
Agreement, from time to time register the transfer of this Global
Warrant Certificate in its records (which may be maintained
electronically) subject to such reasonable regulations as the
Company or the Warrant Agent may prescribe, only to the
Depository, to another nominee of the Depository, to a successor
Depository or to a nominee of a successor Depository, upon
surrender of such Global Warrant Certificate, duly endorsed, or
accompanied by a written instrument or instruments of transfer in
form satisfactory to the Warrant Agent and the Company, duly
executed by the Registered Holder thereof or by the duly
appointed legal representative thereof, or by its duly authorized
attorney. Such signature shall be guaranteed by a bank or trust
company with a correspondent office in The City of New York or by
a broker or a dealer, which is a member of the National
Association of Securities Dealers, Inc. (the "NASD") or by a
member of a national securities exchange. Upon any such
registration of transfer, a new Global Warrant Certificate shall
be issued to the transferee and the surrendered Global Warrant
Certificate shall be cancelled by the Warrant Agent.
The Global Warrant Certificate may be transferred as
provided above when surrendered to the Warrant Agent's Window,
Attention: Transfer Department, or at the location of any
successor Warrant Agent for another Global Warrant Certificate of
like tenor and representing a like number of unexercised
Warrants.
Except for Warrants subject to automatic exercise,
Warrants with respect to which payments of any Alternative
Settlement Amount are made and Warrants deemed worthless
following an Extension Event, each Warrantholder, in connection
with any exercise of Warrants (including a postponed exercise
following an Extraordinary Event or an Exercise Limitation
Event), will have the option (the "Limit Option") to specify that
such Warrants are not to be exercised if the Spot Portfolio Value
that would otherwise be used to determine the Cash Settlement
Value of such Warrants is three or more points lower than the
Limit Option Reference Index. A Warrantholder's election of the
Limit Option must be specified in the applicable Exercise Notice
delivered to the Warrant Agent. The Limit Option Reference Index
will be the Spot Portfolio Value on the relevant Exercise Date.
If an Exercise Notice and the related Warrants are received after
3:00 P.M., New York City time, on a given day, the applicable
Limit Option Reference Index will be determined as of the next
day that is also a Business Day.
Following receipt of an Exercise Notice and the related
Warrants subject to the Limit Option, the Warrant Agent shall
obtain from the Determination Agent the applicable Limit Option
Reference Index and will determine whether such Warrants will not
be exercised because of the Limit Option. Warrants that are not
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<PAGE>
exercised will be treated as not having been tendered for
exercise and such Warrants will be redelivered free to the
account at the Depositary from which they were transferred to the
Warrant Agent. To exercise such Warrants, a Warrantholder will
be required to cause an Exercise Notice and the related Warrants
to be submitted again to the Warrant Agent. In the case of a
postponed Valuation Date, the Limit Option will continue to apply
once elected by a Warrantholder in connection with an exercise of
Warrants on the basis of the Limit Option Reference Index as
initially determined for such Warrants, except when such
Valuation Date is postponed until the Expiration Date, any
Delisting Date or the Cancellation Date or following an Extension
Event. Such Warrants will either (i) be exercised on a delayed
basis if the applicable Spot Portfolio Value on the postponed
Valuation Date is not three or more points less than the Limit
Option Reference Index or (ii) be excluded from being exercised
if, on any applicable postponed Valuation Date, the applicable
Spot Portfolio Value is three or more points less than the Limit
Option Reference Index. In connection with any exercise of 1,000
or more Warrants, a Warrantholder may elect to subject the
exercise of only a portion of such Warrants to the Limit Option,
provided that the number of Warrants subject to the Limit Option
and the number of Warrants not subject to the Limit Option shall
in each case not be less than 500.
Capitalized terms included herein but not defined
herein have the meanings assigned thereto in the Warrant
Agreement.
As used herein, "Business Day" means any day other than
a Saturday or a Sunday or a day on which either the American
Stock Exchange, Inc. is not open for securities trading or
commercial banks in New York City are required or authorized by
law or executive order to remain closed. References in this
Global Certificate to "U.S. Dollars", "U.S.$" or "$" are to the
lawful currency of the United States of America.
The Warrant Agreement and the terms of the Warrants are
subject to amendment, as provided in the Warrant Agreement.
This Global Warrant Certificate shall be governed by,
and interpreted in accordance with, the laws of the State of New
York.
IN WITNESS WHEREOF, The Bear Stearns Companies Inc. has
caused this instrument to be duly executed.
Dated: , 199_ THE BEAR STEARNS COMPANIES INC.
By____________________
Name:
Title:
Attest:
By___________________
Name:
Title:
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Countersigned as of the
date above written:
CHEMICAL BANK
as Warrant Agent
By_______________________
Authorized Officer
<PAGE>
<PAGE>
Schedule A
Number of Warrants Represented by
Date this Global Warrant Certificate
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<PAGE>
<PAGE>
EXHIBIT A-2
EXERCISE NOTICE
For Warrants Represented by the Global Warrant Certificate
CUSIP No.:
Chemical Bank/Geoserve
Corporate Trust Securities Windows
55 Water Street
Room 234
North Building
New York, New York 10041
Attention: Tender Department
1. We refer to the Warrant Agreement dated as of
February 23, 1996 (the "Warrant Agreement"), among The Bear
Stearns Companies Inc. (the "Company"), Chemical Bank, as Warrant
Agent (the "Warrant Agent"), and Bear, Stearns & Co. Inc., as
Determination Agent (the "Determination Agent"). On behalf of
certain beneficial owners, each of whom we certify is exercising
no fewer than 500 Warrants that are covered by this Exercise
Notice and whose Warrants have been, or will be, transferred to
the Warrant Agent in accordance with the provisions of the
Representations Letter relating to the Warrants, we hereby
irrevocably exercise ______ Warrants (the "Tendered Warrants").
We hereby acknowledge that the Warrants being exercised and this
Exercise Notice must be received by you by 3:00 P.M., New York
City time, on a Business Day in order for the Valuation Date for
the Tendered Warrants to be the Business Day following such
Business Day and that, if the Warrants being exercised and this
Exercise Notice are received by you after 3:00 P.M., New York
City time, on a Business Day (or, in the case of Warrants held
through CEDEL or Euroclear, if the Warrants are not received by
3:00 p.m., New York City time, on the first Business Day
following such Business Day) the Valuation Date of the Tendered
Warrants shall be the Business Day next succeeding such Business
Day, in each case subject to certain provisions of the Warrant
Agreement.
2. If you determine that this Exercise Notice has not
been duly completed or is not in proper form, this Exercise
Notice will be void and of no effect and will be deemed not to
have been delivered.
3. We hereby direct you to make payment to us of
amounts payable to our clients as a result of the exercise of the
Warrants hereunder as follows:
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<PAGE>
By cashier's check or an official bank check;
By wire transfer to the following U.S.
Dollar bank account in the United States:
(Minimum payments of $100,000 only)
Bank: __________________________________
Account No.: ___________________________
ABA Routing No.: _______________________
Reference: _____________________________
4. [ALL/PART OF] the Tendered Warrants covered hereby
[ARE/ARE NOT] subject to the Limit Option:
Number of Warrants subject to the Limit Option
(the "Contingently Tendered Warrants"): ____________
5. Each client on whose behalf we are exercising
Warrants pursuant to this Exercise Notice has certified to us
that it is not exercising in excess of 250,000 Warrants on behalf
of any beneficial owner or in concert with any other beneficial
owner on the date of this Exercise Notice.
6. Each client on whose behalf we are exercising
Warrants pursuant to this Exercise Notice has certified that the
number of Contingency Tendered Warrants and the number of
Warrants not subject to the Limit Option shall in each case not
be less than 500; provided that, such client has not combined
Definitive Warrants and Book-entry Warrants to meet such
requirement.
FOR PARTICIPANTS ONLY
7. We hereby certify that we are a Participant of The
Depository Trust Company (the "Depository") with the present
right to use and receive its services.
<PAGE>
<PAGE>
Capitalized terms used but not defined herein have the
meanings assigned thereto in the Warrant Agreement.
Dated: , 19
NAME OF DEPOSITORY
PARTICIPANT
Participant Number
NAME OF EUROCLEAR
PARTICIPANT
Participant Number
NAME OF CEDEL
PARTICIPANT
Participant Number
By___________________________
Authorized Signature
Address:
Telephone: ( )
<PAGE>
<PAGE>
EXHIBIT B
CONFIRMATION OF EXERCISE
For Warrants Represented by Warrant Certificates
We hereby confirm receipt of your Exercise Notice with
respect to _____ Warrants (the "Exercised Warrants") and the
related Warrant Certificates, which we have found to be duly
completed and in proper form. The Valuation Date of the
Exercised Warrants was the close of business on ________________,
19__.
We hereby confirm that the aggregate Cash Settlement
Value of the Exercised Warrants is U.S.$_______ ($________ per
Warrant), which will be made available to you in the form of a
cashier's check or an official bank check, or (in the case of
payments of at least $100,000) by wire transfer to the U.S.
Dollar bank account specified in your irrevocable Exercise
Notice, for payment on the third Business Day following the
Valuation Date for such Warrants (or, if such Valuation Date is
not a Business Day, on the third Business Day following the
Business Day next succeeding the Valuation Date for such
Warrants).
Capitalized terms included herein but not defined have
the meanings assigned thereto in the Warrant Agreement, dated as
of February 23, 1996, among The Bear Stearns Companies Inc.,
Chemical Bank, and Bear, Stearns & Co. Inc.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent,
By______________________________
Authorized Signature
<PAGE>
<PAGE>
EXHIBIT B-1
NOTICE OF REJECTION
of
Exercise Notice
for
Warrants Represented by Warrant Certificates
You are hereby notified that [the Exercise Notice
delivered by you was determined by us not to have been duly
completed in proper form] [we did not receive from Euroclear a
Euroclear confirmation that proper delivery of the Warrants to
which the Exercise Notice delivered by you relates would be made
on a timely basis, as set forth in the Warrant Agreement, dated
as of February 23, 1996 among The Bear Stearns Companies Inc.,
Chemical Bank and Bear, Stearns & Co., Inc.]. Accordingly, we
have rejected your Exercise Notice as being unsatisfactory as to
form.
Capitalized terms used but not defined herein have the
meanings assigned thereto in the Warrant Agreement.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent
By_________________________
Authorized Signature
<PAGE>
<PAGE>
EXHIBIT B-2
CONFIRMATION OF EXERCISE
For Warrants Represented by the Global Warrant Certificate
Name of Depository Participant
Name of Euroclear Participant
Name of CEDEL Participant
Address
We hereby confirm receipt of your Exercise Notice with
respect to Warrants (the "Exercised Warrants") which were
transferred by you (or on your behalf) to our DTC Participant
Account No._____________. Such Notice we have found to be duly
completed and in proper form. The Valuation Date of the
Exercised Warrants was the close of business on ______________,
19__.
[As set forth in your Exercise Notice, none of the
Warrants covered thereby is subject to the Limit Option.
Accordingly, for purposes hereof, all such Warrants shall
constitute Exercised Warrants, which number we hereby confirm to
be _______________________.] [Your Exercise Notice stated that
the Warrants covered thereby are subject to the Limit Option.
The applicable Limit Option Reference Index for such Warrants is
___________________ and the Spot Portfolio Value for the date
that would otherwise be the Valuation Date for such Warrants is
_______________. Such Spot Portfolio Value is not lower than
such Limit Option Reference Index by three or more points.
Accordingly, for purposes hereof, all such Warrants shall
constitute Exercised Warrants. We hereby confirm the number of
such Exercised Warrants to be _______________.]
We hereby confirm that the aggregate Cash Settlement
Value of the Exercised Warrants is U.S.$____________ (U.S.$______
per Warrant), which will be made available to you in the form of
a cashier's check or an official bank check or by wire transfer
to the bank account designated in your irrevocable Exercise
Notice for payment on the third Business Day following the
Valuation Date for such Warrants.
<PAGE>
<PAGE>
Capitalized terms included herein but not defined have
the meanings assigned thereto in the Warrant Agreement dated as
of February 23, 1996, among The Bear Stearns Companies Inc.,
Chemical Bank, as Warrant Agent, and Bear, Stearns & Co. Inc., as
Determination Agent.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent
By_________________________
Authorized Signature
<PAGE>
<PAGE>
EXHIBIT B-3
NOTICE OF REJECTION
of
Exercise Notice
for
Warrants Represented
by the
Global Warrant Certificate
Name of Depository Participant
Name of Euroclear Participant
Name of CEDEL Participant
Address
You are hereby notified that [the Exercise Notice
delivered by you was determined by us not to have been duly
completed in proper form]. [Such Warrants were not transferred
to our DTC Participant Account No. ___________.] [We did not
receive from Euroclear a Euroclear Confirmation that proper
delivery of the Warrants to which the Exercise Notice delivered
by you relates would be made on a timely basis, as set forth in
the Warrant Agreement, dated as of February 23, 1996, among The
Bear Stearns Companies, Inc., Chemical Bank, as Warrant Agent,
and Bear, Stearns & Co. Inc.] Accordingly, we have rejected your
Exercise Notice as being unsatisfactory as to form.
Capitalized terms used but not defined herein have the
meanings assigned thereto in the Warrant Agreement.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent
By_________________________
Authorized Signature
<PAGE>
<PAGE>
EXHIBIT C-1
NOTICE OF REJECTION
RELATING TO LIMIT OPTION
For Warrants Represented
by Warrant Certificates
We refer to your Exercise Notice dated _________, 199_,
with respect to Warrants that were subject to the Limit Option.
The applicable Limit Option Reference Index for such Warrants is
_________________ and the Spot Portfolio Value for the date that
would otherwise be the Valuation Date for such Warrants is
______________. Such Spot Portfolio Value is lower than the
Limit Option Reference Index on the Exercise Date (or if such
date was not an Business Day, on the Business Day prior to the
Exercise Date for such Warrants) by three points or more.
Accordingly, we have rejected such Exercise Notice pursuant to
your exercise of the Limit Option.
Capitalized terms included herein but not defined have
the meanings assigned thereto in the Warrant Agreement dated as
of February 23, 1996, among The Bear Stearns Companies Inc.,
Chemical Bank and Bear, Stearns & Co. Inc.
Dated: , 19
CHEMICAL BANK, as Warrant
Agent
By_________________________
Authorized Signature
<PAGE>
<PAGE>
EXHIBIT C-2
NOTICE OF REJECTION
RELATING TO LIMIT OPTION
For Warrants Represented
by the Global Warrant Certificate
Name of Depository Participant
Address
We refer to your Exercise Notice dated _________, 199_,
with respect to Warrants that were subject to the Limit Option.
The applicable Limit Option Reference Index for such Warrants is
____________ and the Spot Portfolio Value for the date that would
otherwise be the Valuation Date for such Warrants is ___________.
Such Spot Portfolio Value is lower than the Limit Option Refer-
ence Index on the Exercise Date (or if such date was not an
Business Day, on the Business Day prior to the Exercise Date for
such Warrants) by three points or more. Accordingly, we have
rejected such Exercise Notice pursuant to your exercise of the
Limit Option.
Capitalized terms included herein but not defined have
the meanings assigned thereto in the Warrant Agreement dated as
of February 23, 1996, among The Bear Stearns Companies Inc.,
Chemical Bank, and Bear, Stearns & Co. Inc.
Dated: , 199_
CHEMICAL BANK, as Warrant
Agent
By_________________________
Authorized Signature
<PAGE>
WEIL, GOTSHAL & MANGES LLP
A Limited Liability Partnership Including Professional Corporations
1615 L Street, N.W.
Washington, D.C. 20036-5610
(202) 682-7000
Fax: (202) 857-0940
February 20, 1996
The Bear Stearns Companies Inc.
245 Park Avenue
New York, New York 10157
Ladies and Gentlemen:
We have acted as United States counsel to The Bear Stearns
Companies Inc. (the "Company") in connection with its issuance of
1,100,000 "Vantage Point Portfolio Call Warrants" (the "Warrants")
expiring August 20, 1997.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Prospectus Supplement dated
February 20, 1996 ("Prospectus Supplement") to the Prospectus dated
December 18, 1995 ("Prospectus") and such corporate records,
agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and
representatives of the Company, and have made such inquiries of such
officers and representatives, as we have deemed relevant and necessary
as a basis for the opinion hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies. As to all
questions of fact material to this opinion that have not been
independently established, we have relied upon certificates of
officers and representatives of the Company and upon the
representations, warranties and covenants of the Company and the
Dealers contained in the Prospectus Supplement and the Prospectus.
<PAGE>
<PAGE>
The Bear Stearns Companies Inc.
February 20, 1996
Page 2
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that the discussion under the caption
"Certain United States Federal Income Tax Consequences" in the
Prospectus Supplement accurately describes, subject to the limitations
set forth therein, the material United States federal income tax
consequences of the ownership and disposition of Warrants applicable
to holders of such Warrants who acquire and own such Warrants as
capital assets within the meaning of section 1221 of the Internal
Revenue Code of 1986, as amended.
The opinion herein is limited to the federal income tax laws of
the United States, and we express no opinion as to the effect on the
matters covered by this opinion of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the aforesaid
Prospectus Supplement and to the use of our name therein. We hereby
further consent to the use of this opinion as an exhibit to filings
with the securities commissioners of various states of the United
States as required by the securities laws of such states.
This opinion is rendered solely for your benefit in connection
with the transactions described above. This opinion may not be used
or relied upon by any other person and may not be disclosed, quoted,
filed with a governmental agency or otherwise referred to without our
prior written consent except as noted above.
Very truly yours,
WEIL, GOTSHAL & MANGES LLP
