Attached files
file | filename |
---|---|
8-K - 8-K - CNO Financial Group, Inc. | c54007e8vk.htm |
EX-10.1 - EX-10.1 - CNO Financial Group, Inc. | c54007exv10w1.htm |
EX-99.1 - EX-99.1 - CNO Financial Group, Inc. | c54007exv99w1.htm |
EX-10.2 - EX-10.2 - CNO Financial Group, Inc. | c54007exv10w2.htm |
EXHIBIT 10.3
EXHIBIT B
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE ACT), AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF (TRANSFERRED) EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET
FORTH IN AN INVESTOR RIGHTS AGREEMENT, DATED AS OF [ ], 2009, COPIES OF WHICH ARE ON FILE WITH
THE SECRETARY OF THE ISSUER.
CONSECO, INC.
WARRANT TO PURCHASE
[5,000,000]
SHARES OF COMMON STOCK
Issue Date: [___], 2009
1. Definitions. Unless the context otherwise requires, when used herein the following
terms shall have the meanings indicated.
Board of Directors means the board of directors of the Company or any committee
thereof duly authorized to act in the relevant matter on behalf of such board of directors.
Business Day means any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the State of Indiana or the State of New
York generally are authorized or required by law or other governmental actions to close.
Capital Stock means, with respect to any person at any time, any and all shares,
interests, participations or other equivalents (however designated, whether voting or non-voting)
of capital stock, partnership interests (whether general or limited) or equivalent ownership
interests in or issued by such person.
Clause A Distribution has the meaning set forth in Section 12(C).
Clause B Distribution has the meaning set forth in Section 12(C).
Clause C Distribution has the meaning set forth in Section 12(C).
close of business means 5:00 p.m., New York City time.
Closing Sale Price of the Common Stock or any securities distributed in a Spin-Off,
as the case may be, on any date of determination means:
(a) the closing sale price per share of the Common Stock or such other securities (or
if no closing sale price is reported, the average of the closing bid and closing ask prices
or, if more than one in either case, the average of the average closing bid and the average
closing ask prices) as reported by the New York Stock Exchange on such date;
(b) if the Common Stock or such other securities are not listed on the New York Stock
Exchange on such date, the closing sale price per share of the Common Stock or such other
securities (or if no closing sale price is reported, the average of the closing bid and
closing ask prices or, if more than one in either case, the average of the average closing
bid and the average closing ask prices) as reported in composite transactions for the
principal U.S. national or regional securities exchange on which the Common Stock or such
other securities are traded; or
(c) if the Common Stock or such other securities are not listed on a U.S. national or
regional securities exchange, the last quoted bid price for the Common Stock or such other
securities on such date in the over-the-counter market as reported by Pink OTC Markets Inc.
or other similar organization; or
(d) if the Common Stock or such other securities are not so quoted by Pink OTC Markets
Inc. or any similar organization, as determined by a nationally recognized securities firm
retained by the Company for this purpose.
The Closing Sale Price will be determined without reference to early hours, after hours or
extended market trading.
Code means the Internal Revenue Code of 1986, as amended.
Common Stock means the common stock, par value $0.01 per share, of the Company.
Company means Conseco, Inc., a Delaware corporation.
Continuing Director means, during any period of 12 consecutive calendar months,
those individuals who (a) were directors of the Company on the first day of each such period or (b)
who subsequently became directors of the Company and whose election or initial nomination for
election subsequent to that date was approved by a majority of the Continuing Directors then on the
Company Board, to constitute a majority of the Company Board.
Distributed Property has the meaning set forth in Section 12(C).
Exchange Act means the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.
2
Ex-Dividend Date means, with respect to any issuance, dividend or distribution, the
first date on which shares of the Common Stock trade on the applicable exchange or in the
applicable market, regular way, without the right to receive the issuance, dividend or distribution
in question.
Exercise Date means any date, on or prior to the Expiration Date, on which the
Warrantholder exercises the right to purchase the Shares, in whole or in part, pursuant to and in
accordance with the terms and conditions described herein.
Exercise
Price means $6.50 per share of Common Stock, subject to adjustment as
provided in Section 12, and all references thereto shall be deemed to mean such defined term as
adjusted, if applicable.
Expiration Date means the day on which the Expiration Time occurs.
Expiration Time has the meaning set forth in Section 3.
Fair Market Value means the amount which a willing buyer would pay a willing seller
in an arms-length transaction as reasonably determined by the Board of Directors in good faith;
provided, however, that if the Warrantholder disputes such valuation, then such
determination shall be made at the expense of the Company by a third party valuation expert
reasonably acceptable to the Company and the Warrantholder; provided, further, that if the
initial determination of the Board of Directors is within the range of reasonable valuations of
Fair Market Value determined by such valuation firm, then the Warrantholder shall reimburse the
Company for the fees and expenses of such valuation.
Fundamental Change shall be deemed to have occurred at the time after this Warrant
is originally issued if any of the following occurs:
(a) any acquisition, directly or indirectly, by any person, or two or more persons
acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 50% or more of the outstanding shares of voting stock of the
Company, in each case other than any transaction:
(i) involving a merger or consolidation that does not result in a
reclassification, conversion, exchange or cancellation of the outstanding Common
Stock; or
(ii) pursuant to which the holders of the Common Stock immediately prior to the
transaction have the entitlement to exercise, directly or indirectly, 50% or more of
the total voting power of all shares of capital stock entitled to vote generally in
the election of directors of the continuing or surviving corporation immediately
after the transaction, with such holders proportional voting power immediately
after the transaction vis-à-vis each other with respect to the securities they
receive in such transaction being in substantially the same proportions as their
respective voting power vis-à-vis each other with respect to the Common Stock that
they held immediately before such transaction; or
3
(iii) that is effected solely to change the Companys jurisdiction of
incorporation and results in a reclassification, conversion or exchange of
outstanding shares of the Common Stock solely into shares of common stock of the
surviving entity; or
(b) during any period of 12 consecutive calendar months, commencing on the original
issuance date of this Warrant, the ceasing of the Continuing Directors to constitute a
majority of the Board of Directors; or
(c) the Company conveys, sells, transfers or leases all or substantially all of its
assets to another Person; or;
(d) a Termination of Trading; or
(e) the holders of the Common Stock approve any plan or proposal for the liquidation or
dissolution of the Company.
For the purpose of this definition only, person includes any syndicate or group deemed to
be a person under Section 13(d)(3) of the Exchange Act.
Investor Rights Agreement means the Investor Rights Agreement, dated ___, 2009,
between the Company and Paulson & Co., Inc., on behalf of the several investment funds and accounts
managed by it.
Market Disruption Event means:
(a) a failure by the principal market on which the Common Stock is listed or approved
for trading to open for trading during its regular trading session; or
(b) the occurrence or existence for more than a one half-hour period in the aggregate
on any Scheduled Trading Day of any suspension or limitation imposed on trading (by reason
of movements in price exceeding limits permitted by the principal market on which the Common
Stock is listed or approved for trading or otherwise) in the shares of the Common Stock or
in any options, contracts or future contracts relating to shares of the Common Stock, and
such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City
time, on such day.
open of business means 9:00 a.m., New York City time.
Person means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint-stock corporation, limited liability company,
limited liability partnership or trust.
Reference Property shall have the meaning set forth in Section 13.
Regulatory Approvals means, with respect to the Warrantholder, the receipt of
approvals and authorizations of, filings and registrations with, notifications to, or expiration or
termination of any applicable waiting period under, (x) the Hart-Scott-Rodino Antitrust
4
Improvements Act of 1976 and the rules and regulations thereunder or the competition or merger
control laws of other jurisdictions or (y) all insurance statutes and regulations applicable to the
direct and indirect insurance company subsidiaries of the Company, in each case to the extent
applicable and necessary to permit the Warrantholder to exercise this Warrant, in whole or in part,
and own the Shares purchased thereby.
Reorganization Event has the meaning set forth in Section 13.
Restricted Ownership Percentage has the meaning set forth in Section 3A(C).
Scheduled Trading Day means any day that is scheduled to be a Trading Day on the
principal U.S. national or regional securities exchange or market on which the Common Stock is
listed or admitted for trading; provided, that if the Common Stock is not listed or traded,
Scheduled Trading Day shall mean any Business Day.
SEC means the U.S. Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.
Shares has the meaning set forth in Section 2.
Spin-Off has the meaning set forth in Section 12(C).
Spin-Off Valuation Period has the meaning set forth in Section 12(C).
Stock and Warrant Purchase Agreement means the Stock and Warrant Purchase Agreement,
dated as of October 13, 2009, between the Company and the Purchaser, including all schedules and
exhibits thereto
Subsidiary means, with respect to any person, any corporation, partnership, limited
liability company, limited liability partnership, joint venture, trust, association or other
unincorporated organization of which or in which such person and such persons Subsidiaries own
directly or indirectly more than 50% of (a) the combined voting power of all classes of stock
having general voting power under ordinary circumstances to elect a majority of the board of
directors, if it is a corporation; (b) the voting or managing interests (which shall mean the
general partner in the case of a partnership), if it is a partnership, joint venture or similar
entity; (c) the beneficial interest, if it is a trust, association or other unincorporated
organization; or (d) the membership interest, if it is a limited liability company.
Termination of Trading means any time that the Common Stock ceases to be listed for
trading on any of the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global
Market (or any of their respective successors).
TO Expiration Date has the meaning set forth in Section 12(E).
TO Expiration Time has the meaning set forth in Section 12(E).
5
Trading Day means a day on which (a) there is no Market Disruption Event and (b)(i)
trading in the Common Stock generally occurs on the New York Stock Exchange, or if the Common Stock
is not listed on the New York Stock Exchange, then as generally occurs on the principal U.S.
national or regional securities exchange on which the Common Stock is then traded, or (ii) if the
Common Stock is not listed or approved for trading on the New York Stock Exchange or another U.S.
national or regional securities exchange; provided, that if the Common Stock is not so listed or
traded, Trading Day shall mean any Business Day.
Trigger Event has the meaning set forth in Section 12(C).
unit of Reference Property shall have the meaning set forth in Section 13.
Warrantholder has the meaning set forth in Section 2.
Warrant means this Warrant, issued pursuant to the Stock and Warrant Purchase
Agreement.
2. Number of Shares; Exercise Price. This certifies that, for value received, [NAME
OF WARRANTHOLDER] (the Warrantholder) is entitled, upon the terms and subject to the
conditions hereinafter set forth, to acquire from the Company, in whole or in part, subject to
receipt of Regulatory Approval (or, in the case of any required insurance regulatory approvals,
upon entry into mutually agreed alternative arrangements (such as delivery of the Shares into an
escrow account or voting trust) permitting exercise of this Warrant pending receipt of any required
insurance regulatory approvals) and in compliance with the limitations on exercise set forth in
Section 3A, up to an aggregate of [ ] fully paid and non-assessable shares of Common Stock (the
Shares), at a purchase price per Share equal to the Exercise Price.
3. Exercise of Warrant; Term. Subject to Section 2 and Section 3A, and to the extent
permitted by applicable laws and regulations, the right to purchase the Shares represented by this
Warrant is exercisable, in whole or in part, by the Warrantholder, at any time or from time to time
(i) after the earlier to occur of (x) the open of business on June 30, 2013, or (y) receipt of a
notice of a Fundamental Change as provided in Section 17 from the Company following a Fundamental
Change, (ii) but in no event later than the close of business on December 30, 2016 (the
Expiration Time), by:
(1) the surrender of this Warrant and Notice of Exercise annexed hereto, duly completed
and executed on behalf of the Warrantholder, at the office of the Company in Carmel, Indiana
(or such other office or agency of the Company in the United States as it may designate by
notice in writing to the Warrantholder at the address of the Warrantholder appearing on the
books of the Company), and
(2) payment of the aggregate Exercise Price for the number of Shares thereby purchased,
at the election of the Warrantholder, in one of the following manners:
(i) by tendering in cash, by certified or cashiers check or by wire
transfer payable to the order of the Company; or
6
(ii) by having the Company withhold a number of shares of Common Stock
issuable upon exercise of this Warrant equal in value to the aggregate
Exercise Price as to which this Warrant is so exercised based on the Closing
Sale Price of the Common Stock on the Trading Day prior to the date on which
this Warrant and the Notice of Exercise are delivered to the Company.
In the event this Warrant is surrendered for exercise in respect of less than all the Shares
issuable on such exercise at any time prior to the Expiration Time, the Warrantholder will be
entitled to receive from the Company within a reasonable time, and in any event not exceeding three
Business Days following such Exercise Date, a new Warrant in substantially identical form for the
purchase of the number of Shares equal to the difference between the number of Shares subject to
this Warrant and the number of Shares as to which this Warrant is so exercised, in which case such
surrendered Warrant shall be cancelled. Notwithstanding anything to the contrary set forth herein,
upon exercise of any portion of this Warrant in accordance with the terms hereof, the Warrantholder
shall not be required to physically surrender this Warrant to the Company unless such Warrantholder
is purchasing the full number of Shares represented by this Warrant, in which case the
Warrantholder shall promptly surrender this Warrant to the Company. The Warrantholder and the
Company shall each maintain records showing the number of Shares so exercised and issued hereunder
and the dates of such exercises or shall use such other method, reasonably satisfactory to the
Warrantholder and the Company, so as not to require physical surrender of this Warrant upon each
such exercise. In the event of any dispute or discrepancy, such records of the Company
establishing the number of Shares to which the Warrantholder is entitled shall be controlling and
determinative in the absence of demonstrable error. Notwithstanding the foregoing, if this Warrant
is exercised as aforesaid, the Warrantholder may not transfer or assign this Warrant unless such
Warrantholder first physically surrenders this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon order of the Warrantholder a new Warrant of like tenor, registered
on the books of the Company as the Warrantholder may reasonably request, representing the number of
Shares not then exercised. The Warrantholder and any permitted assignee, by acceptance of this
Warrant or a new Warrant, acknowledge and agree that, by reason of the provisions of this Section
3, following exercise of any portion of this Warrant, the number of Shares represented by this
Warrant may be less than the number of Shares set forth on the face hereof.
3A. Limitations on Exercise.
(A) Section 382. This Warrant shall not be exercisable by the Warrantholder to the
extent that the exercise hereof would cause the Warrantholder to become, directly or indirectly, a
5-percent shareholder (as such term is used in Section 382 of the Code and the Treasury
regulations promulgated thereunder), unless the Warrantholder has received prior approval of the
Board of Directors.
(B) 9.9% Limitation. Except with respect to Section 3A(C) below, the number of Shares
issuable to the Warrantholder upon exercise hereof shall not, when added to the total number of
shares of Common Stock deemed beneficially owned by such Warrantholder at such time (other than by
virtue of the ownership of securities or rights to acquire securities (including the Shares) that
have limitations on the Warrantholders right to convert, exercise or purchase
7
similar to the limitation set forth herein), as determined pursuant to the rules and
regulations promulgated under Section 13(d) of the Exchange Act, including all shares of Common
Stock deemed beneficially owned (other than by virtue of the ownership of securities or rights to
acquire securities that have limitations on the right to convert, exercise or purchase similar to
the limitations set forth herein) at such time by persons that would be aggregated for purposes of
determining whether a group exists under Section 13(d) of the Exchange Act, exceed 9.9% of the
total issued and outstanding shares of the Common Stock (the Restricted Ownership
Percentage). Warrantholder shall have the right (x) at any time and from time to time to
reduce its Restricted Ownership Percentage immediately upon notice to the Company and (y) (subject
to waiver) at any time and from time to time, to increase its Restricted Ownership Percentage
immediately in the event of the announcement as pending or planned, of a Fundamental Change.
(C) The foregoing Section 3A(B) shall not apply to the extent that the Warrantholder is
subject to Section 16(a) of the Exchange Act, without regard to the aggregate number of shares of
Common Stock issuable upon exercise of this Warrant or issuable upon conversion or exercise of
other securities or instruments containing limitations on the Warrantholders right to convert,
exercise or purchase shares of Common Stock similar to the limitation set forth in Section 3A(B)
above.
(D) The Company may rely, without limitation, solely upon receipt of any Notice of Exercise by
the Warrantholder hereunder as sufficient evidence of the inapplicability of each of the
limitations to exercise set forth in this Section 3A. The Company shall not be liable to the
Warrantholder or any other Person for any breach of the provisions of this Section 3A resulting
from actions the Company is otherwise required to take in connection with any exercise of all or
any part of this Warrant in reliance on a Notice of Exercise delivered by the Warrantholder.
4. Reservation of Shares; Shares to Be Fully Paid; Listing of Shares.
(A) The Company shall at all times reserve and keep available, out of its authorized but
unissued Common Stock, a sufficient number of shares of Common Stock to satisfy the exercise of
this Warrant from time to time as this Warrant is presented for exercise in accordance with the
terms of this Warrant. The Company hereby represents and warrants that any Shares issued upon the
exercise of this Warrant in accordance with the terms of this Warrant will be duly authorized,
validly issued, fully paid and non-assessable and free and clear of preemptive rights.
(B) The person(s) in whose name(s) any Shares so issued, as designated by the Warrantholder,
will be deemed to be the holder(s) of record of such Shares as of the close of business on the
Exercise Date, notwithstanding that the stock transfer books of the Company may then be closed or
certificates representing such Shares may not be actually delivered on such date; provided,
however, that if such Exercise Date occurs after the Ex-Dividend Date of an event that requires an
adjustment to the Exercise Price and on or prior to the record date for such event, the person in
whose name any Shares so issued upon exercise will be deemed to be the holder of record of such
Shares as of the open of business on the Business Day immediately following the record date for
such event.
8
(C) Certificates for Shares issued upon exercise of this Warrant will be issued in such
name(s) as the Warrantholder may designate and will be delivered to such named person(s) within a
reasonable time, not to exceed three Business Days after any Exercise Date; provided, however, that
the delivery of the certificates representing such Shares will be delayed until the Business Day
immediately following the record date for an event that requires an adjustment to the Exercise
Price if such Business Day is later than three Business Days after the applicable Exercise Date.
(D) If at any time the Companys Common Stock shall be listed on any national securities
exchange or automated quotation system, the Company will use reasonable best efforts to list, and
keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation
system, any Shares issuable upon exercise.
5. No Fractional Shares or Scrip. Any exercise of this Warrant shall be for a whole
number of Shares. No fractional Shares or scrip representing fractional Shares shall be issued
upon any exercise of this Warrant. Upon exercise of this Warrant, if the Shares that the
Warrantholder shall be entitled to receive include a fractional share of Common Stock, the Company
will increase the number of Shares issuable to the next whole number of Shares.
6. No Rights as Warrantholder; Transfer Books. This Warrant does not entitle the
Warrantholder to any voting rights or other rights as holder of Common Stock of the Company prior
to the date of exercise hereof. The Company will at no time close its transfer books against
transfer of this Warrant in any manner which interferes with the timely exercise of this Warrant.
7. Taxes on Shares Issued. The Company shall pay any documentary, stamp or similar
issue or transfer tax due on the issue or delivery of Shares on exercise of this Warrant pursuant
hereto; provided, however, that if such documentary, stamp or similar issue or transfer tax is due
because the Warrantholder has requested that the Shares be issued in a name other than that of the
Warrantholder or an affiliate of the Warrantholder, then such taxes shall be paid by such
Warrantholder, and the Company shall not be required to issue or deliver any stock certificate
representing the Shares unless and until such Warrantholder shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company that such tax have
been paid.
8. Transfer/Assignment.
(A) Subject to compliance with clause (B) of this Section 8, this Warrant and all rights
hereunder are transferable, in whole or in part, upon the books of the Company by the registered
holder hereof in person or by duly authorized attorney, and a new warrant or new warrants shall be
made and delivered by the Company, of the same tenor and date as this Warrant but registered in the
name or names of one or more transferees, upon surrender of this Warrant, duly endorsed, to the
office or agency of the Company described in Section 2. All expenses (other than issue or transfer
taxes) and other charges payable in connection with the preparation, execution and delivery of the
new warrants pursuant to this Section 8 shall be paid by the Company.
9
(B) Notwithstanding the foregoing, this Warrant and any rights hereunder, and any Shares
issued upon exercise of this Warrant, shall be subject to the applicable restrictions as set forth
in the Investor Rights Agreement.
(C) If and for so long as required by the Investor Rights Agreement, this Warrant Certificate,
and any Shares issued upon exercise of this Warrant, shall contain a legend as set forth in Section
2.2 of the Investor Rights Agreement.
9. Exchange and Registry of Warrant. This Warrant is exchangeable, upon the surrender
hereof by the Warrantholder to the Company, for a new warrant or warrants of like tenor and
representing the right to purchase the same aggregate number of Shares. The Company shall maintain
a registry showing the name and address of the Warrantholder as the registered holder of this
Warrant. This Warrant may be surrendered for exchange or exercise, in accordance with its terms,
at the office of the Company, and the Company shall be entitled to rely in all respects, prior to
written notice to the contrary, upon such registry.
10. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and in the case of any such loss, theft or destruction, upon receipt of an indemnity or
security reasonably satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company shall make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of Shares as provided for in such lost, stolen,
destroyed or mutilated Warrant.
11. Rule 144 Information. The Company agrees, at all times after the execution and
delivery of this Warrant and until one year after the Expiration Time, to use its reasonable best
efforts to:
(i) make and keep public information available, as those terms are understood and defined in
Rule 144(c)(1) under the Securities Act or any similar or analogous rule promulgated under the
Securities Act;
(ii) file with the SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act;
(iii) not terminate its status as an issuer required to file reports under the Exchange Act
(even if the Exchange Act or the rules and regulations thereunder would permit such termination);
and
(iv) furnish to the Warrantholder forthwith upon request a written statement by the Company as
to its compliance with the reporting requirements of Rule 144 under the Securities Act; a copy of
the most recent annual or quarterly report of the Company; and such other reports and documents as
the Warrantholder may reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration.
12. Adjustment of Exercise Price. The Exercise Price shall be adjusted from time to
time by the Company if any of the following events occurs, except that no adjustment to the
10
Exercise Price shall be made if the Warrantholder participates at the same time and upon the
same terms as holders of the Common Stock and solely as a result of holding this Warrant, in any of
the transactions described in this Section 12.
(A) If the Company pays a dividend or effects a distribution on the Common Stock exclusively
in shares of its Common Stock to all or substantially all holders of the Common Stock, or if the
Company subdivides or combines the shares of Common Stock, the Exercise Price shall be adjusted
based on the following formula:
where,
P | = | the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date of such dividend or distribution, or immediately prior to the open of business on the effective date of such share subdivision or share combination, as applicable; | ||||
P' | = | the Exercise Price in effect immediately after the open of business on such Ex-Dividend Date, or immediately after the open of business on such effective date, as the case may be; | ||||
OS | = | the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date, or immediately prior to the open of business on such effective date, as the case may be; and | ||||
OS' | = | the number of shares of Common Stock outstanding immediately after such dividend or distribution, or immediately after such effective date, as the case may be. |
Any adjustment made under this Section 12(A) shall become effective immediately after the open
of business on the Ex-Dividend Date for such dividend or distribution, or immediately after the
open of business on the effective date for such share subdivision or share combination. If any
dividend or distribution of the type described in this Section 12(A) is declared but not so paid or
made, or any share subdivision or share combination of the type described in this Section 12(A) is
announced but the outstanding shares of Common Stock are not subdivided or combined, as the case
may be, the Exercise Price shall be immediately readjusted, effective as of the date the Board of
Directors determines not to pay such dividend or distribution, or not to subdivide or combine the
outstanding shares of Common Stock, as the case may be, to the Exercise Price that would then be in
effect if such dividend, distribution, share subdivision or share combination had not been declared
or announced.
(B) If the Company distributes to all or substantially all holders of its Common Stock any
rights, options or warrants that allow the holders to purchase (for a period expiring within 60
days) shares of Common Stock at a price per share less than the average of the Closing Sale Prices
for the 10 consecutive Trading Day period ending on, and including, the Trading Day
11
immediately preceding the date of announcement of such distribution, the Exercise Price shall
be adjusted based on the following formula:
where,
P | = | the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution; | ||||
P' | = | the Exercise Price in effect immediately after the open of business on such Ex-Dividend Date; | ||||
OS | = | the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date; | ||||
N | = | the number of additional shares of Common Stock issuable pursuant to such rights, options or warrants; | ||||
PP | = | the per-share offering price payable to exercise such rights, options or warrants for the additional shares, plus the per-share consideration (if any) the Company receives for such rights, options or warrants; and | ||||
M | = | the average of the Closing Sale Prices over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such distribution. |
Any adjustment made under this Section 12(B) shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately after the open of
business on the Ex-Dividend Date for such issuance. To the extent any such rights, options or
warrants are not exercised prior to their expiration, the Exercise Price shall be readjusted to the
Exercise Price that would then be in effect had the adjustment in the Exercise Price with respect
to the distribution of such rights, options or warrants been made on the basis of delivery of only
the number of such rights, options or warrants actually exercised prior to their expiration. If
such rights, options or warrants are not so distributed, the Exercise Price shall be adjusted to
the Exercise Price that would then be in effect if such Ex-Dividend Date for such distribution had
not occurred.
For purposes of this Section 12(B), in determining whether any rights, options or warrants
entitle the holders to subscribe for or purchase shares of the Common Stock at less than such
average of the Closing Sale Prices for the 10 consecutive Trading Day period ending on, and
including, the Trading Day immediately preceding the date of announcement for such distribution,
and in determining the aggregate offering price of such shares of the Common Stock, there shall be
taken into account any consideration received by the Company for such rights, options or warrants
and any amount payable on exercise or conversion thereof, the value of such consideration, if other
than cash, to be determined by the Board of Directors.
12
(C) If the Company pays dividends or distributes to all or substantially all holders of the
Common Stock consisting of its debt, securities, assets or rights to purchase securities of the
Company, excluding:
(i) dividends or distributions as to which an adjustment was or will be effected pursuant to
Section 12(A);
(ii) distributions of rights, options or warrants as to which an adjustment was or will be
effected pursuant to Section 12(B);
(iii) dividends or distributions paid exclusively in cash as to which an adjustment was or
will be made pursuant to Section 12(D);
(iv) dividends or distributions in connection with a Reorganization Event covered by Section
13; and
(v) any Spin-Off as to which the provisions set forth below in this Section 12(C) shall apply,
(any of such debt, securities, assets or rights to purchase securities of the Company, the
Distributed Property), then the Exercise Price shall be adjusted based on the following
formula:
where,
P | = | the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution; | ||||
P' | = | the Exercise Price in effect immediately after the open of business on such Ex-Dividend Date; | ||||
M | = | the average of the Closing Sale Prices over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding such Ex-Dividend Date; and | ||||
F | = | the Fair Market Value of the portion of the Distributed Property distributed in respect of each share of the Common Stock immediately prior to the open of business on the Ex-Dividend Date for such distribution. |
If the Board of Directors determines the F (as defined above) of any distribution
for purposes of this Section 12(C) by reference to the actual or when-issued trading market for any
securities, it shall in doing so consider the prices in such market over the same period used in
computing the Closing Sale Prices over the 10 consecutive Trading Day period ending on, and
including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution.
13
Notwithstanding the foregoing, if F (as defined above) is equal to or greater than
M (as defined above), in lieu of the foregoing adjustment, the Warrantholder shall
thereafter be entitled to receive (without having to exercise the Warrant), at the same time and
upon the same terms as holders of the Common Stock receive the Distributed Property, the amount and
kind of the Distributed Property that such Warrantholder would have received had such Warrantholder
owned a number of shares of Common Stock on the Ex-Dividend Date for the distribution equal to the
number of Shares such Warrantholder would have received if such Warrantholder had exercised this
Warrant on such Ex-Dividend Date (with reference to the Exercise Price then in effect).
Any adjustment made under the above portion of Section 12(C) shall become effective
immediately after the open of business on the Ex-Dividend Date for such distribution. If such
distribution is not so paid or made, the Exercise Price shall be immediately readjusted, effective
as of the date the Board of Directors determines not to pay such dividend or distribution, to the
Exercise Price that would then be in effect if such distribution had not been declared.
With respect to an adjustment pursuant to this Section 12(C) where there has been a payment of
a dividend or other distribution on the Common Stock to all or substantially all holders of the
Common Stock in shares of Capital Stock of any class or series, or similar equity interest, of or
relating to a Subsidiary or other business unit of the Company, where such Capital Stock or similar
equity interest is listed or quoted (or will be listed or quoted upon consummation of the
transaction) on a national securities exchange or reasonably comparable non-U.S. equivalent (a Spin-Off), the Exercise Price shall be adjusted based on the following formula:
where,
P | = | the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date for the Spin-Off; | ||||
P' | = | the Exercise Price given effect immediately after the open of business on such Ex-Dividend Date; | ||||
F | = | the average of the Closing Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Common Stock applicable to one share of Common Stock over the first 10 consecutive Trading Day period immediately following, and including, the effective date of the Spin-Off (the Spin-Off Valuation Period); and | ||||
MP | = | the average of the Closing Sale Prices over the Spin-Off Valuation Period. |
The adjustment to the Exercise Price under the preceding paragraph shall occur immediately
after the open of business on the day after the last day of the Spin-Off Valuation Period, but will
be given effect as of the open of business on the Ex-Dividend Date for the Spin-Off.
14
If the
effective date of the Spin-Off is less than 10 Trading Days prior to, and including, the Expiration
Date, references in the portion of this Section 12(C) related to Spin-Offs to 10
Trading Days shall be deemed replaced, for purposes of calculating the Exercise Price, with
such lesser number of Trading Days as have elapsed from, and including, such effective date of the
Spin-Off to, and including, the Expiration Date. For purposes of determining the Exercise Price in
respect of any exercise during the 10 Trading Day period commencing on the effective date of any
Spin-Off, references within the portion of this Section 12(C) related to Spin-Offs to 10 Trading
Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and
including, the effective date of such Spin-Off to, but excluding, the relevant Exercise Date.
For the purposes of this Section 12(C), rights, options or warrants distributed by the Company
to all or substantially all of the holders of the Common Stock entitling them to acquire securities
of the Company (either initially or under certain circumstances), which rights, options or
warrants, until the occurrence of a specified event or events (a Trigger Event):
(1) are deemed to be transferred with such shares of Common Stock;
(2) are not exercisable; and
(3) are also issued in respect of future issuances of Common Stock,
shall be deemed not to have been distributed for purposes of this Section 12(C) (and no
adjustment to the Exercise Price under Section 12(C) will be required) until the occurrence of the
earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the Exercise Price shall be made
under this Section 12(C). If any such right, option or warrant, including any such existing
rights, options or warrants distributed prior to the date of this Warrant, are subject to events,
upon the occurrence of which such rights, options or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date of the occurrence of
any and each such event shall be deemed to be the date of distribution and Ex-Dividend Date of such
deemed distribution (in which case the original rights, options or warrants shall be deemed to
terminate and expire on such date without exercise by any of the holders). In addition, in the
event of any distribution or deemed distribution of rights, options or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with respect thereto that
was counted for purposes of calculating a distribution amount for which an adjustment to the
Exercise Price under this Section 12(C) was made,
(1) in the case of any such rights, options or warrants which shall all have been
redeemed or purchased without exercise by any holders thereof, upon such final redemption or
repurchase (x) the Exercise Price shall be readjusted as if such rights, options or warrants
had not been issued and (y) the Exercise Price shall then again be readjusted to give effect
to such distribution, deemed distribution or Trigger Event, as the case may be, as though it
were a cash distribution, equal to the per share redemption or purchase price received by
holders of Common Stock with respect to such rights, options or warrants (assuming each such
holder had retained such rights, options or warrants), made to all holders of Common Stock
as of the date of such redemption or purchase, and
15
(2) in the case of such rights, options or warrants which shall have expired or been
terminated without exercise by any holders thereof, the Exercise Price shall be readjusted
as if such rights, options and warrants had not been issued.
For purposes of this Section 12(C) and subsections (A) and (B) of this Section 12, any
dividend or distribution to which this Section 12(C) applies and which also includes one or both
of:
(a) a dividend or distribution of shares of Common Stock to which Section 12(A) applies
(the Clause A Distribution); and
(b) a dividend or distribution of rights, options or warrants to which Section 12(B)
applies (the Clause B Distribution), then
(I) such dividend or distribution, other than the Clause A Distribution and the
Clause B Distribution, shall be deemed to be a dividend or distribution to which
this Section 12(C) applies (the Clause C Distribution) and any Exercise
Price adjustment required by this Section 12(C) with respect thereto shall then be
made, and
(II) the Clause A Distribution and Clause B Distribution shall be deemed to
immediately follow the Clause C Distribution and any Exercise Price adjustment
required by Section 12(A) and Section 12(B) with respect thereto shall then be made,
except that, if determined by the Company,
(I) the Ex-Dividend Date of the Clause A Distribution and the Clause
B Distribution shall be deemed to be the Ex-Dividend Date of the Clause C
Distribution and
(II) any shares of Common Stock included in the Clause A Distribution or Clause
B Distribution shall be deemed not to be outstanding immediately prior to the
open of business on such Ex-Dividend Date or such effective date within the
meaning of Section 12(A) or outstanding immediately prior to the open of
business on such Ex-Dividend Date within the meaning of Section 12(B).
(D) If the Company makes any distribution of cash to all or substantially all holders of the
Common Stock, the Exercise Price shall be adjusted based on the following formula:
where,
P | = | the Exercise Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution; |
16
P' | = | the Exercise Price in effect immediately after the open of business on such Ex-Dividend Date; | ||||
SP | = | the average of the Closing Sale Prices over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding such Ex-Dividend Date; and | ||||
C | = | the amount in cash per share that the Company distributes to holders of the Common Stock. |
Any adjustment pursuant to this Section 12(D) shall become effective immediately after the
open of business on the Ex-Dividend Date for such dividend or distribution. Notwithstanding the
foregoing, if C (as defined above) is equal to or greater than SP (as defined
above), in lieu of the foregoing adjustment, the Warrantholder shall thereafter be entitled to
receive (without having to exercise this Warrant), at the same time and upon the same terms as the
holders of the Common Stock receive the cash distribution, the amount of cash that such
Warrantholder would have received had such Warrantholder owned a number of shares of Common Stock
on the Ex-Dividend Date for the distribution equal to the number of Shares such Warrantholder would
have received if such Warrantholder had exercised this Warrant on such Ex-Dividend Date (with
reference to the Exercise Price then in effect).
If such distribution is not so paid, the Exercise Price shall be immediately readjusted,
effective as of the date the Board of Directors determines not to pay such dividend or
distribution, to the Exercise Price that would then be in effect if such distribution had not been
declared.
(E) If the Company or any of its Subsidiaries make a payment to all or substantially all
holders of the Common Stock in respect of a tender offer or exchange offer, other than an odd-lot
offer, by the Company or any of its Subsidiaries for the Common Stock, to the extent that the cash
and value of any other consideration included in the payment per share of the Common Stock exceeds
the average of the Closing Sale Prices over the 10 consecutive Trading Day period commencing on,
and including, the Trading Day following the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer (the TO Expiration Date), the Exercise Price
shall be adjusted based on the following formula:
where,
P | = | the Exercise Price in effect immediately prior to the open of business on the Trading Day immediately following the TO Expiration Date; | ||||
P' | = | the Exercise Price given effect immediately after the open of business on the Trading Day following the TO Expiration Date; |
17
F | = | the Fair Market Value of the aggregate consideration payable in such tender offer or exchange offer (up to any maximum amount specified in the terms of the tender or exchange offer) for all shares of Common Stock the Company or any of its Subsidiaries purchase in such tender or exchange offer, such Fair Market Value to be measured as of the expiration time of the tender or exchange offer (the TO Expiration Time); | ||||
OS | = | the number of shares of Common Stock outstanding immediately prior to the TO Expiration Time (prior to giving effect to the purchase of any shares of Common Stock accepted for purchase or exchange in such tender or exchange offer); | ||||
OS' | = | the number of shares of Common Stock outstanding immediately after the TO Expiration Time (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer); and | ||||
SP | = | the average of the Closing Sale Prices over the 10 consecutive Trading Day period commencing on, and including, the Trading Day following the TO Expiration Date. |
The adjustment to the Exercise Price under this Section 12(D) shall occur immediately after
the open of business on the 11th Trading Day following the TO Expiration Date, but will be given
effect at the open of business on the Trading Day following the TO Expiration Date. If the Trading
Day following the TO Expiration Date is less than 10 Trading Days prior to, and including, the
Expiration Date, references within this Section 12(E) to 10 Trading Days shall be deemed replaced,
for purposes of calculating the Exercise Price, with such lesser number of Trading Days as have
elapsed from, and including, the Trading Day following the TO Expiration Date to, and including,
the Expiration Date. For purposes of determining the Exercise Price in respect of any exercise of
this Warrant during the 10 Trading Days commencing on the Trading Day following the TO Expiration
Date, references within this Section 12(E) to 10 Trading Days shall be deemed replaced with such
lesser number of Trading Days as have elapsed from, and including, the Trading Day following the TO
Expiration Date to, but excluding, such Exercise Date.
(F) The Company from time to time may decrease the Exercise Price by any amount for a period
of at least 20 Business Days; provided that the Board of Directors shall have made a determination
that such decrease would be in the best interests of the Company (which determination shall be
conclusive) and such decrease is irrevocable during such period. Whenever the Exercise Price is
decreased pursuant to this Section 12(F), the Company shall mail to the Warrantholder a notice of
the decrease at least ten calendar days prior to the date the decreased Exercise Price takes
effect, and such notice shall state the decreased Exercise Price and the period during which it
will be in effect.
(G) The Company may (but shall not be required to) decrease the Exercise Price, in addition to
any adjustments pursuant to clause (A), (B), (C), (D) and (E) of this Section 12, if the
18
Board of Directors considers such decrease to be advisable to avoid or diminish any income tax to holders of
Common Stock, or rights to acquire shares of Common Stock, in connection with any dividend or
distribution of shares of Common Stock (or rights to acquire shares of Common
Stock) or similar event. If the Company pays U.S. federal withholding tax in respect of any
adjustment to the Exercise Price pursuant to this Section 12, it may, at its option, set off such
payments against any other payments otherwise due to a Warrantholder (including any actual cash
dividends or distributions subsequently made with respect to Shares received upon exercise of this
Warrant).
(H) If, with respect to any exercise of this Warrant:
(i) any distribution or transaction described in clause (A), (B), (C), (D) and (E) of this
Section 12 has not yet resulted in an adjustment to the Exercise Price on a given Trading Day prior
to the Expiration Time; and
(ii) any Shares deliverable upon exercise of this Warrant in respect of such Trading Day are
not entitled to participate in the relevant distribution or transaction (because they were not held
on a related record date or otherwise);
then the Exercise Price in respect of such Trading Day shall be adjusted to reflect the
relevant distribution or transaction.
(I) All calculations under this Section 12 shall be made by the Company and shall be made to
the nearest cent.
(J) No adjustment shall be required to be made for the Companys issuance of shares of Common
Stock or any securities convertible into or exchangeable for shares of Common Stock or rights to
purchase shares of Common Stock or such convertible or exchangeable securities, other than as
provided in this Section 12.
(K) The Company shall not take any action that would result in any adjustment to the Exercise
Price, pursuant to the provisions of this Section 12, in such a manner as to result in the
reduction of the Exercise Price to less than the par value per share of the Common Stock. If an
adjustment in Exercise Price made hereunder would reduce the Exercise Price to an amount below par
value of the Common Stock, then such adjustment in Exercise Price made hereunder shall reduce the
Exercise Price to the par value of the Common Stock.
(L) Whenever the Exercise Price is adjusted as provided in this Section 12, the Company shall
promptly file at the principal office of the Company a statement setting forth the Exercise Price
after such adjustment and setting forth a brief statement of the facts requiring such adjustment,
and the Company shall prepare a notice of such adjustment of the Exercise Price setting forth the
adjusted Exercise Price and the date on which each adjustment becomes effective and shall mail such
notice to the Warrantholder. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.
(M) For purposes of this Section 12, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company so long as the Company
does not pay any dividend or make any distribution on shares of Common Stock held in the treasury
of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu
of fractions of shares of Common Stock.
19
(N) Notwithstanding anything to the contrary in this Section 12, no adjustment to the Exercise
Price shall be made:
(i) upon the issuance of any shares of Common Stock pursuant to any present or future plan
providing for the reinvestment of dividends or interest payable on the Companys securities and the
investment of additional optional amounts in shares of Common Stock under any plan;
(ii) upon the issuance of any shares of Common Stock or options or rights to purchase those
shares pursuant to any present or future employee, director or consultant benefit plan or program
of the Company;
(iii) for ordinary course of business stock repurchases (including, without limitation,
structured or derivative transactions) pursuant to a stock repurchase program approved by the Board
of Directors;
(iv) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security not described in clause (ii) of this subsection
(N) of Section 12 and outstanding as of the date hereof; or
(v) in connection with a change in the par value of the Common Stock.
(O) If the Company adopts a stockholder rights plan under which the Company issues rights
providing that each share of Common Stock issued upon conversion of the Warrant, at any time prior
the distribution of separate certificates representing such rights, will be entitled to receive
such rights, then there shall be no adjustment to the Exercise Price as a result of (i) the
issuance of such rights, (ii) the distribution of separate certificates representing such rights,
(iii) the exercise or redemption of such rights in accordance with any rights agreement, or (iv)
the termination or invalidation of any such rights. However, each Share, if any, issued upon
exercise of this Warrant shall be entitled to receive the appropriate number of rights, if any, and
the certificates representing Shares issued upon such exercise shall bear such legends, if any, in
each case, as may be provided by the terms of the Investor Rights Agreement, as the same may be
amended from time to time. Notwithstanding the foregoing, if prior to any conversion such rights
have separated from the shares of Common Stock in accordance with the provisions of the applicable
stockholder rights agreement, the Exercise Price shall be adjusted at the time of separation as if
the Company had distributed to all holders of the Common Stock its debt, securities, assets or
rights to purchase securities of the Company as described in Section 12(C), subject to readjustment
in the event of the expiration, termination or redemption of such rights.
(P) No adjustment in the Exercise Price will be required unless the adjustment would require
an increase or decrease of more than 1% of the applicable Exercise Price. If the adjustment is not
made because the adjustment does not change the applicable Exercise Price by more than 1%, then the
adjustment that is not made will be carried forward and taken into account in any future
adjustment. Notwithstanding the foregoing, all such carried forward
20
adjustments shall be made with respect to the Shares issuable upon exercise of this Warrant when they add up to 1%.
(Q) If, during a period applicable for calculating the Closing Sale Price of the Common Stock
or any other security, an event occurs that requires an adjustment to the Exercise Price, the
Closing Sale Price of such security shall be calculated for such period in a manner reasonably
determined by the Company to appropriately reflect the impact of such event on the price of such
security during such period. Whenever any provision of this Section 12 requires a calculation of
an average of Closing Sale Prices of Common Stock or any other security over multiple days,
appropriate adjustments shall be made to account for any adjustment to the Exercise Price that
becomes effective, or any event requiring an adjustment to the Exercise Price where the Ex-Dividend
Date of the event occurs, at any time during the period during which the average is to be
calculated.
(R) Upon any adjustment of the Exercise Price pursuant to this Section 12, the number of
Shares issuable upon exercise of this Warrant shall be automatically adjusted to such number of
Shares issuable immediately prior to such adjustment multiplied by a fraction, the numerator of
which shall be the Exercise Price in effect immediately before such adjustment and the denominator
of which shall be the Exercise Price in effect immediately following such adjustment (irrespective
of the number of Shares set forth on the face hereof).
13. Effect of Recapitalization, Reclassification, Consolidation, Merger or Sale.
In the event of:
(i) any reclassification (including through a recapitalization) or other change of the Common
Stock;
(ii) any consolidation, merger, combination or binding share exchange involving the Company;
or
(iii) any sale or conveyance (including through a lease or other transfer) to a third party of
all or substantially all of the property and assets of the Company,
in each case in which the holders of the outstanding Common Stock are entitled to receive stock,
other securities, other property or assets (including cash or any combination thereof) (any such
event, a Reorganization Event), then, at the effective time of such Reorganization Event,
the right of the Warrantholder to purchase the Shares evidenced by this Warrant shall be changed
into a right to purchase the type and amount of shares of stock, other securities or other property
or assets (including cash or any combination thereof) that the Warrantholder would have been
entitled to purchase had the Warrantholder owned a number of shares of Common Stock immediately
prior to such Reorganization Event equal to the number of Shares the Warrantholder would have
received if the Warrantholder had exercised this Warrant immediately prior to such Reorganization
Event (with reference to the Exercise Price then in effect) (the Reference Property, with
each unit of Reference Property meaning the type and amount of Reference Property that a
holder of one share of Common Stock is entitled to receive) and, concurrently with or promptly
following the effective time of such Reorganization Event, upon the Warrantholders surrender of
this Warrant to the Company or the successor or purchasing
21
person, as the case may be, pursuant to procedures comparable to those set forth in Section 9 hereof, the Company or the successor or
purchasing person, as the case may be, shall issue in favor of the Warrantholder a new warrant or warrants of like tenor and representing the right to
purchase a number of units of Reference Property corresponding to the number of Shares such
surrendered Warrant previously entitled the Warrantholder to purchase upon cashless or cash
exercise, and subject to the Exercise Price then in effect; provided, however, that any Shares that
the Company would have been required to deliver upon exercise of this Warrant in accordance with
Sections 3 and 4, if any, shall instead be deliverable in the amount and type of Reference Property
that a holder of that number of shares of Common Stock would have been entitled to receive in such
Reorganization Event.
If, as a result of the Reorganization Event, holders of the Common Stock are entitled to
receive more than a single type of consideration because such holders have the right to elect the
types of consideration they receive, then:
(i) the Reference Property for which this Warrant will be exercisable will be deemed to be the
weighted average of the types and amounts of consideration received by the holders of Common Stock
that affirmatively make such an election, and
(ii) the unit of Reference Property for purposes of the foregoing sentence shall refer to the
consideration referred to in clause (i) attributable to one share of Common Stock.
The Company shall notify the Warrantholder of such weighted average as soon as practicable
after such determination is made.
The Company shall not become a party to any such Reorganization Event unless its terms are
consistent with this Section 13. Such new warrant described in the second immediately preceding
paragraph shall provide for adjustments to Exercise Price thereunder which shall be equivalent to
the adjustments provided for in Section 13. If, in the case of any such Reorganization Event, the
Reference Property receivable thereupon by a holder of Common Stock includes shares of stock,
securities or other property or assets (including cash or any combination thereof) of a Person
other than the successor or purchasing Person, as the case may be, in such Reorganization Event,
then such Warrant shall additionally be executed and delivered by such other Person.
14. Governing Law. This Warrant shall be binding upon any successors or assigns of
the Company. This Warrant shall be deemed to be made in and in all respects shall be interpreted,
construed and governed by and in accordance with the laws of the State of New York (except to the
extent that mandatory provisions of Delaware law are applicable).
15. Attorneys Fees. In any litigation, arbitration or court proceeding between the
Company and the Warrantholder as the holder of this Warrant relating hereto, the prevailing party
shall be entitled to reasonable attorneys fees and expenses incurred in enforcing this Warrant.
16. Amendments. This Warrant may be amended, and the observance of any term of this
Warrant may be waived, only with the written consent of the Company and the Warrantholder.
22
17. Notices.
(A) All notices hereunder shall be in writing and shall be effective:
(i) on the day on which delivered if delivered personally or transmitted by telex or telegram
or telecopier with evidence of receipt;
(ii) one Business Day after the date on which the same is delivered to a nationally recognized
overnight courier service with evidence of receipt; or
(iii) five Business Days after the date on which the same is deposited, postage prepaid, in
the U.S. mail, sent by certified or registered mail, return receipt requested, and addressed to
the party to be notified at the address indicated below for the Company, or at the address for the
Warrantholder provided to the Company, or at such other address and/or telecopy or telex number
and/or to the attention of such other person as the Company or the Warrantholder may designate by
ten-day advance written notice.
(B) In case of any:
(i) action by the Company or one of its Subsidiaries that would require an adjustment in the
Exercise Price pursuant to Section 12 or Section 13;
(ii) Reorganization Event;
(iii) voluntary or involuntary dissolution, liquidation or winding up of the Company or any of
its Subsidiaries; or
(iv) Fundamental Change;
then, in each case, the Company shall cause to be mailed to the Warrantholder at the address
provided to the Company as promptly as practicable a notice stating:
(i) the date on which a record is to be taken for the purpose of such action by the Company or
one of its Subsidiaries or, if a record is not to be taken, the date as of which the holders of
Common Stock of record are to be determined for the purposes of such action by the Company or one
of its Subsidiaries, or
(ii) the date on which such Reorganization Event, Fundamental Change, dissolution, liquidation
or winding up is expected to become effective or occur, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such Reorganization Event, Fundamental Change,
dissolution, liquidation or winding up.
Failure to give any such notice, or any defect therein, shall not affect the legality or validity
of such dividend (or any other distribution), Reorganization Event, Fundamental Change,
dissolution, liquidation or winding up.
23
18. Prohibited Actions. The Company agrees that it will not take any action which
would entitle the Warrantholder to an adjustment of the Exercise Price if the total number of
shares of Common Stock issuable after such action upon exercise of this Warrant, together with all
shares of Common Stock then outstanding and all shares of Common Stock then issuable upon the
exercise of all outstanding options, warrants, conversion and other rights, would exceed the total
number of shares of Common Stock then authorized by its articles of incorporation.
19. Entire Agreement. This Warrant and the forms attached hereto, the Stock and
Warrant Purchase Agreement, and the Investor Rights Agreement contain the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior and contemporaneous
arrangements or undertakings with respect thereto.
[Remainder of page intentionally left blank]
24
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by a duly
authorized officer.
Dated: [ ],
CONSECO, INC. | ||||
By: | ||||
Name: | ||||
Title: | ||||
Attest: | ||||
By: | ||||
Name: | ||||
Title: |
[Signature Page to Warrant]
[Form Of Notice Of Exercise]
Date:
TO: Conseco, Inc.
RE: Election to Subscribe for and Purchase Common Stock
The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby agrees
to subscribe for and purchase the number of shares of the Common Stock set forth below covered by
such Warrant. The undersigned, in accordance with Section 3 of the Warrant, hereby agrees to pay
the aggregate Exercise Price for such shares of Common Stock in the manner set forth below. A new
warrant evidencing the remaining shares of Common Stock covered by such Warrant, but not yet
subscribed for and purchased, should be issued in the name set forth below. If the new warrant is
being transferred, an opinion of counsel is attached hereto with respect to the transfer of such
warrant.
Number of Shares of Common Stock: | ||||||
Method of Payment of Exercise Price (note if cashless exercise pursuant to
Section 3(ii) of the Warrant):
Name and Address of Person to be Issued New Warrant: | ||||||||
Holder: | ||||
By: | ||||
Name: | ||||
Title: | ||||