ex4_7.htm


    
      

    

    Exhibit
4.7

     

    
      
        EXECUTION
COPY

      

      
         

      

      
        


      

      
        


      

      
        
          

          

        

        


      

      
        


      

      
        


      

      
        WARRANT
AGREEMENT

      

      
        


      

      
        Dated as
of

      

      
        


      

      
        March 23,
2004

      

      
        


      

      
        between

      

      
        


      

      
        GRANDE
COMMUNICATIONS HOLDINGS, INC.

      

      
        


      

      
        and

      

      
        


      

      
        U.S. BANK
NATIONAL ASSOCIATION

      

      
        


      

      
        as
Warrant Agent

      

      
        


      

      
        


      

      
        


        
          

          

          
            
               


            

            
               


              
                

              

            

            
               


            

          



      

      
        WARRANT
AGREEMENT, dated as of March 23, 2004, between Grande Communications Holdings,
Inc., a Delaware corporation (the "COMPANY"), and U.S. Bank
National Association, as warrant agent (the "WARRANT
AGENT").

      

      
        


      

      
        WHEREAS,
the Company proposes to issue warrants (the "WARRANTS") to initially
purchase up to an aggregate of 13,645,696 shares of Common Stock, par value
$.001 per share (the "COMMON
STOCK"), of the Company (the Common Stock issuable on exercise of the
Warrants being referred to herein as the "WARRANT SHARES"), in
connection with the offering (the "OFFERING") by the Company of
136,000 Units (the "UNITS"),
each consisting of $1,000 principal amount at maturity of 14% Senior
Secured Notes due 2011 of the Company (the "NOTES") and one Warrant, each
Warrant initially representing the right to purchase 100.336 Warrant
Shares.

      

      
        


      

      
        WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing so to act in connection with the issuance of Warrant
Certificates (as defined) and other matters as provided
herein.

      

      
        


      

      
        NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set
forth, the parties hereto agree as follows:

      

      
        


      

      
        
          	
                	
                  SECTION
    1.

                	
                  CERTAIN
      DEFINITIONS

                


        

      

      
        


      

      
        As used
in this Agreement, the following terms shall have the following respective
meanings:

      

      
        


      

      
        "144A GLOBAL WARRANT" means a
global Warrant substantially in the form of Exhibit A hereto
bearing the Global Warrant Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee.

      

      
        


      

      
        "AFFILIATE" of any specified
Person means any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified Person. For
purposes of this definition, "control," as used with respect to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person will be
deemed to be control. For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" have correlative
meanings.

      

      
        


      

      
        "APPLICABLE PROCEDURES" means,
with respect to any transfer or exchange of or for beneficial interests in any
Global Note, the rules and procedures of the Depositary, Euroclear and
Clearstream that apply to such transfer or exchange.

      

      
        


      

      
        "BOARD OF DIRECTORS"
means:

      

      
        


      

      
        (1)    
       with respect to a corporation, the
board of directors of the corporation or any committee thereof duly authorized
to act on behalf of such board;

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      
        (2)        
   with respect to a partnership, the Board of Directors of the
general partner of the partnership;

      

      
        


      

      
        (3)         
  with respect to a limited liability company, the managing member or
members or any controlling committee of managing members thereof;
and

      

      
        


      

      
        (4)          
 with respect to any other Person, the board or committee of such Person
serving a similar function.

      

      
        


      

      
        "BUSINESS DAY" means any day
other than a Legal Holiday.

      

      
        


      

      
        "CLEARSTREAM" means
Clearstream Banking, S.A.

      

      
        


      

      
        "CLOSING DATE" means the date
hereof.

      

      
        


      

      
        "COMMISSION" means the
Securities and Exchange Commission.

      

      
        


      

      
        "DEFINITIVE WARRANT" means a
certificated Warrant registered in the name of the Holder thereof and issued in
accordance with Section 3.5 hereof,
substantially in the form of Exhibit A hereto
except that such Warrant shall not bear the Global Warrant Legend and shall not
have the "Schedule of Exchanges of Interests in the Global Warrant" attached
thereto.

      

      
        


      

      
        "DEPOSITARY" means, with
respect to the Warrants issuable or issued in whole or in part in global form,
the Person specified in Section 3.3 hereof as
the Depositary with respect to the Warrants, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of the Indenture.

      

      
        


      

      
        "EQUITY REGISTRATION RIGHTS
AGREEMENT" means the registration rights agreement, dated as of March 23,
2004, by and between the Company and the Initial Purchasers relating to the
Warrant Shares.

      

      
        


      

      
        "EUROCLEAR" means Euroclear
Bank S.A./N.V., as operator of the Euroclear system.

      

      
        


      

      
        "EXCHANGE ACT" means the
Securities Exchange Act of 1934, as amended.

      

      
        


      

      
        "EXERCISE PRICE" means the
amount set forth in the form of Warrant Certificate attached hereto as Exhibit A, as
adjusted as herein provided.

      

      
        


      

      
        "GLOBAL WARRANTS" means,
individually and collectively, each of the Restricted Global Warrants and the
Unrestricted Global Warrants, substantially, in the form of Exhibit A hereto
issued in accordance with Section 3.1(b) and
Section 3.5
hereof.

      

      
        


      

      
        "GLOBAL WARRANT LEGEND" means
the legend set forth in Section 3.5(g)(ii),
which is required to be placed on all Global Warrants issued under this Warrant
Agreement.

      


      
        
           


        

        
          2

          
            

          

        

        
           


        

      


      
        "INDENTURE" means the
indenture, dated as of March 23, 2004, among the Company, the Guarantors set
forth therein and U.S. Bank National Association, as trustee, relating to the
Notes.

      

      
        


      

      
        "INDIRECT PARTICIPANT" means a
Person who holds a beneficial interest in a Global Warrant through a
Participant.

      

      
        


      

      
        "INITIAL PURCHASERS" means
Bear, Stearns & Co. Inc. and Deutsche Bank Securities
Inc.

      

      
        


      

      
        "INSTITUTIONAL ACCREDITED INVESTOR"
means an institution that is an "accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act, which is not also a
QIB.

      

      
        


      

      
        "LEGAL HOLIDAY" means a
Saturday, a Sunday or a day on which banking institutions in the City of New
York, the city in which the corporate trust office of the Warrant Agent is
located or at a place of payment are authorized or obligated by law, regulation
or executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.

      

      
        


      

      
        "NON-U.S. PERSON" means any
Person other than a U.S. Person.

      

      
        


      

      
        "OFFICER" means, with respect
to any Person, the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Vice-President of such Person.

      

      
        


      

      
        "OPINION OF COUNSEL" means an
opinion from legal counsel who is reasonably acceptable to the Warrant Agent in
form and substance reasonably acceptable to the Warrant Agent. The counsel may
be an employee of or counsel to the Company, any subsidiary of the Company or
the Warrant Agent.

      

      
        


      

      
        "PARTICIPANT" means, with
respect to the Depositary, Euroclear or Clearstream, a Person who has an account
with the Depositary, Euroclear or Clearstream, respectively (and, with respect
to DTC, shall include Euroclear and Clearstream).

      

      
        


      

      
        "PERSON" means any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, limited liability company or government or
other entity.

      

      
        


      

      
        "PRIVATE PLACEMENT LEGEND"
means the legend set forth in Section 3.5(g)(i) to
be placed on all Warrants issued under this Warrant Agreement except where
otherwise permitted by the provisions of this Warrant
Agreement.

      

      
        


      

      
        "QIB" means a "qualified
institutional buyer" as defined in Rule 144A.

      

      
        


      

      
        "REGULATION S" means
Regulation S promulgated under the Securities Act.

      


      
        
           


        

        
          3

          
            

          

        

        
           


        

      


      
        "REGULATION S GLOBAL WARRANT"
means a global Warrant in the form of Exhibit A hereto
bearing the Global Warrant Legend, the Private Placement Legend and the
Regulation S Legend and deposited with or on behalf of and registered in the
name of the Depositary or its nominee.

      

      
        


      

      
        "REGULATION S LEGEND" means
the legend set forth in Section 3.5(g)(iv) to
be placed on all Regulation S Global Warrants issued pursuant to Regulation
S.

      

      
        


      

      
        "RESTRICTED DEFINITIVE WARRANT"
means a Definitive Warrant bearing the Private Placement
Legend.

      

      
        


      

      
        "RESTRICTED GLOBAL WARRANT"
means a Global Warrant bearing the Private Placement
Legend.

      

      
        


      

      
        "RULE 144" means Rule 144
promulgated under the Securities Act.

      

      
        


      

      
        "RULE 144A" means Rule 144A
promulgated under the Securities Act.

      

      
        


      

      
        "RULE 903" means Rule 903
promulgated under the Securities Act.

      

      
        


      

      
        "RULE 904" means Rule 904
promulgated under the Securities Act.

      

      
        


      

      
        "SECURITIES ACT" means the
Securities Act of 1933, as amended.

      

      
        


      

      
        "SEPARATION DATE" means the
earliest to occur of (i) 180 days after the date hereof, (ii) the date on which
a registration statement for a registered exchange offer with respect to the
Notes is declared effective under the Securities Act, (iii) the date on which a
shelf registration statement with respect to the Warrant Shares is declared
effective under the Securities Act, (iv) in the event a Change of Control
occurs, the date on which the Company mails the required notice thereof to the
holders of Notes of the occurrence of a Change of Control, (v) in the event an
Asset Sale Offer is required to be made, the date on which the Company mails the
required notice thereof to the holders of Notes of the occurrence of an Asset
Sale Offer, (vi) in the event that the Company engages in an optional redemption
of the Notes after an Equity Offering, the date on which the Company mails the
required notice thereof to the holders of Notes of the optional redemption,
(vii) a Restructuring (as defined in the Indenture), (viii) an Event of Default
under the Indenture and (ix) such date as Bear, Stearns & Co. Inc. in its
sole discretion shall determine.

      

      
        


      

      
        "TRANSFER RESTRICTED SECURITIES"
shall mean (a) each Warrant and Warrant Share held by an Affiliate of the
Company and (b) each other Warrant and Warrant Share until the earlier to occur
of (i) with respect to each such Warrant Share only, the date on which such
Warrant Share has been effectively registered under the Securities Act and
disposed of in accordance with a Registration Statement covering it (and the
purchasers thereof have been issued a registered freely tradable security) and
(ii) the date on which such Warrant or Warrant Share is distributed to the
public pursuant to Rule 144 under the Securities Act.

      

      
        


      

      
        "TRUSTEE" means the trustee
under the Indenture.

      


      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      
        "UNRESTRICTED GLOBAL WARRANT"
means a global Warrant substantially in the form of Exhibit A attached
hereto that bears the Global Warrant Legend and that has the "Schedule of
Exchanges of Interests in the Global Warrant" attached thereto, and that is
deposited with or on behalf of and registered in the name of the Depositary,
representing a series of Warrants that do not bear the Private Placement
Legend.

      

      
        


      

      
        "UNRESTRICTED DEFINITIVE WARRANT"
means one or more Definitive Warrants that do not bear and are not
required to bear the Private Placement Legend.

      

      
        


      

      
        "U.S. PERSON" means a U.S.
person as defined in Rule 902(k) under the Securities Act.

      

      
        


      

      
        "WARRANT PAYING AGENT" means
an office or agency where Warrants may be presented for surrender. The Company
initially appoints the Warrant Agent to act as Warrant Paying
Agent.

      

      
        


      

      
        
          	
                	
                  SECTION
    2.

                	
                  APPOINTMENT OF WARRANT
      AGENT.

                


        

      

      
        


      

      
        The
Company hereby appoints the Warrant Agent to act as agent for the Company in
accordance with the instructions set forth hereinafter in this Agreement and the
Warrant Agent hereby accepts such appointment.

      

      
        


      

      
        
          	
                	
                  SECTION
    3.

                	
                  ISSUANCE OF WARRANTS;
      WARRANT CERTIFICATES

                


        

      

      
        


      

      
        3.1           FORM
AND DATING.

      

      
        


      

      
        (a)         
  General.

      

      
        


      

      
        The
Warrants shall be substantially in the form of Exhibit A hereto
(each a "WARRANT CERTIFICATE").
The Warrants may have notations, legends or endorsements required by law,
stock exchange rule or usage. Each Warrant shall be dated the date of the
countersignature.

      

      
        


      

      
        The terms
and provisions contained in the Warrants shall constitute, and are hereby
expressly made, a part of this Warrant Agreement. The Company and the Warrant
Agent, by their execution and delivery of this Warrant Agreement, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Warrant conflicts with the express provisions of
this Warrant Agreement, the provisions of this Warrant Agreement shall govern
and be controlling.

      

      
        


      

      
        (b)          
 Global
Warrants.

      

      
        


      

      
        Warrants
issued in global form shall be substantially in the form of Exhibit A attached
hereto (including the Global Warrant Legend thereon and the "Schedule of
Exchanges of Interests in the Global Warrant" attached thereto). Warrants issued
in definitive form shall be substantially in the form of Exhibit A attached
hereto (but without the Global Warrant Legend thereon and without the "Schedule
of Exchanges of Interests in the Global Warrant" attached thereto). Each Global
Warrant shall represent such of the outstanding Warrants as shall be specified
therein and each shall provide that it shall represent the number of outstanding
Warrants from time to time endorsed thereon and that the number of outstanding
Warrants represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Warrant to reflect the amount of any increase or decrease in the number of
outstanding Warrants represented thereby shall be made by the Warrant Agent in
accordance with instructions given by the holder thereof as required by Section 3.5
hereof.

      


      
        
           


        

        
          5

          
            

          

        

        
           


        

      

       

      
        (c)       
    Euroclear and Clearstream Procedures
Applicable.

      

      
        


      

      
        The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the "General Terms and Conditions of
Clearstream Banking" and "Customer Handbook" of Clearstream shall be applicable
to transfers of beneficial interests in the Regulation S Global Warrant that are
held by Participants through Euroclear or Clearstream.

      

      
        


      

      
        3.2           EXECUTION

      

      
        


      

      
        An
Officer shall sign the Warrants on behalf of the Company by manual or facsimile
signature.

      

      
        


      

      
        If the
Officer whose signature is on a Warrant no longer holds that office at the time
a Warrant is countersigned, the Warrant shall nevertheless be
valid.

      

      
        


      

      
        A Warrant
shall not be valid until countersigned by the manual signature of the Warrant
Agent. The signature shall be conclusive evidence that the Warrant has been
properly issued under this Warrant Agreement.

      

      
        


      

      
        The
Warrant Agent shall, upon a written order of the Company signed by an Officer (a
"WARRANT COUNTERSIGNATURE
ORDER"), countersign Warrants for original issue up to the number stated
in the preamble hereto.

      

      
        


      

      
        The
Warrant Agent may appoint an agent acceptable to the Company to countersign
Warrants. Such an agent may countersign Warrants whenever the Warrant Agent may
do so. Each reference in this Warrant Agreement to a countersignature by the
Warrant Agent includes a countersignature by such agent. Such an agent has the
same rights as the Warrant Agent to deal with the Company or an Affiliate of the
Company.

      

      
        


      

      
        3.3           WARRANT
REGISTRAR AND DEPOSITARY

      

      
        


      

      
        The
Company shall maintain an office or agency where Warrants may be presented for
registration of transfer or for exchange ("WARRANT REGISTRAR"). The
Warrant Registrar shall keep a register of the Warrants and of their transfer
and exchange. The Company may appoint one or more co-Warrant Registrars. The
term "Warrant Registrar" includes any co-Warrant Registrar. The Company may
change any Warrant Registrar without notice to any holder. The Company shall
notify the Warrant Agent in writing of the name and address of any agent not a
party to this Warrant Agreement. If the Company fails to appoint or maintain
another entity as Warrant Registrar, the Warrant Agent shall act as such. The
Company or any of its subsidiaries may act as Warrant
Registrar.

      


      
        
           


        

        
          6

          
            

          

        

        
           


        

      

       

      
        The
Company initially appoints the Warrant Agent to act as the Warrant Registrar
with respect to the Global Warrants.

      

      
        


      

      
        The
Company initially appoints The Depository Trust Company ("DTC") to act as
Depositary with respect to the Global Warrants.

      

      
        


      

      
        3.4           HOLDER
LISTS

      

      
        


      

      
        The
Warrant Agent shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of all holders
of Warrants. If the Warrant Agent is not the Warrant Registrar, the Company
shall promptly furnish to the Warrant Agent at such times as the Warrant Agent
may request in writing, a list in such form and as of such date as the Warrant
Agent may reasonably require of the names and addresses of the
holders.

      

      
        


      

      
        3.5           TRANSFER
AND EXCHANGE

      

      
        


      

      
        (a)      
     Transfer and Exchange of Global
Warrants.

      

      
        


      

      
        A Global
Warrant may not be transferred as a whole except by the Depositary to a nominee
of the Depositary, by a nominee of the Depositary to the Depositary or to
another nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Warrants will be exchanged by the Company for Definitive Warrants if (i) the
Company delivers to the Warrant Agent notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Warrants (in whole but not in part) should
be exchanged for Definitive Warrants and delivers a written notice to such
effect to the Warrant Agent. Upon the occurrence of either of the preceding
events in clauses (i) or (ii) above, Definitive Warrants shall be issued in such
names as the Depositary shall instruct the Warrant Agent. Global Warrants also
may be exchanged or replaced, in whole or in part, as provided in Sections 3.6 and 3.7
hereof. A Global Warrant may not be exchanged for another Warrant other than as
provided in this Section 3.5(a),
however, beneficial interests in a Global Warrant may be transferred and
exchanged as provided in Section 3.5(b) or (c)
hereof.

      

      
        


      

      
        (b)      
     Transfer and Exchange of Beneficial
Interests in the Global Warrants.

      

      
        


      

      
        The
transfer and exchange of beneficial interests in the Global Warrants shall be
effected through the Depositary, in accordance with the provisions of this
Warrant Agreement and the Applicable Procedures. Beneficial interests in the
Restricted Global Warrants shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Warrants also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as
applicable:

      


      
        
           


        

        
          7

          
            

          

        

        
           


        

      


      
        (i)            
Transfer
of Beneficial Interests in the Same Global Warrant. Beneficial interests in any Restricted
Global Warrant may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in the same Restricted Global Warrant in
accordance with the
transfer restrictions set forth in the Private Placement Legend. Beneficial
interests in any
Unrestricted Global Warrant may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted Global Warrant.
No written orders or instructions shall be required to be delivered to the
Warrant Registrar to effect the transfers described in this Section
3.5(b)(i).

      

      
        


      

      
        (ii)           
All
Other Transfers and Exchanges of Beneficial Interests in Global
Warrants. In connection with all transfers and
exchanges of beneficial interests that are not subject to Section
3.5(b)(i) above, the
transferor of such beneficial interest must deliver to the Warrant Registrar both (A) (1) a
written or electronic order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Warrant in an amount equal to the beneficial interest
to be transferred or exchanged and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to be
credited with such increase or both (B) (1) a written or electronic order from a
Participant or an Indirect Participant given to the Depositary in accordance
with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Warrant in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to the
Warrant Registrar containing information regarding the Person in whose name
such Definitive Warrant
shall be registered. Upon satisfaction of all of the requirements for
transfer or exchange of
beneficial interests in Global Warrants contained in this Agreement and
the Warrants or otherwise
applicable under the Securities Act, the Warrant Agent shall adjust the
principal amount of the
relevant Global Warrant(s) pursuant to Section
3.5(g)
hereof.

      

      
        


      

      
        (iii)          
Transfer
of Beneficial Interests to Another Restricted Global Warrant. A beneficial interest in any Restricted
Global Warrant may be transferred to a Person who takes delivery thereof in the form
of a beneficial interest in another Restricted Global Warrant if the transfer
complies with the requirements of Section
3.5(b)(ii) above and the
Warrant Registrar receives the following:

      

      
        


      

      
        (A)           if
the transferee will take delivery in the form of a beneficial interest in the
144A Global Warrant, then the transferor must deliver a certificate in the form
of Exhibit B
hereto, including the certifications in item (1) thereof; and

      

      
        


      

      
        (B)           if
the transferee will take delivery in the form of a beneficial interest in the
Regulation S Global Warrant, then the transferor must deliver a certificate in
the form of Exhibit
B hereto, including the certifications in item (2)
thereof.

      

      
        


      

      
        (iv)          
Transfer
and Exchange of Beneficial Interests in a Restricted Global
Warrant for Beneficial Interests in the Unrestricted Global Warrant. A beneficial interest in any Restricted Global Warrant may be
exchanged by any holder thereof for a beneficial interest in an Unrestricted Global
Warrant or transferred to a Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Warrant if the exchange or transfer complies
with the requirements of Section 3.5(b)(ii)
above and the Warrant Registrar receives the
following:

      


      
        
           


        

        
          8

          
            

          

        

        
           


        

      

       

      
        (A)           if
the holder of such beneficial interest in a Restricted Global Warrant proposes
to exchange such beneficial interest for a beneficial interest in an
Unrestricted Global Warrant, a certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (l)(a) thereof; or

      

      
        


      

      
        (B)           if
the holder of such beneficial interest in a Restricted Global Warrant proposes
to transfer such beneficial interest to a Person who shall take delivery thereof
in the form of a beneficial interest in an Unrestricted Global Warrant, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;

      

      
        


      

      
        and, in
each such case set forth in this subparagraph (iv), if the Warrant Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Warrant Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the Securities
Act.

      

      
        


      

      
        If any
such transfer is effected pursuant to subparagraph (iv) above at a time when an
Unrestricted Global Warrant has not yet been issued, the Company shall issue
and, upon receipt of an Warrant Countersignature Order in accordance with Section 3.2 hereof,
the Warrant Agent shall countersign one or more Unrestricted Global Warrants in
the number equal to the number of beneficial interests transferred pursuant to
subparagraph (iv) above.

      

      
        


      

      
        (c)      
     Transfer and Exchange of Beneficial
Interests for Definitive Warrants.

      

      
        


      

      
        (i)            
Beneficial
Interests in Restricted Global Warrants to Restricted Definitive
Warrants. If any holder of a beneficial interest
in a Restricted Global Warrant proposes to exchange such beneficial
interest for a Restricted Definitive Warrant or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Restricted Definitive Warrant, then, upon receipt
by the Warrant Registrar of the following
documentation:

      

      
        


      

      
        (A)           if
the holder of such beneficial interest in a Restricted Global Warrant proposes
to exchange such beneficial interest for a Restricted Definitive Warrant, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (2)(a) thereof;

      

      
        


      

      
        (B)           if
such beneficial interest is being transferred to a QIB in accordance with Rule
144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;

      

      
        


      

      
        (C)           if
such beneficial interest is being transferred to a Non-U.S. Person in an
offshore transaction in accordance with Rule 903 or Rule 904 under the
Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;

      


      
        
           


        

        
          9

          
            

          

        

        
           


        

      


      
        (D)           if
such beneficial interest is being transferred pursuant to an exemption from the
registration requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof; or

      

      
        


      

      
        (E)           if
such beneficial interest is being transferred to the Company or any of its
Subsidiaries, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof;

         


        the
Warrant Agent shall cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be reduced by the number of
Warrants to be represented by the Definitive Warrant pursuant to Section 3.5(g)
hereof, and the Company shall execute and the Warrant Agent shall countersign
and deliver to the Person designated in the instructions a Definitive Warrant in
the appropriate amount. Any Definitive Warrant issued in exchange for a
beneficial interest in a Restricted Global Warrant pursuant to this Section 3.5(c) shall
be registered in such name or names as the holder of such beneficial interest
shall instruct the Warrant Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Warrant Agent shall deliver
such Definitive Warrants to the Persons in whose names such Warrants are so
registered. Any Definitive Warrant issued in exchange for a beneficial interest
in a Restricted Global Warrant pursuant to this Section 3.5(c)(i)
shall bear the Private Placement Legend and shall be subject to all restrictions
on transfer contained therein.

      

      
        


      

      
        (ii)            Beneficial
Interests in Restricted Global Warrants to Unrestricted Definitive
Warrants. A holder of a beneficial interest in a
Restricted Global Warrant may exchange such beneficial interest for
an Unrestricted Definitive Warrant or may transfer such beneficial interest to a Person who
takes delivery thereof in the form of an Unrestricted Definitive Warrant only if the Warrant
Registrar receives the following:

      

      
        


      

      
        (A)           if
the holder of such beneficial interest in a Restricted Global Warrant proposes
to exchange such beneficial interest for an Unrestricted Definitive Warrant, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (l)(b) thereof; or

      

      
        


      

      
        (B)           if
the holder of such beneficial interest in a Restricted Global Warrant proposes
to transfer such beneficial interest to a Person who shall take delivery thereof
in the form of an Unrestricted Definitive Warrant, a certificate from such
holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;

      

      
        


      

      
        and, in
each such case set forth in this subparagraph (ii), if the Warrant Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Warrant Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the Securities
Act.

      

      
        


      

      
        (iii)          
Beneficial
Interests in Unrestricted Global Warrants to Unrestricted
Definitive Warrants. If any holder of a beneficial interest
in an Unrestricted Global Warrant
proposes to exchange such beneficial interest for a Definitive Warrant or to
transfer such beneficial interest to a Person who takes delivery thereof in the
form of a Definitive Warrant, then, upon satisfaction of the conditions set
forth in Section
3.5(b)(ii) hereof, the Warrant Agent shall cause the amount of the
applicable Global Warrant to be reduced accordingly pursuant to Section 3.5(g)
hereof, and the Company shall execute and the Warrant Agent shall countersign
and deliver to the Person designated in the instructions a Definitive Warrant in
the appropriate principal amount. Any Definitive Warrant issued in exchange for
a beneficial interest pursuant to this Section 3.5(c)(iii)
shall be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Warrant Registrar through instructions from the Depositary and the Participant
or Indirect Participant. The Warrant Agent shall deliver such Definitive
Warrants to the Persons in whose names such Warrants are so registered. Any
Definitive Warrant issued in exchange for a beneficial interest pursuant to this
Section
3.5(c)(iii) shall not bear the Private Placement
Legend.

      


      
        
           


        

        
          10

          
            

          

        

        
           


        

      


      
 

      
        (d)           Transfer and Exchange of Definitive
Warrants for Beneficial Interests.

      

      
        


      

      
        (i)            
Restricted
Definitive Warrants to Beneficial Interests in Restricted Global
Warrants. If any holder of a Restricted
Definitive Warrant proposes to exchange such Warrant for a beneficial interest
in a Restricted Global Warrant or to transfer such Restricted Definitive Warrants to a Person who
takes delivery thereof in the form of a beneficial interest in a Restricted
Global Warrant, then, upon receipt by the Warrant Registrar of the following
documentation:

      

      
        


      

      
        (A)           if
the holder of such Restricted Definitive Warrant proposes to exchange such
Warrant for a beneficial interest in a Restricted Global Warrant, a certificate
from such holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;

      

      
        


      

      
        (B)           if
such Restricted Definitive Warrant is being transferred to a QIB in accordance
with Rule 144A under the Securities Act, a certificate to the effect set forth
in Exhibit B
hereto, including the certifications in item (1) thereof;

      

      
        


      

      
        (C)           if
such Restricted Definitive Warrant is being transferred to a Non-U.S. Person in
an offshore transaction in accordance with Rule 903 or Rule 904 under the
Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;

      

      
        


      

      
        (D)           if
such Restricted Definitive Warrant is being transferred pursuant to an exemption
from the registration requirements of the Securities Act in accordance with Rule
144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;

      

      
        


      

      
        (E)           if
such Restricted Definitive Warrant is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration
requirements of the Securities Act other than those listed in subparagraphs (B)
through (D) above, a certificate to the effect set forth in Exhibit B hereto,
including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if applicable;
or

      


      
        
           


        

        
          11

          
            

          

        

        
           


        

      

       

      
        (F)           if
such Restricted Definitive Warrant is being transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit
B hereto, including the certifications in item
(3)(b) thereof;

      

      
        


      

      
        the
Warrant Agent shall cancel the Restricted Definitive Warrant, increase or cause
to be increased the amount of, in the case of clause (A) above, the appropriate
Restricted Global Warrant, in the case of clause (C) above, the Regulation S
Global Warrant, and in all other cases, the 144A Global
Warrant.

      

      
        


      

      
        (ii)           
Restricted
Definitive Warrants to Beneficial Interests in Unrestricted
Global Warrants. A holder of a Restricted Definitive
Warrant may exchange such Warrant for a beneficial interest in an Unrestricted
Global Warrant or transfer such Restricted Definitive Warrant to a Person who
takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Warrant only if
the Warrant Registrar receives the following:

      

      
        


      

      
        (A)           if
the holder of such Definitive Warrants proposes to exchange such Warrants for a
beneficial interest in the Unrestricted Global Warrant, a certificate from such
holder in the form of Exhibit C hereto,
including the certifications in item (l)(c) thereof; or

      

      
        


      

      
        (B)           if
the holder of such Definitive Warrants proposes to transfer such Warrants to a
Person who shall take delivery thereof in the form of a beneficial interest in
the Unrestricted Global Warrant, a certificate from such holder in the form of
Exhibit B
hereto, including the certifications in item (4)
thereof;

      

      
        


      

      
        and, in
each such case set forth in this subparagraph (ii), if the Warrant Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Warrant Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the Securities
Act.

      

      
        


      

      
        Upon
satisfaction of the conditions of any of the subparagraphs in this Section 3.5(d)(ii),
the Warrant Agent shall cancel the Definitive Warrants and increase or cause to
be increased the aggregate principal amount of the Unrestricted Global
Warrant.

      

      
        


      

      
        (iii)          
Unrestricted
Definitive Warrants to Beneficial Interests in Unrestricted
Global Warrants. A holder of an Unrestricted Definitive
Warrant may exchange such
Warrant for a beneficial interest in an Unrestricted Global Warrant or transfer
such Definitive Warrants
to a Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Warrant at any time. Upon receipt of a request for such
an exchange or transfer,
the Warrant Agent shall cancel the applicable Unrestricted Definitive Warrant
and increase or cause to
be increased the amount of one of the Unrestricted Global
Warrants.

      

      
        


      

      
        If any
such exchange or transfer from a Definitive Warrant to a beneficial interest is
effected pursuant to subparagraphs (ii)(B) or (iii) above at a time when an
Unrestricted Global Warrant
has not yet been issued, the Company shall issue and, upon receipt of an Warrant
Countersignature Order in accordance with Section 3.2 hereof,
the Warrant Agent shall countersign one or more Unrestricted Global Warrants in
the number equal to the number of beneficial interests of Definitive Warrants so
transferred.

      


      
        
           


        

        
          12

          
            

          

        

        
           


        

      

       

      
        (e)      
     Transfer and Exchange of Definitive
Warrants for Definitive Warrants.

      

      
        


      

      
        Upon
request by a holder of Definitive Warrants and such holder's compliance with the
provisions of this Section 3.5(e), the
Warrant Registrar shall register the transfer or exchange of Definitive
Warrants. Prior to such registration of transfer or exchange, the requesting
holder shall present or surrender to the Warrant Registrar the Definitive
Warrants duly endorsed or accompanied by a written instruction of transfer in
form satisfactory to the Warrant Registrar duly executed by such holder or by
its attorney, duly authorized in writing. In addition, the requesting holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
3.5(e).

      

      
        


      

      
        (i)            
Restricted
Definitive Warrants to Restricted Definitive Warrants. Any Restricted Definitive Warrant may
be transferred to and registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Warrant if the Warrant Registrar receives the
following:

      

      
        


      

      
        (A)           if
the transfer will be made pursuant to Rule 144A, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;

      

      
        


      

      
        (B)           if
the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; or

      

      
        


      

      
        (C)           if
the transfer will be made pursuant to any other exemption from the registration
requirements of the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable.

      

      
        


      

      
        (ii)           
Restricted
Definitive Warrants to Unrestricted Definitive Warrants. Any Restricted Definitive Warrant may
be exchanged by the holder thereof for an Unrestricted Definitive Warrant or
transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted
Definitive Warrant if the Warrant Registrar receives the
following:

      

      
        


      

      
        (A)           if
the holder of such Restricted Definitive Warrants proposes to exchange such
Warrants for an Unrestricted Definitive Warrant, a certificate from such holder
in the form of Exhibit
C hereto, including the certifications in item (l)(d) thereof;
or

      

      
        


      

      
        (B)           if
the holder of such Restricted Definitive Warrants proposes to transfer such
Warrants to a Person who shall take delivery thereof in the form of an
Unrestricted Definitive Warrant, a certificate from such holder in the form of
Exhibit B
hereto, including the certifications in item (4) thereof;

         


        and, in
each such case set forth in this subparagraph (ii), if the Warrant Registrar so
requests, an Opinion of Counsel in form reasonably acceptable to the Warrant
Registrar to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain compliance
with the Securities Act.

      


      
        
           


        

        
          13

          
            

          

        

        
           


        

      

       

      
        (iii)          
Unrestricted
Definitive Warrants to Unrestricted Definitive Warrants. A holder of Unrestricted Definitive
Warrants may transfer such Warrants to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Warrant. Upon receipt of a request to register
such a transfer, the Warrant Registrar shall register the Unrestricted
Definitive Warrants
pursuant to the instructions from the holder thereof.

      

      
        


      

      
        (f)          
  Legends.

      

      
        


      

      
        The
following legends shall appear on the face of all Global Warrants and Definitive
Warrants issued under this Warrant Agreement unless specifically stated
otherwise in the applicable provisions of this Warrant
Agreement.

      

      
        


      

      
        (i)            
Private
Placement Legend.

      

      
        


      

      
        (A)           Except
as permitted by subparagraph (B) below, each Global Warrant and each Definitive
Warrant (and all Warrants issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:

      

      
        


      

      
        "THIS
SECURITY AND THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY, THE WARRANT SHARES TO BE
ISSUED UPON ITS EXERCISE NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

      

      
        


      

      
        THE
HOLDER OF THIS SECURITY AND THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE,
BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY AND THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH GRANDE
COMMUNICATIONS HOLDINGS, INC. ("GRANDE") OR ANY AFFILIATE OF GRANDE WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO GRANDE
OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (E) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO GRANDE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
IT, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.

      


      
        
           


        

        
          14

          
            

          

        

        
           


        

      

       

      
        THE
HOLDER OF THIS SECURITY AND THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE,
BY ITS ACCEPTANCE HEREOF, AGREES NOT TO ENGAGE IN ANY HEDGING TRANSACTION UNLESS
IN COMPLIANCE WITH THE SECURITIES ACT. THE HOLDER OF THIS SECURITY AND THE
WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE, BY ITS ACCEPTANCE HEREOF, AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THESE
LEGENDS."

      

      
        


      

      
        (B)           Notwithstanding
the foregoing, any Global Warrant or Definitive Warrant issued pursuant to
subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii)
or (f) of this Section
3.5 (and all Warrants issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.

      


      
        
           


        

        
          15

          
            

          

        

        
           


        

      


      
        (ii)           
Global
Warrant Legend. Each Global Warrant shall bear a
legend in substantially
the following form:

      

      
        


      

      
        "THIS
GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE WARRANT AGREEMENT
GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (II) THIS
GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
3.5(a) OF THE WARRANT AGREEMENT, (III) THIS GLOBAL WARRANT MAY BE DELIVERED TO
THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 3.8 OF THE WARRANT
AGREEMENT AND (IV) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."

      

      
        


      

      
        (iii)           Unit
Legend. Prior to the Separation Date, a Unit
Certificate shall be
attached to all Warrants issued hereunder, and such Unit Certificate shall bear
a legend in substantially the following form:

      

      
        


      

      
        "THE
UNITS EVIDENCED BY THIS CERTIFICATE EACH CONSIST OF $1,000 PRINCIPAL AMOUNT AT
MATURITY OF THE 14% SENIOR SECURED NOTES DUE 2011 (THE "NOTES") OF GRANDE
COMMUNICATIONS HOLDINGS, INC. AND ONE WARRANT TO PURCHASE 100.336 SHARES OF
COMMON STOCK, PAR VALUE $0.001 PER SHARE, OF GRANDE COMMUNICATIONS HOLDINGS,
INC., SUBJECT TO CERTAIN ADJUSTMENTS.

      

      
        


      

      
        PRIOR
TO THE EARLIEST TO OCCUR OF (I) 180 DAYS AFTER THE CLOSING OF THE OFFERING OF
THE UNITS, (II) THE DATE ON WHICH A REGISTRATION STATEMENT WITH RESPECT TO A
REGISTERED EXCHANGE OFFER FOR THE NOTES IS DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (III) THE DATE ON WHICH A SHELF REGISTRATION STATEMENT WITH
RESPECT TO THE WARRANT SHARES IS DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(IV) IN THE EVENT A CHANGE OF CONTROL (AS DEFINED IN THE INDENTURE GOVERNING THE
NOTES) OCCURS, THE DATE ON WHICH THE COMPANY MAILS THE REQUIRED NOTICE THEREOF
TO THE HOLDERS OF NOTES OF THE OCCURRENCE OF A CHANGE OF CONTROL, (V) IN THE
EVENT AN ASSET SALE OFFER (AS DEFINED IN THE INDENTURE GOVERNING THE NOTES) IS
REQUIRED TO BE MADE, THE DATE ON WHICH THE COMPANY MAILS THE REQUIRED NOTICE
THEREOF TO THE HOLDERS OF NOTES OF THE OCCURRENCE OF SUCH ASSET SALE OFFER,
(VI) IN THE EVENT THAT THE COMPANY ENGAGES IN AN OPTIONAL REDEMPTION OF THE
NOTES AFTER AN EQUITY OFFERING (AS DEFINED IN THE INDENTURE GOVERNING THE
NOTES), THE DATE ON WHICH THE COMPANY MAILS THE REQUIRED NOTICE THEREOF TO THE
HOLDERS OF NOTES OF SUCH OPTIONAL REDEMPTION, (VII) A RESTRUCTURING (AS DEFINED
IN THE INDENTURE GOVERNING THE NOTES), (VIII) AN EVENT OF DEFAULT UNDER THE
INDENTURE GOVERNING THE NOTES, AND (IX) SUCH DATE AS BEAR, STEARNS & CO.
INC. IN ITS SOLE DISCRETION SHALL DETERMINE, THE SECURITIES ATTACHED TO THIS
UNIT CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM EACH OTHER,
BUT MAY BE TRANSFERRED OR EXCHANGED ONLY AS A
UNIT."

      


      
        
           


        

        
          16

          
            

          

        

        
           


        

      

       

      
        (iv)          
Regulation
S Legend. Each Warrant that is a Registrable
Security and issued
pursuant to Regulation S shall bear the following legend on the face
thereof:

      

      
        


      

      
        "THIS
WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT AND THE WARRANT MAY NOT BE EXERCISED BY OR
ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE. IN ORDER TO EXERCISE THIS WARRANT, THE HOLDER MUST FURNISH TO THE
COMPANY AND THE WARRANT AGENT EITHER (A) A WRITTEN CERTIFICATION THAT IT IS NOT
A U.S. PERSON AND THE WARRANT IS NOT BEING EXERCISED ON BEHALF OF A U.S. PERSON
OR (B) A WRITTEN OPINION OF COUNSEL TO THE EFFECT THAT THE SECURITIES DELIVERED
UPON EXERCISE OF THE WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR
THAT THE DELIVERY OF SUCH SECURITIES IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. TERMS IN THIS LEGEND HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT."

      

      
        


      

      
        (g)      
     Cancellation and/or Adjustment of
Global Warrants.

      

      
        


      

      
        At such
time as all beneficial interests in a particular Global Warrant have been
exercised or exchanged for Definitive Warrants or a particular Global Warrant
has been exercised, redeemed, repurchased or canceled in whole and not in part,
each such Global Warrant shall be returned to or retained and canceled by the
Warrant Agent in accordance with Section 3.8 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Warrant is exercised or exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Warrant
or for Definitive Warrants, the amount of Warrants represented by such Global
Warrant shall be reduced accordingly and an endorsement
shall be made on such Global Warrant by the Warrant Agent or by the Depositary
at the direction of the Warrant Agent to reflect such reduction; and if the
beneficial interest is being exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Warrant, such other Global Warrant shall be increased accordingly and an
endorsement shall be made on such Global Warrant by the Warrant Agent or by the
Depositary at the direction of the Warrant Agent to reflect such
increase.

      


      
        
           


        

        
          17

          
            

          

        

        
           


        

      

       

      
        (h)      
     General Provisions Relating to
Transfers and Exchanges.

      

      
        


      

      
        (i)            
To permit registrations of
transfers and exchanges, the Company shall execute and the Warrant Agent
shall countersign Global Warrants and Definitive Warrants upon the Company's order or at the
Warrant Registrar's request.

      

      
        


      

      
        (ii)           
No service charge shall be
made to a holder of a beneficial interest in a Global Warrant or to a holder of a
Definitive Warrant for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith.

      

      
        


      

      
        (iii)          
All Global Warrants and
Definitive Warrants issued upon any registration of transfer or exchange of
Global Warrants or Definitive Warrants shall be the duly authorized, executed and issued
warrants for Common Stock of the Company, not subject to any preemptive rights,
and entitled to the same benefits under this Warrant Agreement, as the Global
Warrants or Definitive Warrants surrendered upon such registration of transfer
or exchange.

      

      
        


      

      
        (iv)          
Prior to due presentment
for the registration of a transfer of any Warrant, the Warrant Agent, and the
Company may deem and treat the Person in whose name any Warrant is registered as the
absolute owner of such Warrant for all purposes and none of the Warrant Agent,
or the Company shall be affected by notice to the
contrary.

      

      
        


      

      
        (v)           
The Warrant Agent shall
countersign Global Warrants and Definitive Warrants in accordance with
the provisions of Section
3.2
hereof.

      

      
        


      

      
        (i)         
   Facsimile
Submissions to Warrant Agent.

      

      
        


      

      
        All
certifications, certificates and Opinions of Counsel required to be submitted to
the Warrant Registrar pursuant to this Section 3.5 to effect
a registration of transfer or exchange may be submitted by
facsimile.

      

      
        


      

      
        Notwithstanding
anything herein to the contrary, as to any certificates and/or certifications
delivered to the Warrant Registrar pursuant to this Section 3.5, the
Warrant Registrar's duties shall be limited to confirming that any such
certifications and certificates delivered to it are in the form of Exhibits B and C
attached hereto. The Warrant Registrar shall not be responsible for confirming
the truth or accuracy of representations made in any such certifications or
certificates. As to any Opinions of Counsel delivered pursuant to this Section 3.5, the
Warrant Registrar may rely upon, and be fully protected in relying upon, such
opinions.

      


      
        
           


        

        
          18

          
            

          

        

        
           


        

      


      
        3.6           REPLACEMENT
WARRANTS

      

      
        


      

      
        If any
mutilated Warrant is surrendered to the Warrant Agent or the Company and the
Warrant Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Warrant, the Company shall issue and the Warrant Agent, upon
receipt of a Warrant Countersignature Order, shall countersign a replacement
Warrant if the Warrant Agent's requirements are met. If required by the Warrant
Agent or the Company, an indemnity bond must be supplied by the holder that is
sufficient in the judgment of the Warrant Agent and the Company to protect the
Company, the Warrant Agent, any Agent and any agent for purposes of the
countersignature from any loss that any of them may suffer if a Warrant is
replaced. The Company may charge for its expenses in replacing a
Warrant.

      

      
        


      

      
        Every
replacement Warrant is an additional warrant of the Company and shall be
entitled to all of the benefits of this Warrant Agreement equally and
proportionately with all other Warrants duly issued
hereunder.

      

      
        


      

      
        3.7           TEMPORARY
WARRANTS

      

      
        


      

      
        Until
certificates representing Warrants are ready for delivery, the Company may
prepare and the Warrant Agent, upon receipt of a Warrant Countersignature Order,
shall issue temporary Warrants. Temporary Warrants shall be substantially in the
form of certificated Warrants but may have variations that the Company considers
appropriate for temporary Warrants and as shall be reasonably acceptable to the
Warrant Agent. Without unreasonable delay, the Company shall prepare and the
Warrant Agent shall countersign definitive Warrants in exchange for temporary
Warrants.

      

      
        


      

      
        Holders
of temporary Warrants shall be entitled to all of the benefits of this Warrant
Agreement.

      

      
        


      

      
        3.8           CANCELLATION

      

      
        


      

      
        Subject
to Section
3.5(g) hereof, the Company at any time may deliver Warrants to the
Warrant Agent for cancellation. The Warrant Registrar and Warrant Paying Agent
shall forward to the Warrant Agent any Warrants surrendered to them for
registration of transfer, exchange or exercise. The Warrant Agent and no one
else shall cancel all Warrants surrendered for registration of transfer,
exchange, exercise, replacement or cancellation and shall destroy canceled
Warrants (subject to the record retention requirement of the Exchange Act).
Certification of the destruction of all canceled Warrants shall be delivered to
the Company. The Company may not issue new Warrants to replace Warrants that
have been exercised or that have been delivered to the Warrant Agent for
cancellation.

      

      
        


      

      
        
          	
                	
                  SECTION
    4.

                	
                  SEPARATION OF
      WARRANTS; EXERCISE OF WARRANTS; TERMS OF
  WARRANTS

                


        

      

      
        


      

      
        (a)      
     The Notes and Warrants will not be separately
transferable until the Separation Date. Subject to the terms of this Agreement,
each Warrant holder shall have the right, which may be exercised during the
period commencing at the opening of business on the Separation Date and until
5:00 p.m., New York City time on April 1, 2011 (the "EXERCISE PERIOD"), to receive from the Company the number of fully paid
and nonassessable Warrant Shares which the holder may at the time be entitled to
receive on exercise of such Warrants and payment of the Exercise Price (i) in
cash, by wire transfer or by certified or official bank check payable to the
order of the Company, (ii) by tendering Notes having an Accreted Value (as
defined in the Indenture) at the time of tender equal to the Exercise Price then
in effect, (iii) by tendering Warrants as set forth below or (iv) any
combination of cash, Notes or Warrants. Each holder may elect, upon exercise of
its Warrants during the Exercise Period, to receive Warrant Shares on a net
basis, such that, without the exchange of any funds, the holder will receive
such number of Warrant Shares as shall equal the product of (A) the number of
Warrant Shares for which such Warrant is exercisable as of the date of exercise
(if the Exercise Price were being paid in cash) and (B) the Cashless Exercise
Ratio. The "CASHLESS EXERCISE RATIO" shall equal a
fraction the numerator of which is the Market Value (as defined below) per share
of Common Stock minus the Exercise Price per share as of the date of exercise
and the denominator of which is the Market Value per share on the date of
exercise. Each Warrant not exercised prior to 5:00 p.m., New York City time, on
April 1, 2011 (the "EXPIRATION DATE") shall become void and
all rights thereunder and all rights in respect thereof under this agreement
shall cease as of such time. The Warrant Agent shall have no obligation to
calculate the Cashless Exercise Ratio. No adjustments as to dividends will be
made upon exercise of the Warrants.

      


      
        
           


        

        
          19

          
            

          

        

        
           


        

      

       

      
        The "MARKET VALUE" per share of
Common Stock as of any date shall equal (i) if Common Stock is primarily traded
on a securities exchange, the last sale price on such securities exchange on the
trading day immediately prior to the date of determination, or if no sale
occurred on such day, the mean between the closing "bid" and "asked" prices on
such day, (ii) if the principal market for Common Stock is in the
over-the-counter market, the closing sale price on the trading day immediately
prior to the date of the determination, as published by the National Association
of Securities Dealers Automated Quotation System or similar organization, or if
such price is not so published on such day, the mean between the closing "bid"
and "asked" prices, if available, on such day, which prices may be obtained from
any reputable pricing service, broker or dealer, and (iii) if neither clause (i)
nor clause (ii) is applicable, the fair market value on the date of
determination of Common Stock as determined in good faith by the Board of
Directors of the Company.

      

      
        


      

      
        (b)       
    In order to exercise all or any of the Warrants
represented by a Warrant Certificate, (i) in the case of a Definitive Warrant,
the holder thereof must surrender upon exercise the Warrant Certificate to the
Company at the corporate trust office of the Warrant Agent set forth in Section 15 hereof,
(ii) in the case of a book-entry interest in a Global Warrant, the exercising
Participant whose name appears on a securities position listing of the
Depositary as the holder of such book-entry interest must comply with the
Depositary's procedures relating to the exercise of such book-entry interest in
such Global Warrant and (iii) in the case of interests in both Global Warrants
and Definitive Warrants, the holder thereof or the Participant, as applicable,
shall deliver to the Company at the corporate trust office of the Warrant Agent
the form of election to purchase on the reverse thereof duly completed and
signed, which signature shall be medallion guaranteed by an institution which is
a member of a Securities Transfer Association recognized signature guarantee
program, and upon payment to the Warrant Agent for the account of the Company of
the Exercise Price, for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price shall be
made in accordance with Section 4(a)
hereof.

      


      
        
           


        

        
          20

          
            

          

        

        
           


        

      


      
        (c)       
    Subject to the provisions of Section 5 hereof,
upon compliance with clause (b) above, the Company shall deliver or cause to be
delivered with all reasonable dispatch, to or to the written order of the holder
and in such name or names as the holder may designate, a certificate or
certificates for the number of whole Warrant Shares issuable upon the exercise
of such Warrants or other securities or property to which such holder is
entitled hereunder, together with cash as provided in Section 9 hereof;
provided that if any consolidation, merger or lease or sale of assets is
proposed to be effected by the Company or its subsidiaries as described in Section 8(m) hereof,
or a tender offer or an exchange offer for shares of Common Stock shall be made,
upon such surrender of Warrants and payment of the Exercise Price in accordance
with clause (b) above, the Company shall, as soon as possible, but in any event
not later than two business days thereafter, deliver or cause to be delivered
the full number of Warrant Shares issuable upon the exercise of such Warrants in
the manner described in this sentence or other securities or property to which
such holder is entitled hereunder, together with cash as provided in Section 9 hereof.
Such certificate or certificates shall be deemed to have been issued and any
Person so designated to be named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price.

      

      
        


      

      
        (d)      
     The Warrants shall be exercisable, at
the election of the holders thereof, either in full or in part. If less than all
the Warrants represented by a Warrant Certificate are exercised, such Warrant Certificate
shall be surrendered and a new Warrant Certificate of the same tenor and for the number of
Warrants which were not exercised shall be executed by the Company and delivered
to the Warrant Agent and the Warrant Agent shall countersign the new
Warrant Certificate,
registered in such name or names as may be directed in writing by the
holder, and shall deliver or cause to be delivered the new Warrant Certificate
to the Person or Persons entitled to receive the same.

      

      
        


      

      
        (e)     
      All Warrant Certificates surrendered
upon exercise of Warrants shall be cancelled by the Warrant Agent. Such
cancelled Warrant Certificates shall then be disposed of by the Warrant Agent in a manner
satisfactory to the Company. The Warrant Agent shall report promptly to
the Company with respect to Warrants exercised and concurrently pay to the
Company all monies received by the Warrant Agent for the purchase of the Warrant
Shares through the exercise of such Warrants.

      

      
        


      

      
        (f)      
     The Warrant Agent shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the holders during normal business hours at its office. The Company shall
supply the Warrant Agent from time to time with such numbers of copies of this
Agreement as the Warrant Agent may request.

      

      
        


      

      
        
          	
                	
                  SECTION
    5.

                	
                  PAYMENT OF
      TAXES

                


        

      

      
        


      

      
        The
Company shall pay all documentary stamp taxes attributable to the initial
issuance of Warrant Shares upon the exercise of Warrants; provided that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue of any Warrant Certificates or any
certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the
Person or Persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

      


      
        
           


        

        
          21

          
            

          

        

        
           


        

      

       

      
        
          	
                	
                  SECTION
    6.

                	
                  RESERVATION OF WARRANT
      SHARES

                


        

      

      
        


      

      
        (a)    
       The Company shall at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock or the authorized and issued Common Stock
held in its treasury, for the purpose of enabling it to satisfy any obligation
to issue Warrant Shares upon exercise of Warrants, the maximum number of shares
of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.

      

      
        


      

      
        (b)     
      The Company or, if appointed, the transfer
agent for the Common Stock (the "TRANSFER AGENT") and every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the exercise of any of the rights of purchase aforesaid will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company shall keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the rights of purchase represented by the Warrants. The Warrant Agent is
hereby irrevocably authorized to requisition from time to time from such
Transfer Agent the stock certificates required to honor outstanding Warrants
upon exercise thereof in accordance with the terms of this Agreement. The
Company shall supply such Transfer Agent with duly executed certificates for
such purposes and shall provide or otherwise make available any cash which may
be payable as provided in Section 9 hereof. The
Company shall furnish such Transfer Agent a copy of all notices of adjustments,
and certificates related thereto, transmitted to each holder pursuant to Section 11
hereof.

      

      
        


      

      
        (c)       
    Before taking any action which would cause an adjustment
pursuant to Section
8 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company shall take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so
adjusted.

      

      
        


      

      
        (d)        
   The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants shall, upon issue, be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issuance thereof.

      

      
        


      

      
        
          	
                	
                  SECTION
    7.

                	
                  OBTAINING STOCK
      EXCHANGE LISTINGS.

                


        

      

      
        


      

      
        The
Company shall from time to time take all action which may be necessary so that
the Warrant Shares, immediately upon their issuance upon the exercise of
Warrants, will be listed on a principal securities exchange, automated quotation
system or other market within the United States of America, if any, on which
other shares of Common Stock are then listed, if any.

      


      
        
           


        

        
          22

          
            

          

        

        
           


        

      


      
        
          	
                	
                  SECTION
    8.

                	
                  ADJUSTMENT OF EXERCISE
      PRICE AND NUMBER OF WARRANT SHARES
      ISSUABLE

                


        

      

      
        


      

      
        The
Exercise Price and the number of Warrant Shares issuable upon the exercise of
each Warrant shall be subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 8; provided
that in no event shall the Exercise Price be less than $0.01 per share of Common
Stock. For purposes of this Section 8, "COMMON STOCK" means shares
now or hereafter authorized of any class of common stock of the Company and any
other stock of the Company, however designated, that has the right (subject to
any prior rights of any class or series of preferred stock) to participate in
any distribution of the assets or earnings of the Company without limit as to
per share amount.

      

      
        


      

      
        In
addition to the adjustments required under this Section 8, the
Company may, at any time reduce the Exercise Price to any amount greater than or
equal to $0.01 per share for any period of time (but not less than 20 Business
Days) deemed appropriate by the Board of Directors of the
Company.

      

      
        


      

      
        (a)        
   Adjustment
for Change in Capital Stock.

      

      
        


      

      
        If the
Company (i) pays a dividend or makes a distribution on its Common Stock payable
in shares of its Common Stock, (ii) subdivides its outstanding shares of Common
Stock into a greater number of shares, (iii) combines its outstanding shares of
Common Stock into a smaller number of shares, (iv) makes a distribution on its
Common Stock in shares of its capital stock other than Common Stock or (v)
issues by reclassification of its Common Stock any shares of its capital stock,
then the Exercise Price in effect immediately prior to such action shall,
subject to the proviso to the first sentence of the first paragraph of this
Section 8, be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which such holder would have owned immediately following such action
assuming the exercise of such Warrant immediately prior to such
action.

      

      
        


      

      
        The
adjustment shall become effective immediately after the record date in the case
of a dividend or distribution and immediately after the effective date in the
case of a subdivision, combination or reclassification.

      

      
        


      

      
        If, after
an adjustment, a holder of a Warrant upon exercise of it may receive shares of
two or more classes of capital stock of the Company, the Company shall
determine, in good faith, the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this Section 8. Such
adjustment shall be made successively whenever any event listed above shall
occur.

      

      
        


      

      
        (b)      
     Adjustment for Rights
Issue.

      

      
        


      

      
        If the
Company distributes any rights, options or warrants to all holders of its Common
Stock entitling them for a period expiring within 45 days after the record date
set forth below to subscribe for shares of Common Stock or securities
convertible into, or exchangeable or
exercisable for, shares of Common Stock, in either case, at a price per share
less than the Fair Value (as defined in subsection (g) of this Section 8) per share
on that record date, the Exercise Price shall be adjusted in accordance with the
formula:

      


      
        
           


        

        
          23

          
            

          

        

        
           


        

      

       

      
        
          
            
              
                
                  
                    
                      	 
      	 
      	
                              O+

                            	
                              N x P

                            
	 
      	
                              E'
      = E x   

                            	           	
                                M    

                            
	 
      	 
      	 
      	
                              O +
      N

                            


                    

                  

                

              

            

          

        

      

      
        


      

      
        
          	
                	
                  where:

                	
                   

                


        

      

      
        
          	
                	
                  E'
      =

                	
                  the
      adjusted Exercise Price.

                


        

      

      
        
          	
                	
                  E
      =

                	
                  the
      current Exercise Price.

                


        

      

      
        
          	
                	
                  O
      =

                	
                  the
      number of shares of Common Stock outstanding on the record date.

                


        

      

      
        
          	
                	
                  N
      =

                	
                  the
      number of additional shares of Common Stock issued pursuant to such rights,
      options or warrants.

                


        

      

      
        
          	
                	
                  P
      =

                	
                  the
      aggregate price per share of the additional
  shares.

                


        

      

      
        
          	
                	
                  M
      =

                	
                  the
      Fair Value per share of Common Stock on the record
  date.

                


        

      

      
        


      

      
        The
adjustment shall be made successively whenever any such rights, options or
warrants are issued and shall become effective immediately after the record date
for the determination of stockholders entitled to receive the rights, options or
warrants. If at the end of the period during which such rights, options or
warrants are exercisable, not all rights, options or warrants shall have been
exercised, the Exercise Price shall be immediately readjusted to what it would
have been if "N" in the above formula had been the number of shares actually
issued.

      

      
        


      

      
        (c)       
    Adjustment for Other
Distributions.

      

      
        


      

      
        If the
Company distributes to all holders of its Common Stock any of its assets
(including cash), debt securities, preferred stock or any rights or warrants to
purchase assets (including cash), debt securities, preferred stock or other
securities of the Company, the Exercise Price shall be adjusted in accordance
with the formula:

      

      
        


      

      
        
          
            
              	 
      	 
      	
                      M-F

                    
	 
      	
                      E'
      = Ex   

                    	
                       
      M

                    


            

          

        

      

      
        


      

      
        
          	
                	
                  where:

                	
                   

                


        

      

      
        
          	
                	
                  E'
      =

                	
                  the
      adjusted Exercise Price.

                


        

      

      
        
          	
                	
                  E
      =

                	
                  the
      current Exercise Price.

                


        

      

      
        
          	
                	
                  M
      =

                	
                  the
      Fair Value per share of Common Stock on the record
  date.

                


        

      

      
        
          	
                	
                  F
      =

                	
                  the fair market value on the
      record date of the debt securities, preferred stock, assets,
      securities, rights or warrants to be distributed in respect of one share of Common
      Stock as determined in good faith by the Board of Directors
      of the Company.

                


        

      

      
        


      

      
        The
adjustment shall be made successively whenever any such rights, options or
warrants are issued and shall become effective immediately after the record date
for the determination of stockholders entitled to receive the rights, options or
warrants. If at the end of the period during which such rights, options or
warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.

      


      
        
           


        

        
          24

          
            

          

        

        
           


        

      

       

      
        The
adjustment shall be made successively whenever any such distribution is made and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive the distribution.

      

      
        


      

      
        This
Section 8(c)
shall not apply to cash dividends or other cash distributions paid out of
consolidated current or retained earnings as shown on the books of the Company
prepared in accordance with generally accepted accounting principles. In
addition, this Section
8(c) shall not apply to rights, options or warrants referred to in Section 8(b)
hereof.

      

      
        


      

      
        (d)      
     Adjustment for Common Stock
Issue.

      

      
        


      

      
        If the
Company issues shares of Common Stock for a consideration per share less than
the Fair Value per share on the date the Company fixes the offering price of
such additional shares, the Exercise Price shall be adjusted in accordance with
the formula:

      

      
        


      

      
        
          
            	 
      	 
      	
                    O +
      P

                  
	 
      	
                    E'=E
      x   

                  	
                          
      M   

                  
	 
      	 
      	
                     
      A

                  


          

        

      

      
        


      

      
        
          	
                	
                  where:

                	
                   

                


        

      

      
        
          	
                	
                  E'
      =

                	
                  the
      adjusted Exercise Price.

                


        

      

      
        
          	
                	
                  E
      =

                	
                  the
      current Exercise Price.

                


        

      

      
        
          	
                	
                  O
      =

                	
                  the
      number of shares outstanding immediately prior to the issuance of such additional
      shares.

                


        

      

      
        
          	
                	
                  P
      =

                	
                  the
      aggregate consideration received for the issuance of such additional
      shares.

                


        

      

      
        
          	
                	
                  M
      =

                	
                  the
      Fair Value per share of Common Stock on the record
  date.

                


        

      

      
        
          	
                	
                  A
      =

                	
                  the number of shares outstanding
      immediately after the issuance of such additional
      shares.

                


        

      

      
        


      

      
        The
adjustment shall be made successively whenever any such issuance is made, and
shall become effective immediately after such issuance.

      

      
        


      

      
        This
subsection (d) shall not apply to:

      

      
        


      

      
        (1)     
      any of the transactions described in
subsections (a), (b) and (c) of this Section
8,

      

      
        


      

      
        (2)       
    the exercise of Warrants, or the conversion, exchange or
exercise of other securities convertible into or exchangeable or exercisable for
Common Stock the issuance of which requires an adjustment to be made under Section
8(e),

      

      
        


      

      
        (3)       
    the issuance of Common Stock (and options exercisable
therefor) to employees, officers or directors of the Company or its subsidiaries
under bona fide employee benefit plans adopted by the Board of Directors and
approved by the holders of Common Stock when required by law, if such Common
Stock would otherwise be covered by this subsection (d) (but only
to the extent that the aggregate number of shares excluded hereby and issued
after the date of this Warrant Agreement shall not exceed 12% of the Common
Stock outstanding at the time of the adoption of each such plan, exclusive of
anti-dilution adjustments thereunder),

      


      
        
           


        

        
          25

          
            

          

        

        
           


        

      

       

      
        (4)      
     the issuance of Common Stock to shareholders of
any Person which merges into the Company, or with a subsidiary of the Company,
in proportion to their stock holdings of such person immediately prior to such
merger, upon such merger, provided that if such Person is an Affiliate of the
Company, the Board of Directors shall have obtained a fairness opinion from a
nationally recognized investment banking, appraisal or valuation firm, which is
not an Affiliate of the Company, stating that the consideration received in such
merger is fair to the Company from a financial point of view,

      

      
        


      

      
        (5)        
   the issuance of securities upon the conversion, exchange or
exercise of other securities, warrants, options or similar rights if the
conversion, exchange or exercise price is not less than the Fair Value per share
of Common Stock at the time the security, warrant, option or right so converted,
exchanged or exercised was issued or granted or if such other securities,
warrants, options or similar rights were outstanding as of the date hereof,
or

      

      
        


      

      
        (6)          
 the issuance of shares of Common Stock pursuant to rights, options or
warrants which were originally issued in a Non-Affiliate Sale (as defined below)
together with one or more other securities as part of a unit at a price per unit
not less than the Fair Value per unit at the time that such unit was issued or
granted or if such units were outstanding as of the date
hereof.

      

      
        


      

      
        (e)           
Adjustment for Convertible
Securities Issue.

      

      
        


      

      
        If the
Company issues any securities convertible into or exchangeable or exercisable
for Common Stock (other than securities issued in transactions described in
subsections (a), (b) and (c) of this Section 8) for a
consideration per share of Common Stock initially deliverable upon conversion,
exchange or exercise of such securities less than the Fair Value per share on
the date of issuance of such securities, the Exercise Price shall be adjusted in
accordance with the formula:

      

      
        


      

      
        
          
            
              
                	 
      	 
      	
                         
      O + P

                      
	 
      	
                        E'=E x

                      	
                                
      M            

                      
	 
      	 
      	
                         
      O+D

                      


              

            

          

        

      

      
        


      

      
        
          	
                	
                  where:

                	
                   

                


        

      

      
        
          	
                	
                  E'
      =

                	
                  the
      adjusted Exercise Price.

                


        

      

      
        
          	
                	
                  E
      =

                	
                  the
      current Exercise Price.

                


        

      

      
        
          	
                	
                  O
      =

                	
                  the
      number of shares outstanding immediately prior to the issuance of such additional
      shares.

                


        

      

      
        
          	
                	
                  P
      =

                	
                  the
      aggregate consideration received for the issuance of such additional
      shares.

                


        

      

      
        
          	
                	
                  M
      =

                	
                  the
      Fair Value per share of Common Stock on the record
  date.

                


        

      

      
        
          	
                	
                  D
      =

                	
                  the
      maximum number of shares deliverable upon conversion or in exchange for
      such securities at the initial conversion, exchange or exercise
      rate.

                


        

      


      
        
           


        

        
          26

          
            

          

        

        
           


        

      


      
        The
adjustment shall be made successively whenever any such issuance is made, and
shall become effective immediately after such issuance.

      

      
        


      

      
        If all of
the Common Stock deliverable upon conversion, exchange or exercise of such
securities have not been issued when such securities are no longer outstanding,
then the Exercise Price shall promptly be readjusted to the Exercise Price which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of the actual number of shares of Common Stock issued
upon conversion, exchange or exercise of such securities.

      

      
        


      

      
        This
subsection (e) shall not apply to:

      

      
        


      

      
        (1)        
   convertible securities issued to shareholders of any Person
which merges into the Company, or with a subsidiary of the Company, in
proportion to their stock holdings of such person immediately prior to such
merger, upon such merger, provided that if such Person is an Affiliate of the
Company, the Board of Directors shall have obtained a fairness opinion from a
nationally recognized investment banking, appraisal or valuation firm, which is
not an Affiliate of the Company, stating that the consideration received in such
merger is fair to the Company from a financial point of view,

      

      
        


      

      
        (2)          
 the issuance of options exercisable for Common Stock to employees,
officers or directors of the Company or its subsidiaries under bona fide
employee benefit plans adopted by the Board of Directors and approved by the
holders of Common Stock when required by law, if such options to acquire Common
Stock would otherwise be covered by this subsection (e) (but only to the extent
that the aggregate number of shares excluded hereby and issued after the date of
this Warrant Agreement shall not exceed 12% of the Common Stock outstanding at
the time of the adoption of each such plan, exclusive of anti-dilution
adjustments thereunder),

      

      
        


      

      
        (3)           
the issuance of convertible securities to shareholders of any Person which
merges into the Company, or with a subsidiary of the Company, in proportion to
their stock holdings of such person immediately prior to such merger, upon such
merger, provided that if such Person is an Affiliate of the Company, the Board
of Directors shall have obtained a fairness opinion from a nationally recognized
investment banking, appraisal or valuation firm, which is not- an Affiliate of
the Company, stating that the consideration received in such merger is fair to
the Company from a financial point of view,

      

      
        


      

      
        (4)           
the issuance of convertible securities upon the conversion, exchange or exercise
of other securities, warrants, options or similar rights if the conversion,
exchange or exercise price is not less than the Fair Value per share of such
convertible security at the time the security, warrant, option or right so
converted, exchanged or exercised was issued or granted or if such other
securities, warrants, options or similar rights were outstanding as of the date
hereof, or

      

      
        


      

      
        (5)           
the issuance of convertible securities pursuant to rights, options or warrants
which were originally issued in a Non-Affiliate Sale (as defined below) together
with one or more other securities as part of a unit at a price per unit not less
than the Fair Value per unit at
the time that such unit was issued or granted or if it such unit outstanding as
of the date hereof.

      


      
        
           


        

        
          27

          
            

          

        

        
           


        

      

       

      
        (f)       
     Consideration
Received.

      

      
        


      

      
        For
purposes of any computation respecting consideration received pursuant to
subsections (d) and (e) of this Section 8, the
following shall apply:

      

      
        


      

      
        (1)        
   in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or otherwise
in connection therewith;

      

      
        


      

      
        (2)          
 in the case of the issuance of shares of Common Stock for a consideration
in whole or in part other than cash, the consideration other than cash shall be
deemed to be the fair market value thereof as determined in good faith by the
Board of Directors (irrespective of the accounting treatment thereof), whose
determination shall be conclusive, and described in a Board resolution which
shall be filed with the Warrant Agent;

      

      
        


      

      
        (3)        
   in the case of the issuance of securities convertible into or
exchangeable or exercisable for shares, the aggregate consideration received
therefor shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if any,
to be received by the Company upon the conversion, exchange or exercise thereof
(the consideration in each case to be determined in the same manner as provided
in clauses (1) and (2) of this subsection (f)); and

      

      
        


      

      
        (4)         
  in the case of the issuance of shares of Common Stock pursuant to
rights, options or warrants which rights, options or warrants were originally
issued together with one or more other securities as part of a unit at a price
per unit, the consideration shall be deemed to be the fair value of such rights,
options or warrants at the time of issuance thereof as determined in good faith
by the Board of Directors whose determination shall be conclusive and described
in a Board resolution which shall be filed with the Warrant Agent plus the
additional minimum consideration, if any, to be received by the Company upon the
exercise, conversion or exchange thereof (as determined in the same manner as
provided in clauses (1) and (2) of this subsection (f)).

      

      
        


      

      
        (g)         
  Fair
Value.

      

      
        


      

      
        For purposes of Sections
8(b). (c), (d) and (e) hereof, the "FAIR VALUE"
per share of Common Stock or for any
convertible security at any date of determination shall be (1) if the security is primarily traded on
a securities exchange, the last sale price on such securities exchange on the trading day
immediately prior to the date of determination, or if no sale occurred on such
day, the mean between the closing "bid" and "asked" prices on such
day, (2) if the principal market for the
security is in the over-the-counter market, the closing sale price on the trading day immediately prior to
the date of the determination, as published by the National Association of Securities
Dealers Automated Quotation System or similar organization, or if such price is
not so published on such day, the mean between the closing "bid" and "asked"
prices, if available, on
such day, which prices may be obtained from any reputable pricing service,
broker or dealer or (3) if clause (1) or (2) above is not applicable, (A) in
connection with a sale by the Company to a party that is not an Affiliate of the
Company in an arm's-length transaction (a "NON-AFFILIATE SALE"), the price per security
at which such security is sold and (B) in connection with any sale by the
Company to an Affiliate of the Company, (i) the last price per security at which
such security was sold in a Non-Affiliate Sale within the three-month period
preceding such date of determination and (ii), if clause (i) is not applicable,
the fair market value of such security determined in good faith by (y) a
majority of the Board of Directors of the Company, including a majority of the
Disinterested Directors, and approved in a Board resolution delivered to the
Warrant Agent or (z) a nationally recognized investment banking, appraisal or
valuation firm, which is not an Affiliate of the Company, in each case, taking
into account, among all other factors deemed relevant by the Board of Directors
or such investment banking, appraisal or valuation firm, the trading price and
volume of such security on any national securities exchange or automated
quotation system on which such security is
traded.

      


      
        
           


        

        
          28

          
            

          

        

        
           


        

      

       

      
        For
purposes of this Section 8(g), "DISINTERESTED DIRECTOR"
means, in connection with any issuance of securities that gives rise to a
determination of the Fair Value thereof, each member of the Board of Directors
who is not an officer, employee, director or other Affiliate of the party to
whom the Company is proposing to issue the securities giving rise to such
determination.

      

      
        


      

      
        For
purposes of this Section 8(g), "AFFILIATE" of any specified
Person means (A) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person and (B) any director, officer or employee of such specified Person. For
purposes of this definition "CONTROL" (including, with
correlative meanings, the terms "CONTROLLING," "CONTROLLED BY"
and "UNDER COMMON
CONTROL WITH") as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

      

      
        


      

      
        (h)           When De Minimis Adjustment May Be
Deferred.

      

      
        


      

      
        No
adjustment in the Exercise Price need be made unless the adjustment would
require an increase or decrease of at. least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 8 shall be
made to the nearest cent or to the nearest 1/100th of a share, as the case may
be, it being understood that no such rounding shall be made under subsection
(p).

      

      
        


      

      
        (i)        
    When
No Adjustment Required.

      

      
        


      

      
        With
respect to Warrants of any holder, no adjustment need be made for a transaction
referred to Section
8(a), (b), (c), (d), (e) or (f) hereof, if such holder is to participate
(without being required to exercise its Warrants) in the transaction on a basis
and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction. No adjustment need be made for (i) rights to
purchase Common Stock pursuant to a Company plan for reinvestment of dividends
or interest or (ii) a change in the par value or no par value of the Common
Stock. To the extent the
Warrants become convertible into cash, no adjustment need be made thereafter as
to the cash. Interest will not accrue on the cash.

      


      
        
           


        

        
          29

          
            

          

        

        
           


        

      

       

      
        (j)       
     Notice of
Adjustment.

      

      
        


      

      
        Whenever
the Exercise Price is adjusted, the Company shall provide the notices required
by Section 10
hereof.

      

      
        


      

      
        (k)       
    Reorganization of Company;
Restructuring.

      

      
        


      

      
        Immediately
after the date hereof, if the Company consolidates or merges with or into,
transfers or leases all or substantially all its assets to, any Person, or
consummates a recapitalization, reclassification or reorganization of the
capital stock of the Company in such a way that holders of the Company's Common
Stock shall be entitled to receive stock, securities, or other assets or
property or consummates the Restructuring (as defined in the Indenture), upon
consummation of such transaction the Warrants shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of a Warrant would have owned immediately after such transaction if
the holder had exercised the Warrant immediately before the effective date of
the transaction. Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or merger if other
than the Company, or the Person to which such sale or conveyance shall have been
made, shall enter into (i) a supplemental Warrant Agreement so providing and
further providing for adjustments which shall be as nearly equivalent as may be
practical to the adjustments provided for in this Section 8(k) and (ii)
a supplement to the Equity Registration Rights Agreement providing for the
assumption of the Company's obligations thereunder. The successor Company shall
mail to Warrant holders a notice describing the supplemental Warrant Agreement
and Equity Registration Rights Agreement. If the issuer of securities
deliverable upon exercise of Warrants under the supplemental Warrant Agreement
is an Affiliate of the formed, surviving, transferee or lessee corporation, such
issuer shall join in the supplemental Warrant Agreement and Equity Registration
Rights Agreement. If this Section 8(k) shall be
applicable, Sections
8(a), (b),
(c),
(d), (e) and
(f) hereof shall not be applicable.

      

      
        


      

      
        (1)        
   Company
Determination Final.

      

      
        


      

      
        Any
determination that the Company or the Board of Directors must make pursuant to
Section 8(a), (c),
(d), (e), (f),
(g), (h) or
(i) hereof is conclusive.

      

      
        


      

      
        (m)           Warrant Agent's
Disclaimer.

      

      
        


      

      
        The
Warrant Agent shall have no duty to determine when an adjustment under this
Section 8
should be made, how it should be made or what it should be. The Warrant Agent
shall have no duty to determine whether a supplement warrant agreement under
Section 8(k)
need be entered into or whether any provisions of a supplemental Warrant
Agreement under Section 8(k) hereof
are correct. The Warrant Agent makes no representation as to the validity or
value of any securities or assets issued upon exercise of Warrants. The Warrant
Agent shall not be responsible for the Company's failure to comply with this
Section
8.

      


      
        
           


        

        
          30

          
            

          

        

        
           


        

      


      
        (n)           When Issuance or Payment May Be
Deferred.

      

      
        


      

      
        In any
case in which this Section 8 shall
require that an adjustment in the Exercise Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event (i) issuing to the holder of any Warrant exercised
after such record date the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise over and above the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise on
the basis of the Exercise Price and (ii) paying to such holder any amount in
cash in lieu of a fractional share pursuant to Section 10 hereof;
provided that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
Warrant Shares, other capital stock and cash upon the occurrence of the event
requiring such adjustment.

      

      
        


      

      
        (o)     
      Adjustment in Number of
Shares.

      

      
        


      

      
        Upon each
adjustment of the Exercise Price pursuant to this Section 8, each Warrant
outstanding prior to the making of the adjustment in the Exercise Price shall
thereafter evidence the right to receive upon payment of the adjusted Exercise
Price that number of shares of Common Stock (calculated to the nearest
hundredth) obtained from the following formula:

      

      
        


      

      
        
          
            	 
      	 
      	
                         E  
      

                  
	 
      	
                    N'=N
      x    

                  	
                        
      E'

                  


          

        

      

      
        


      

      
        
          	
                	
                  where:

                	
                   

                


        

      

      
        
          	
                	
                  N'
      =

                	
                  the
      adjusted number of Warrant Shares issuable upon exercise of a Warrant by payment
      of the adjusted Exercise
Price.

                


        

      

      
        
          	
                	
                  N
      =

                	
                  the
      number or Warrant Shares previously issuable upon exercise of a Warrant by payment
      of the Exercise Price prior to
adjustment.

                


        

      

      
        
          	
                	
                  E'
      =

                	
                  the
      adjusted Exercise Price.

                


        

      

      
        
          	
                	
                  E
      =

                	
                  the
      Exercise Price prior to
adjustment.

                


        

      

      
        


      

      
        (p)        
   Form of
Warrants.

      

      
        


      

      
        Irrespective
of any adjustments in the Exercise Price or the number or kind of shares
purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.

      

      
        


      

      
        
          	
                	
                  SECTION
    9.

                	
                  FRACTIONAL
      INTERESTS

                


        

      

      
        


      

      
        The
Company shall not be required to issue fractional Warrant Shares on the exercise
of Warrants. If more than one Warrant shall be presented for exercise in full at
the same time by the same holder, the number of full Warrant Shares which shall
be issuable upon the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of a Warrant Share would, except for the provisions
of this Section
9, be issuable on the exercise of any Warrants (or specified portion
thereof), the Company shall pay an amount in cash equal to the Fair Value per
Warrant
Share, as determined on the day immediately preceding the date the Warrant is
presented for exercise, multiplied by such fraction, computed to the nearest
whole U.S. cent.

      


      
        
           


        

        
          31

          
            

          

        

        
           


        

      

       

      
        
          	
                	
                  SECTION
    10.

                	
                  NOTICES TO WARRANT
      HOLDERS

                


        

      

      
        


      

      
        (a)        
   Upon any adjustment of the Exercise Price pursuant to Section 8 hereof, the
Company shall promptly thereafter (i) cause to be filed with the Warrant Agent a
certificate of a firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company (who may be the regular
auditors of the Company) setting forth the Exercise Price after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and setting forth the number of Warrant
Shares (or portion thereof) issuable after such adjustment in the Exercise
Price, upon exercise of a Warrant and payment of the adjusted Exercise Price,
which certificate shall be conclusive evidence of the correctness of the matters
set forth therein, and (ii) cause to be given to each of the registered holders
of Warrants at the address appearing on the Warrant register for each such
registered holder written notice of such adjustments by first-class mail,
postage prepaid. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Section
10.

      

      
        


      

      
        (b)         
  In the event:

      

      
        


      

      
        (i)           
 that the Company shall authorize the
issuance to all holders of shares of Common Stock of rights,
options or warrants to subscribe for or purchase shares of Common Stock or of any other
subscription rights or warrants;

      

      
        


      

      
        (ii)           
that the Company shall
authorize the distribution to all holders of shares of Common Stock of evidences of
its indebtedness or assets (other than dividends or cash distributions paid out
of consolidated current or retained earnings as shown on the books of the
Company prepared in
accordance with generally accepted accounting principles or dividends payable in
shares of Common Stock or distributions referred to in Section
10(a)
hereof);

      

      
        


      

      
        (iii)           of any consolidation or merger to which
the Company is a party and
for which approval of any stockholders of the Company is required, or of the
conveyance or transfer of
the properties and assets of the Company substantially as an entirety, or of any
reclassification or change
of Common Stock issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par value to par value,
or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock;

      

      
        


      

      
        (iv)          
of the voluntary or
involuntary dissolution, liquidation or winding up of the Company;
or

      

      
        


      

      
        (v)           
that the Company proposes
to take any action (other than actions of the character described in
Section
8(a) hereof) which would
require an adjustment of the Exercise Price pursuant to Section
8
hereof;

      

      
        


      

      
        then the
Company shall cause to be filed with the Warrant Agent and shall cause to be
given to each of the registered holders of Warrants at his address appearing on
the Warrant register, at least 20
days (or 10 days in any case specified in clauses (i) or (ii) above) prior to
the applicable record date hereinafter specified, or promptly in the case of
events for which there is no record date, by first-class mail, postage prepaid,
a written notice stating (x) the date as of which the holders of record of
shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, (y) the initial expiration date
set forth in any tender offer or exchange offer for shares of Common Stock, or
(z) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 10 or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any
action.

      


      
        
           


        

        
          32

          
            

          

        

        
           


        

      

       

      
        (c)       
    Nothing contained in this Agreement or in any of the
Warrant Certificates shall be construed as conferring upon the holders of
Warrants the right to vote or to consent or to receive notice as stockholders in
respect of the meetings of stockholders or the election of directors of the
Company or any other matter, or any rights whatsoever as stockholders of the
Company.

      

      
        


      

      
        
          	
                	
                  SECTION
    11.

                	
                  MERGER, CONSOLIDATION
      OR CHANGE OF NAME OF WARRANT
      AGENT

                


        

      

      
        


      

      
        (a)         
  Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 13 hereof. In
case at the time such successor to the Warrant Agent shall succeed to the agency
created by this Agreement, and in case at that time any of the Warrant
Certificates shall have been countersigned but not delivered, any such successor
to the Warrant Agent may adopt the countersignature of the original Warrant
Agent; and in case at that time any of the Warrant Certificates shall not have
been countersigned, any successor to the Warrant Agent may countersign such
Warrant Certificates either in the name of the predecessor Warrant Agent or in
the name of the successor to the Warrant Agent; and in all such cases such
Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Agreement.

      

      
        


      

      
        (b)      
     In case at any time the name of the Warrant Agent
shall be changed and at such time any of the Warrant Certificates shall have
been countersigned but not delivered, the Warrant Agent whose name has been
changed may adopt the countersignature under its prior name, and in case at that
time any of the Warrant Certificates shall not have been countersigned, the
Warrant Agent may countersign such Warrant Certificates either in its prior name
or in its changed name, and in all such cases such Warrant Certificates shall
have the full force and effect provided in the Warrant Certificates and in this
Agreement.

      


      
        
           


        

        
          33

          
            

          

        

        
           


        

      


      
        
          	
                	
                  SECTION
    12.

                	
                  WARRANT
      AGENT

                


        

      

      
        


      

      
        The
Warrant Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Warrants, by their acceptance thereof, shall be
bound:

      

      
        


      

      
        (a)     
      The statements contained herein and in the
Warrant Certificates shall be taken as statements of the Company and the Warrant
Agent assumes no responsibility for the correctness of any of the same except
such as describe the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution of the
Warrant Certificates except as herein otherwise provided.

      

      
        


      

      
        (b)      
     The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the
Company.

      

      
        


      

      
        (c)        
   The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.

      

      
        


      

      
        (d)         
  The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.

      

      
        


      

      
        (e)           
The Company agrees to pay to the Warrant Agent reasonable compensation for all
services rendered by the Warrant Agent in the execution of this Agreement, to
reimburse the Warrant Agent for all expenses, taxes and governmental charges and
other charges of any kind and nature incurred by the Warrant Agent in the
execution of this Agreement. The Company shall indemnify the Warrant Agent
against any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Warrant Agreement, including the costs and expenses of enforcing this
Agreement against the Company and defending itself against any claim (whether
asserted by the Company or any holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its gross negligence or bad faith. The Warrant Agent shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Warrant Agent to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Warrant Agent shall cooperate in the defense. The Warrant Agent may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld, conditioned or
delayed.

      


      
        
           


        

        
          34

          
            

          

        

        
           


        

      


      
        (f)        
    The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more registered holders
of Warrants shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred, but this provision
shall not affect the power of the Warrant Agent to take such action as it may
consider proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent and any recovery of judgment shall
be for the ratable benefit of the registered holders of the Warrants, as their
respective rights or interests may appear.

      

      
        


      

      
        (g)         
  The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.

      

      
        


      

      
        (h)           
The Warrant Agent shall act hereunder solely as agent for the Company, and its
duties shall be determined solely by the provisions hereof. The Warrant Agent
shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own gross negligence or bad
faith.

      

      
        


      

      
        (i)      
      The Warrant Agent shall not at any time be
under any duty or responsibility to any holder of any Warrant Certificate to
make or cause to be made any adjustment of the Exercise Price or number of the
Warrant Shares or other securities or property deliverable as provided in this
Agreement, or to determine whether any facts exist which may require any of such
adjustments, or with respect to the nature or extent of any such adjustments,
when made, or with respect to the method employed in making the same. The
Warrant Agent shall not be accountable with respect to the validity or value or
the kind or amount of any Warrant Shares or of any securities or property which
may at any time be issued or delivered upon the exercise of any Warrant or with
respect to whether any such Warrant Shares or other securities will when issued
be validly issued and fully paid and nonassessable, and makes no representation
with respect thereto.

      

      
        


      

      
        (j)        
    The Warrant Agent shall not be required to risk or
expend its own funds on the performance of it obligations and duties
hereunder.

      

      
        


      

      
        
          	
                	
                  SECTION
    13.

                	
                  CHANGE OF WARRANT
      AGENT

                


        

      

      
        


      

      
        If the
Warrant Agent shall become incapable of acting as Warrant Agent, the Company
shall appoint a successor to such Warrant Agent. If the Company shall fail to
make such appointment within a period of 30 days after it has been notified in
writing of such incapacity by the Warrant Agent or by the registered holder of a
Warrant Certificate, then the registered holder of any Warrant may apply to any
court of competent jurisdiction for the appointment
of a successor to the Warrant Agent. Pending appointment of a successor to such
Warrant Agent, either by the Company or by such a court, the duties of the
Warrant Agent shall be carried out by the Company. The holders of a majority of
the unexercised Warrants shall be entitled at any time to remove the Warrant
Agent and appoint a successor to such Warrant Agent. Such successor to the
Warrant Agent need not be approved by the Company or the former Warrant Agent.
After appointment the successor to the Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Warrant Agent without further act or deed; provided that the former
Warrant Agent shall deliver and transfer to the successor to the Warrant Agent
any property at the time held by it hereunder and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure to
give any notice provided for in this Section 13, however,
or any defect therein, shall not affect the legality or validity of the
appointment of a successor to the Warrant Agent.

      


      
        
           


        

        
          35

          
            

          

        

        
           


        

      

       

      
        
          	
                	
                  SECTION
    14.

                	
                  REPORTS

                


        

      

      
        


      

      
        (a)         
  The Company agrees with each holder, for so long as any Warrants or
Warrant Shares remain outstanding and during any period in which the Company (i)
is not subject to Section 13 or 15(d) of the Exchange Act, to make available,
upon request of any holder, to such holder or beneficial owner of Warrants or
Warrant Shares in connection with any sale thereof and any prospective purchaser
of such Warrants or Warrant Shares designated by such holder or beneficial
owner, the information required by Rule 144(A)(d)(4) under the Act in order to
permit resales of such Warrants or Warrant Shares pursuant to Rule 144A, and
(ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Warrants
or Warrant Shares pursuant to Rule 144 A.

      

      
        


      

      
        (b)          
 The Company shall provide the Warrant Agent with a sufficient number of
copies of all such reports that the Warrant Agent may be required to deliver to
the holders of the Warrants and the Warrant Shares under this Section
14.

      

      
        


      

      
        
          	
                	
                  SECTION
    15.

                	
                  NOTICES TO COMPANY AND
      WARRANT AGENT

                


        

      

      
        


      

      
        Any
notice or demand authorized by this Agreement to be given or made by the Warrant
Agent or by the registered holder of any Warrant to or on the Company shall be
sufficiently given or made when received if deposited in the mail, first class
or registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:

      

      
        


      

      
        Grande
Communications Holdings, Inc.

      

      
        401
Carlson Circle

      

      
        San
Marcos, Texas 78666

      

      
        Telecopier
No.: (512)878-4287

      

      
        Attention:
General Counsel

      


      
        
           


        

        
          36

          
            

          

        

        
           


        

      


      
        With a
copy to:

      

      
        


      

      
        Hogan
& Hartson L.L.P.

      

      
        555 13th
Street, NW

      

      
        Washington,
DC 20004

      

      
        Telecopier
No.: (202)637-5600

      

      
        Attention:
Steven M. Kaufman, Esq.

      

      
        


      

      
        In case
the Company shall fail to maintain such office or agency or shall fail to give
such notice of the location or of any change in the location thereof,
presentations may be made and notices and demands may be served at the corporate
trust office of the Warrant Agent.

      

      
        


      

      
         Any
notice pursuant to this Agreement to be given by the Company or by the
registered holder(s) of any Warrant to the Warrant Agent shall be sufficiently
given when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) to and received by the Warrant Agent at its corporate
trust office as follows:

      

      
        


      

      
        U.S. Bank
National Association

      

      
        60
Livingston Avenue

      

      
        St. Paul,
Minnesota 55107-2292

      

      
        Telecopier
No.: (651) 495-8097

      

      
        Attention:
Corporate Trust Department

      

      
        


      

      
        
          	
                	
                  SECTION
    16.

                	
                  SUPPLEMENTS AND
      AMENDMENTS

                


        

      

      
        


      

      
        The
Company and the Warrant Agent may from time to time supplement or amend this
Agreement without the approval of any holders of Warrants in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not in any way materially adversely affect the interests of the holders of
Warrants. Any amendment or supplement to this Agreement that has a materially
adverse effect on the interests of the holders of Warrants shall require the
written consent of the holders of a majority of the then outstanding Warrants
(excluding Warrants held by the Company or any of its Affiliates). The consent
of each holder of Warrants affected shall be required for any amendment pursuant
to which the Exercise Price would be increased or the number of Warrant Shares
purchasable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided in this Agreement).

      

      
        


      

      
        
          	
                	
                  SECTION
    17.

                	
                  SUCCESSORS

                


        

      

      
        


      

      
        All the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Warrant Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.

      


      
        
           


        

        
          37

          
            

          

        

        
           


        

      


      
        
          	
                	
                  SECTION
    18.

                	
                  TERMINATION

                


        

      

      
        


      

      
        This
Agreement shall terminate at 5:00 p.m., New York City time on April 1, 2011.
Notwithstanding the foregoing, this Agreement will terminate on any earlier date
if all Warrants have been exercised. The provisions of Section 12 shall
survive such termination.

      

      
        


      

      
        
          	
                	
                  SECTION
    19.

                	
                  GOVERNING
      LAW

                


        

      

      
        


      

      
        This
Agreement and each Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be construed in accordance with the internal laws of said
State.

      

      
        


      

      
        
          	
                	
                  SECTION
    20.

                	
                  BENEFITS OF THIS
      AGREEMENT

                


        

      

      
        


      

      
        Nothing
in this Agreement shall be construed to give to any person or corporation other
than the Company, the Warrant Agent and the registered holders of Warrants any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered holders of Warrants.

      

      
        


      

      
        
          	
                	
                  SECTION
    21.

                	
                  COUNTERPARTS

                


        

      

      
        


      

      
        This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.

      

      
        


      

      
        [Signature
Page Follows]

      


      
        
           


        

        
          38

          
            

          

        

        
           


        

      


      
        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.

      

      
        


      

      
        


      

      
        


      

      
        
          
            
              
                
                  	 
      	
                          GRANDE
      COMMUNICATIONS HOLDINGS, INC.

                        
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	
                          /s/ Michael L. Wilfley

                        	 
      
	 
      	 
      	
                          Name:

                        	 
      
	 
      	 
      	
                          Title:

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          U.S.
      BANK NATIONAL ASSOCIATION, as Warrant Agent

                        
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	
                           

                        	 
      
	 
      	 
      	
                          Name:

                        	 
      
	 
      	 
      	
                          Title:

                        	 
      


                

              

            

          

        

      


      
        
           


        

        
          39

          
            

          

        

        
           


        

      


      
        EXHIBIT A

      

      
        


      

      
        [Form of
Warrant Certificate]

      

      
        


      

      
        [Face]

      

      
        


      

      
        [Insert
the Private Placement Legend,

      

      
        if
applicable pursuant to the terms of the Warrant Agreement]

      

      
        


      

      
        [Insert
the Global Warrant Legend,

      

      
        if
applicable pursuant to the terms of the Warrant Agreement]

      

      
        


      

      
        [Insert
the Regulation S Legend,

      

      
        if
applicable pursuant to the terms of the Warrant Agreement]

      

      
        


      

      
        No.___________________   ___Warrants

      

      
        


      

      
        CUSIP No.
______

      

      
        


      

      
        Warrant
Certificate

      

      
        


      

      
        GRANDE
COMMUNICATIONS HOLDINGS, INC.

      

      
        


      

      
        This
Warrant Certificate certifies that Cede & Co., or its registered assigns, is
the registered holder of the number set forth above of Warrants expiring April
1, 2011 (the "Warrants") to purchase Common Stock, par value $0.001 (the "Common
Stock"), of Grande Communications Holdings, Inc., a Delaware corporation (the
"Company"). Each Warrant entitles the registered holder upon exercise at any
time from 9:00 a.m. on the Separation Date referred to below until 5:00 p.m. New
York City Time on April 1, 2011 to receive from the Company 100.336 fully paid
and nonassessable shares of Common Stock (the "Warrant Shares") at the initial
exercise price (the "Exercise Price") of $0.01 per share payable upon surrender
of this Warrant Certificate and payment of the Exercise Price at the office or
agency of the Warrant Agent, but only subject to the conditions set forth herein
and in the Warrant Agreement referred to on the reverse hereof. The Exercise
Price and number of Warrant Shares issuable upon exercise of the Warrants are
subject to adjustment upon the occurrence of certain events set forth in the
Warrant Agreement.

      

      
        


      

      
        No
Warrant may be exercised after 5:00 p.m., New York City Time on April 1, 2011.
To the extent not exercised by such time any such Warrant shall become
void.

      

      
        


      

      
        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 at this place.

      

      
        


      

      
        This
Warrant Certificate shall not be valid unless countersigned by the Warrant
Agent, as such term is used in the Warrant Agreement.

      

      
        


      

      
        This
Warrant Certificate shall be governed by and construed in accordance with the
internal laws of the State of New York.

      


      
        
           


        

        
          A-1

          
            

          

        

        
           


        

      


      
        IN
WITNESS WHEREOF, the undersigned has caused this Warrant Certificate to be
signed below.

      

      
        


      

      
        


      

      
        


      

      
        
          
            
              
                
                  
                    	
                            DATED:
      March 23, 2004

                          	
                            GRANDE
      COMMUNICATIONS HOLDINGS, INC.

                          
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                            By:

                          	 
      	 
      
	 
      	 
      	
                            Name:

                          	 
      
	 
      	 
      	
                            Title:

                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                            Countersigned:

                          	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                            U.S.
      BANK NATIONAL ASSOCIATION, as

                          
	 
      	
                            Warrant
      Agent

                          	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                            By:

                          	 
      	 
      
	 
      	 
      	
                            Authorized
      Signature

                          	 
      


                  

                

              

            

          

        

      


      
        
           


        

        
          A-2

          
            

          

        

        
           


        

      


      
        [Reverse
of Warrant Certificate]

      

      
        


      

      
        The
Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants expiring at 5:00 p.m. New York City time on April 1, 2011
entitling the holder on exercise to receive shares of Common Stock, and are
issued or to be issued pursuant to a Warrant Agreement dated as of March 23,
2004 (the "Warrant Agreement"), duly executed and delivered by the Company to
U.S. Bank National Association, as warrant agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. Capitalized terms used
but not defined herein have the meaning ascribed to such terms in the Warrant
Agreement. A copy of the Warrant Agreement may be obtained by the holder hereof
upon written request to the Company.

      

      
        


      

      
        Warrants
may be exercised at any time on or after the Separation Date and on or before
5:00 p.m. New York City time on April 1, 2011. In order to exercise all or any
of the Warrants represented by this Warrant Certificate, the holder must deliver
to the Warrant Agent at its corporate trust office set forth in Section 15 of
the Warrant Agreement this Warrant Certificate and the form of election to
purchase on the reverse hereof duly completed and signed, which signature shall
be medallion guaranteed by an institution which is a member of a Securities
Transfer Association recognized signature guarantee program, and upon payment to
the Warrant Agent for the account of the Company of the Exercise Price, for the
number of Warrant Shares in respect of which such Warrants are then exercised.
No adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.

      

      
        


      

      
        The
Warrant Agreement provides that upon the occurrence of certain events the
Exercise Price set forth on the face hereof may, subject to certain conditions,
be adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides
that the number of shares of Common Stock issuable upon the exercise of each
Warrant shall be adjusted. No fractions of a share of Common Stock will be
issued upon the exercise of any Warrant, but the Company will pay the cash value
thereof determined as provided in the Warrant Agreement.

      

      
        


      

      
        The
Company has agreed pursuant to a Equity Registration Rights Agreement dated as
of March 23, 2004 (the "Equity Registration Rights Agreement") upon receipt of
written request by holders of at least 5% of the Registrable Securities to, as
promptly as practicable, file a registration statement on an appropriate form
under the Securities Act covering the resale of the Warrant Shares. In addition,
the Company may, at any time at its option, file a registration statement
covering the resale of the Warrant Shares. The Company will use its reasonable
best efforts to cause any such registration statement to be declared effective
and to keep such registration statement continuously effective under the
Securities Act in order to permit the resale of the Warrant Shares by the
holders thereof for two years.

      

      
        


      

      
        Warrant
Certificates, when surrendered at the corporate trust office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.

      


      
        
           


        

        
          A-3

          
            

          

        

        
           


        

      

       

      
        Upon due
presentation for registration of transfer of this Warrant Certificate at the
corporate trust office of the Warrant Agent a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this' Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.

      

      
        


      

      
        The
Company and the Warrant Agent may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, of any distribution to the holder(s) hereof, and
for all other purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary. Neither the Warrants nor this Warrant
Certificate entitles any holder hereof to any rights of a stockholder of the
Company.

      


      
        
           


        

        
          A-4

          
            

          

        

        
           


        

      


      
        [Form of
Election to Purchase]

      

      
        


      

      
        (To Be
Executed Upon Exercise Of Warrant)

      

      
        


      

      
        The undersigned hereby irrevocably
elects to exercise the right, represented by this Warrant Certificate, to receive ________________ shares of Common Stock
and herewith tenders payment for such shares to the order of GRANDE
COMMUNICATIONS HOLDINGS, INC., in the amount of [Warrants] [Notes] equal in
[principal amount] [fair market value] to $ ________________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the name of ________________, whose address
is ________________ and that such shares be delivered to ________________, whose address
is ________________ If said number of shares is less than
all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be registered in the name
of ________________, whose address is ________________, and that such Warrant
Certificate be delivered to whose address is ________________.

      

      
        


      

      
        
          
            
              
                	 
      	 
	
                        Signature

                      	 
	 
      	 
	 
      	 
	 
      	 
	
                        Date:

                      	 
	 
      	 
	 
      	 
	 
      	 
	
                        Signature
      Guaranteed

                      	 


              

            

          

        

      

      
        


      

      
        Signatures
must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Warrant Agent, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Warrant Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

      


      
        
           


        

        
          A-5

          
            

          

        

        
           


        

      


      
        SCHEDULE
OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS

      

      
        


      

      
        The
following exchanges of a part of this Global Warrant have been
made:

      

      
        


      

      


      
        
          	
                  
                    Date of Exchange

                  

                	 	
                  
                    Number of Warrants in Amount of decrease in this Global
      Warrant

                  

                	 	
                  
                    Number of Warrants in Amount of increase in this Global
      Warrant

                  

                	 	
                  
                    Number of warrants in this Global Warrant following such decrease or
      increase

                  

                	 	
                  
                    Signature of authorized officer of Warrant
      Agent

                  

                


        

      


      
        
           


        

        
          A-6

          
            

          

        

        
           


        

      


      
        EXHIBIT
B

      

      
        


      

      
        FORM
OF CERTIFICATE OF TRANSFER

      

      
        


      

      
        


      

      
        


      

      
        Grande
Communications Holdings, Inc.

      

      
        401
Carlson Circle

      

      
        San
Marcos, Texas 78666

      

      
        


      

      
        U.S. Bank
National Association

      

      
        60
Livingston Avenue

      

      
        St. Paul,
Minnesota 55107-2292

      

      
        Attention:
Corporate Trust Department

      

      
        


      

      
        
          	
                   
      

                	
                  Re:           Warrants

                


        

      

      
        


      

      
        Reference
is hereby made to the Warrant Agreement, dated as of March 23, 2004 (the
"WARRANT AGREEMENT"), between Grande Communications Holdings, Inc., as issuer
(the "COMPANY"), and U.S. Bank National Association, as warrant agent.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Warrant Agreement.

      

      
        


      

      
        ________________, (the "TRANSFEROR")
owns and proposes to transfer the Warrant[s] or interest in such
Warrant[s] specified in Annex A hereto, in the principal amount at maturity of $ ________________ in such Warrant[s] or
interests (the "TRANSFER"), to ________________ (the "TRANSFEREE"), as
further specified in Annex A hereto. In connection with the
Transfer, the Transferor hereby certifies that:

      

      
        


      

      
        [CHECK
ALL THAT APPLY]

      

      
        


      

      
        1. £ CHECK IF
TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL
WARRANT OR A DEFINITIVE WARRANT PURSUANT TO RULE 144A. The Transfer is being
effected pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the beneficial interest or Definitive
Warrant is being transferred to a Person that the Transferor reasonably believed
and believes is purchasing the beneficial interest or Definitive Warrant for its
own account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Transfer is in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Warrant Agreement, the transferred beneficial interest or Definitive Warrant
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Warrant and/or the Definitive
Warrant and in the Warrant Agreement and the Securities
Act.

      


      
        
           


        

        
          B-1

          
            

          

        

        
           


        

      


      
        2. £ CHECK. IF
TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S
GLOBAL WARRANT OR A DEFINITIVE WARRANT PURSUANT TO REGULATION S. The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that
(i) the Transfer is not being made to a person in the United States and (x) at
the time the buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its behalf reasonably
believed and believes that the Transferee was outside the United States or (y)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the United
States, (ii) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities
Act, (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed
transfer in accordance with the terms of the Warrant Agreement, the transferred
beneficial interest or Definitive Warrant will be subject to the restrictions on
Transfer enumerated in the Private Placement Legend printed on the Regulation S
Global Warrant and/or the Definitive Warrant and in the Warrant Agreement and
the Securities Act.

      

      
        


      

      
        3. £ CHECK AND
COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN A
DEFINITIVE WARRANT PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN
RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the
transfer restrictions applicable to beneficial interests in Restricted Global
Warrants and Restricted Definitive Warrants and pursuant to and in accordance
with the Securities Act and any applicable blue sky securities laws of any state
of the United States, and accordingly the Transferor hereby further certifies
that (check one):

      

      
        


      

      
        (a) £ such Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act; or

      

      
        


      

      
        (b) £ such Transfer
is being effected to the Company or a subsidiary thereof; or

      

      
        


      

      
        (c) £ such Transfer
is being effected to an Institutional Accredited Investor and pursuant to an
exemption from the registration requirements of the Securities Act other than
Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies
that it has not engaged in any general solicitation within the meaning of
Regulation D under the Securities Act and the Transfer complies with the
transfer restrictions applicable to beneficial interests in a Restricted Global
Warrant or Restricted Definitive Warrants and the requirements of the exemption
claimed, which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Warrant Agreement and (2) if the
Company requests, an Opinion of Counsel provided by the Transferor or the
Transferee (a copy of which the Transferor has attached to this certification),
to the effect that such Transfer is in compliance with the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of the
Warrant Agreement,
the transferred beneficial interest or Definitive Warrant will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the IAI Global Warrant and/or the Definitive Warrants and in the Warrant
Agreement and the Securities Act.

      


      
        
           


        

        
          B-2

          
            

          

        

        
           


        

      

       

      
        4. £ CHECK IF
TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
WARRANT OR OF AN UNRESTRICTED DEFINITIVE WARRANT.

      

      
        


      

      
        (a) £ CHECK IF
TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to
and in accordance with Rule 144 under the Securities Act and in compliance with
the transfer restrictions contained in the Warrant Agreement and any applicable
blue sky securities laws of any state of the United States and (ii) the
restrictions on transfer contained in the Warrant Agreement and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Warrant Agreement, the transferred beneficial interest or
Definitive Warrant will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Warrants, on Restricted Definitive Warrants and in the Warrant
Agreement.

      

      
        


      

      
        (b) £ CHECK IF
TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act
and in compliance with the transfer restrictions contained in the Warrant
Agreement and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Warrant Agreement
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Warrant Agreement, the transferred
beneficial interest or Definitive Warrant will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Warrants, on Restricted Definitive Warrants and in the
Warrant Agreement.

      

      
        


      

      
        (c) £ CHECK IF
TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected
pursuant to and in compliance with an exemption from the registration
requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and
in compliance with the transfer restrictions contained in the Warrant Agreement
and any applicable blue sky securities laws of any State of the United States
and (ii) the restrictions on transfer contained in the Warrant Agreement and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Warrant Agreement, the transferred beneficial interest or
Definitive Warrant will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Warrants or Restricted Definitive Warrants and in the Warrant
Agreement.

      


      
        
           


        

        
          B-3

          
            

          

        

        
           


        

      


      
        This
certificate and the statements contained herein are made for your benefit and
the benefit of the Company.

      

      
        


      

      
        


      

      
        


      

      
        
          
            
              	 
      	
                      [Insert
      Name of Transferor]

                    
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                      By:.

                    	 
      	 
      
	 
      	 
      	
                      Name:

                    	 
      
	 
      	 
      	
                      Title:

                    	 
      
	 
      	 
      	
                      Dated:

                    	 
      


            

          

        

      


      
        
           


        

        
          B-4

          
            

          

        

        
           


        

      


      
        ANNEX
A TO CERTIFICATE OF TRANSFER

      

      
        


      

      
        1.           The
Transferor owns and proposes to transfer the following:

      

      
        


      

      
        [CHECK
ONE OF (a) OR (b)]

      

      
        


      

      
        (a)       
    £ a beneficial
interest in the:

      

      
        


      

      
        (i)     
       £ 144A Global
Warrant, or

      

      
        


      

      
        (ii)  
         £ Regulation S
Global Warrant, or

      

      
        
 

      

      
        (b) 
          £ a Restricted
Definitive Warrant.

      

      
        


      

      
        2.           After
the Transfer the Transferee will hold:

      

      
        


      

      
        [CHECK
ONE]

      

      
        


      

      
        (a)          
 £ a
beneficial interest in the:

      

      
        


      

      
        (i)   
         £ 144A Global
Warrant, or

      

      
        


      

      
        (ii)   
        £ Regulation S
Global Warrant, or

      

      
        


      

      
        (iii)           £ Unrestricted
Global Warrant; or

      

      
        


      

      
        (iv)          £ Regulation S
Global Warrant; or

      

      
        


      

      
        (b)        
   £ a Restricted
Definitive Warrant; or

      

      
        


      

      
        (c)          
 £ an
Unrestricted Definitive Warrant,

      

      
        


      

      
        in
accordance with the terms of the Warrant Agreement.

      


      
        
           


        

        
          B-5

          
            

          

        

        
           


        

      


      
        EXHIBIT
C

      

      
        


      

      
        FORM
OF CERTIFICATE OF EXCHANGE

      

      
        


      

      
        


      

      
        


      

      
        Grande
Communications Holdings, Inc.

      

      
        401
Carlson Circle

      

      
        San
Marcos, Texas 78666

      

      
        


      

      
        U.S. Bank
National Association

      

      
        60
Livingston Avenue

      

      
        St. Paul,
Minnesota 55107-2292

      

      
        Attention:
Corporate Trust Department

      

      
        


      

      
        Re:           Warrants

      

      
        


      

      
        (CUSIP
________________)

      

      
        


      

      
        Reference
is hereby made to the Warrant Agreement, dated as of March 23, 2004 (the
"WARRANT AGREEMENT"), between Grande Communications Holdings, Inc., as issuer
(the "COMPANY"), and U.S. Bank National Association, as warrant agent.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Warrant Agreement.

      

      
        


      

      
        ________________, (the "OWNER") owns
and proposes to exchange
the Warrant[s] or interest in such Warrant[s] specified herein, in the amount
of $ ________________ in such Warrant[s] or
interests (the "EXCHANGE"). In connection with the Exchange, the Owner hereby certifies
that:

      

      
        


      

      
        1.       
      EXCHANGE OF RESTRICTED DEFINITIVE WARRANTS
OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL WARRANT FOR UNRESTRICTED
DEFINITIVE WARRANTS OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL
WARRANT

      

      
        


      

      
        (a)       
    £ CHECK IF
EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL WARRANT TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL WARRANT. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Warrant for a
beneficial interest in an Unrestricted Global Warrant in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Warrants and pursuant to and in accordance with the United States Securities Act
of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Warrant Agreement and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Warrant is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.

      


      
        
           


        

        
          C-1

          
            

          

        

        
           


        

      


      
        (b)      
     £ CHECK IF
EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL WARRANT TO
UNRESTRICTED DEFINITIVE WARRANT. In connection with the Exchange of the Owner's
beneficial interest in a Restricted Global Warrant for an Unrestricted
Definitive Warrant, the Owner hereby certifies (i) the Definitive Warrant is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Restricted Global Warrants and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Warrant Agreement and
the Private Placement Legend are not required in order to maintain compliance
with the Securities Act and (iv) the Definitive Warrant is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.

      

      
        


      

      
        (c)        
   £ CHECK IF
EXCHANGE IS FROM RESTRICTED DEFINITIVE WARRANT TO BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL WARRANT. In connection with the Owner's Exchange of a
Restricted Definitive Warrant for a beneficial interest in an Unrestricted
Global Warrant, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Warrants and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Warrant
Agreement and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

      

      
        


      

      
        (d)         
  £ CHECK IF
EXCHANGE IS FROM RESTRICTED DEFINITIVE . WARRANT TO UNRESTRICTED DEFINITIVE
WARRANT. In connection with the Owner's Exchange of a Restricted Definitive
Warrant for an Unrestricted Definitive Warrant, the Owner hereby certifies (i)
the Unrestricted Definitive Warrant is being acquired for the Owner's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Warrants and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Warrant Agreement and the Private Placement Legend are
not required in order to maintain compliance with the Securities Act and (iv)
the Unrestricted Definitive Warrant is being acquired in compliance with any
applicable blue sky securities laws of any state of the United
States.

      

      
        


      

      
        2.         
    EXCHANGE OF RESTRICTED DEFINITIVE WARRANTS OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL WARRANTS FOR RESTRICTED DEFINITIVE WARRANTS OR
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL WARRANTS

      

      
        


      

      
        (a)           £ CHECK IF
EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL WARRANT TO
RESTRICTED DEFINITIVE WARRANT. In connection with the Exchange of the Owner's
beneficial interest in a Restricted Global Warrant for a Restricted Definitive
Warrant in a number equal to the number of beneficial interests exchanged, the
Owner hereby certifies that the Restricted Definitive Warrant is being acquired
for the Owner's own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Warrant Agreement, the Restricted
Definitive Warrant issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend
printed on the Restricted Definitive Warrant and in the Warrant Agreement and
the Securities Act.

      


      
        
           


        

        
          C-2

          
            

          

        

        
           


        

      

       

      
        (b)           £ CHECK IF
EXCHANGE IS FROM RESTRICTED DEFINITIVE WARRANT TO BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL WARRANT. In connection with the Exchange of the Owner's
Restricted Definitive Warrant for a beneficial interest in the [CHECK ONE] □
144A Global Warrant, □ Regulation S Global'Warrant in a number equal to the
number of beneficial interests exchanged, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Warrants and pursuant
to and in accordance with the Securities Act, and in compliance with any
applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the
Warrant Agreement, the beneficial interest issued will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the relevant Restricted Global Warrant and in the Warrant Agreement and the
Securities Act.

      

      
        


      

      
        This
certificate and the statements contained herein are made for your benefit and
the benefit of the Company.

      

      
        


      

      
        


      

      
        


      

      
        
          
            
              	 
      	
                      [Insert
      Name of Transferor]

                    
	 
      	 
      	 
      	 
      
	 
      	
                      By:.

                    	 
      	 
      
	 
      	 
      	
                      Name:

                    	 
      
	 
      	 
      	
                      Title:

                    	 
      
	 
      	 
      	
                      Dated:

                    	 
      


            

          

        

      


      
        
           


        

        
          C-3

          
            

          

        

        
           


        

      


      
        EXHIBIT
D

      

      
        


      

      
        FORM
OF CERTIFICATE FROM

      

      
        ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR

      

      
        


      

      
        


      

      
        


      

      
        Grande
Communications Holdings, Inc.

      

      
        401
Carlson Circle

      

      
        San
Marcos, Texas 78666

      

      
        


      

      
        U.S. Bank
National Association

      

      
        60
Livingston Avenue

      

      
        St. Paul,
Minnesota 55107-2292

      

      
        Attention:
Corporate Trust Department

      

      
        


      

      
        Re:           Warrants

      

      
        


      

      
        Reference
is hereby made to the Warrant Agreement, dated as of March 23, 2004 (the
"WARRANT AGREEMENT"), between Grande Communications Holdings, Inc., as issuer
(the "COMPANY"), and U.S. Bank National Association, as warrant agent.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Warrant Agreement.

      

      
        


      

      
        In
connection with our proposed purchase of $ ________________ amount
of:

      

      
        


      

      
        (a)      
     £ a beneficial
interest in a Global Warrant, or

      

      
        


      

      
        (b)       
    £ a Definitive
Warrant,

      

      
        


      

      
        we
confirm that:

      

      


      
        1.           
 We understand that any subsequent transfer of the Warrants or any interest
therein is subject to certain restrictions and conditions set forth in the
Warrant Agreement and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Warrants or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES ACT").

      

      
        


      

      
        2.         
   We understand that the offer and sale of the Warrants have not
been registered under the Securities Act, and that the Warrants and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Warrants or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and, if
requested by the Company, an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such transfer is in compliance with the
Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of Rule
144(k) under the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Warrant or beneficial interest in a Global
Warrant from us in a transaction meeting the requirements of clauses (A) through
(E) of this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.

      


      
        
           


        

        
          D-1

          
            

          

        

        
           


        

      

      
         

      

      
        3.       
     We understand that, on any proposed resale of the
Warrants or beneficial interest therein, we will be required to furnish to you
and the Company such certifications, legal opinions and other information as you
and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Warrants purchased by us will bear a legend to the foregoing
effect.

      

      
        


      

      
        4.          
  We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Warrants, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.

      

      
        
 

      

      
        5.  
          We are acquiring the
Warrants or beneficial interest therein purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment
discretion.

      

      
        


      

      
        We agree
not to engage in any hedging transactions with regard to the Warrants unless
such hedging transactions are in compliance with the Securities
Act.

      

      
        


      

      
        You and
the Company are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

      

      
        


      

      
        


      

      
        


      

      
        
          
            
              	 
      	
                      [Insert
      Name of Transferor]

                    
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                      By:

                    	 
      	 
      
	 
      	 
      	
                      Name:

                    	 
      
	 
      	 
      	
                      Title:

                    	 
      
	 
      	 
      	
                      Dated:

                    	 
      


            

          

        

      

       

       

      D-2