EXHIBIT 10.22
WARRANT AGREEMENT
DATED AS OF APRIL 10, 2000
BY AND AMONG
AMERICAN REPROGRAPHICS HOLDINGS, L.L.C.
GS MEZZANINE PARTNERS II, L.P.
AND
GS MEZZANINE PARTNERS II OFFSHORE, L.P.
WARRANT AGREEMENT, dated as of April 10, 2000, by and between American
Reprographics Holdings, L.L.C., a California limited liability company
("Holdings") and GS Mezzanine Partners IL L.P., a limited partnership organized
under the laws of Delaware ("GS Mezzanine"), GS Mezzanine Partners II Offshore,
L.P., an exempted limited partnership organized under the laws of the Cayman
Islands ("GS Offshore", together with GS Mezzanine, the "Purchasers").
RECITALS
WHEREAS, Holdings and the parties listed on the signature pages thereof
have entered into a Purchase Agreement, dated as of April 10, 2000 (as amended,
supplemented or modified from time to time, the "Purchase Agreement"), with the
Purchasers, pursuant to which Holdings has agreed to issue and sell to the
Purchasers (i) $94,564,690 aggregate face amount of Senior Discount Notes due
2009 (the "Original Holdings Notes"), issued pursuant to an Indenture, dated the
date hereof, from Holdings to Wilmington Trust Company, a Delaware banking
corporation, Trustee (as amended, supplemented or modified from time to time,
the "Holdings Indenture"), and (ii) warrants (such warrants and all warrants
issued in exchange, substitution or replacement therefor, the "Original
Warrants") to purchase up to an aggregate of 3,580.24 Common Units of Holdings
(the "Common Units") (subject to adjustment as provided in Section 11),
exercisable at any time prior to the Expiration Date, at an exercise price of
$1,382.59 per unit (the Common Units issuable on exercise of the Original
Warrants being herein called the "Original Warrant Shares");
WHEREAS, Holdings has an option, under the circumstances described in the
Purchase Agreement, to issue and sell to the Purchasers certain additional
Senior Discount Notes due 2009 (the "Additional Holdings Notes", and together
with the Original Holdings Notes and any notes issued in exchange, substitution
or replacement for the Original Holdings Notes and the Additional Holdings
Notes, the "Holdings Notes"), and in connection with the issuance and sale of
the Additional Holdings Notes, Holdings will issue to the Purchasers Additional
Warrants (such warrants and all warrants issued in exchange, substitution or
replacement therefor, the "Additional Warrants", and together with the Original
Warrants, the "Warrants") to purchase the number of Common Units of Holdings
(the "Additional Warrant Shares", and together with the Original Warrant Shares,
the "Warrant Shares") (subject to adjustment as provided in Section 11), which
bears the same proportion to the Original Warrant Shares as the purchase price
payable by the Purchasers for the Additional Holdings Notes bears to the
purchase price paid by the Purchasers for the Original Holdings Notes,
exercisable at any time prior to the Expiration Date, at an exercise price
determined as set forth in Section 2.4(e) of the Purchase Agreement;
WHEREAS, the parties hereto desire to enter into this Agreement in order
to set forth the terms and conditions of the Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
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As used in this Agreement, the following capitalized terms will have the
respective meanings:
"Additional Holdings Notes" shall have the meaning set forth in the
Recitals.
"Additional Warrants" shall have the meaning set forth in the Recitals.
"Additional Warrant Shares" shall have the meaning set forth in the
Recitals.
"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 the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" and all references thereto means this Agreement as it may from
time to time be amended, supplemented or modified.
"Applicable Share" shall have the meaning set forth in Section 11(f).
"Board" means the Board of Advisors of Holdings, as defined in the
Holdings Operating Agreement, or any successor governing body of Holdings.
"Commission" means the Securities and Exchange Commission.
"Common Units" shall have the meaning set forth in the Recitals.
"Conversion Right" shall have the meaning set forth in Section 7.
"Current Market Price" shall have the meaning set forth in Section 11(f).
"Co-Sale" shall have the meaning assigned to such term in the Purchase
Agreement.
"Estimated Tax Distribution" shall have the meaning assigned to such term
in the Holdings Operating Agreement.
"Exercise Price" shall have the meaning set forth in Section 7.
"Exercise Rate" shall have the meaning set forth in Section 11.
"Expiration Date" shall have the meaning set forth in Section 7.
"Final Tax Distribution" shall have the meaning assigned to such term in
the Holdings Operating Agreement.
"GS Mezzanine" shall have the meaning set forth in the preamble to this
Agreement.
"GS Offshore" shall have the meaning set forth in the preamble to this
Agreement.
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"Holdings" shall have the meaning set forth in the first paragraph of this
Agreement.
"Holdings Indenture" shall have the meaning set forth in the Recitals.
"Holdings Notes" shall have the meaning set forth in the Recitals.
"Holdings Operating Agreement" shall have the meaning assigned to such
term in the Purchase Agreement.
"Independent Financial Expert" shall have the meaning set forth in Section
12.
"Independent Expert" shall have the meaning set forth in Section 12.
"Manager" shall have the meaning assigned to such term in the Holdings
Operating Agreement.
"Original Holdings Notes" shall have the meaning set forth in the
Recitals.
"Original Warrants" shall have the meaning set forth in the Recitals.
"Original Warrants Shares" shall have the meaning set forth in the
Recitals.
"Person" means any individual, corporation, partnership, limited liability
company, association, joint venture, trust, unincorporated organization,
government or any agency or political subdivision thereof or other entity.
"Purchase Agreement" shall have the meaning set forth in the Recitals.
"Purchasers" shall have the meaning set forth in the Recitals.
"Recapitalization Agreement" shall have the meaning assigned to such term
in the Purchase Agreement.
"Register Office" shall have the meaning set forth in Section 6.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of Holdings.
"Transaction" shall have the meaning set forth in Section 11(j).
"Transfer Agent" shall have the meaning set forth in Section 10.
"Transfer Notice" shall have the meaning set forth in Section 6.
"Value Report" shall have the meaning set forth in Section 12.
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"Warrant holder(s) or "holders of Warrant certificates" means, in each
case, registered holders of Warrant certificates.
"Warrants" shall have the meaning set forth in the Recitals.
"Warrant Shares" shall have the meaning set forth in the Recitals.
SECTION 2. WARRANT CERTIFICATES
The Warrant certificates to be issued and delivered pursuant to this
Agreement shall be in registered form only and shall be substantially in the
form set forth in Exhibit A attached hereto.
SECTION 3. ISSUANCE OF WARRANTS.
Holdings, (a) simultaneously with the Closing (as defined in the Purchase
Agreement), shall deliver to each Purchaser duly executed Original Warrant
certificates registered in the name of each Purchaser for the purchase of the
number of Original Warrant Shares set forth opposite the name of such Purchaser
on Schedule A, to this Agreement and (b) simultaneously with each Additional
Closing (as defined in the Purchase Agreement), shall deliver to each Purchaser
duly executed Additional Warrant certificates registered in the name of each
Purchaser for the purchase of the number of Additional Warrant Shares which
bears the same proportion to the aggregate number of the Additional Warrant
Shares as the number of Original Warrant Shares for which the Original Warrants
purchased by such Purchaser at the Closing are exercisable bears to the
aggregate number of the Original Warrant Shares.
SECTION 4. EXECUTION OF WARRANT CERTIFICATES.
Warrant certificates evidencing Warrants, each Warrant to purchase
initially one Common Unit, shall be duly executed, on the date of this Agreement
(in the case of Original Warrants) and on the date of each Additional Closing
(in the case of Additional Warrants), by Holdings and delivered to the
registered holders of the Warrants in accordance with the provisions of Section
3. Warrant certificates shall be signed on behalf of Holdings by its Manager or,
upon conversion of Holdings into a corporation, by the Chief Executive Officer,
the President, the Chief Operating Officer, any Vice-President, its Secretary or
any Assistant Secretary of such corporation. Each such signature upon the
Warrant certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, Manager, the Chief Executive Officer, the
President, the Chief Operating Officer, any Vice-President, its Secretary or any
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
certificates and, for that purpose, Holdings may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, a Manager,
the Chief Executive Officer, the President, the Chief Operating Officer, any
Vice-President, its Secretary or any Assistant Secretary notwithstanding the
fact that at the time the Warrant certificates shall be delivered or disposed of
such Person shall have ceased to hold such office. In case any Manager or
officer of Holdings who shall have signed any of the Warrant certificates shall
cease to hold such office before such Warrant certificates shall have been
delivered or disposed of by Holdings, such Warrant certificates nevertheless may
be delivered or disposed of as though such Person had not ceased to hold such
office. Any Warrant certificate may be signed on behalf of Holdings by any
Person who, at the actual date of the execution of such Warrant certificate,
shall be a Manager or
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a proper officer of Holdings to sign such Warrant certificate, although at the
date of the execution of this Agreement such Person did not hold such office.
SECTION 5. REGISTRATION.
Holdings shall number and register the Warrant certificates in a register
as they are issued by Holdings. Holdings may deem and treat the registered
holder(s) of the Warrant certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and Holdings shall not be affected by any notice to
the contrary.
SECTION 6. REGISTRATION OF TRANSFERS AND EXCHANGES.
Holdings shall cause to be kept at its principal office (the "Register
Office") a register in which, subject to such reasonable regulations as it may
prescribe, Holdings shall provide for the registration of Warrant certificates
and of transfers or exchanges of Warrant certificates at the Warrant holder's
option. Holdings shall promptly register the transfer of any outstanding Warrant
certificates upon the records to be maintained by it for that purpose, upon
surrender thereof. Upon any such registration of transfer, a new Warrant
certificate shall be issued to the transferee(s) and the surrendered Warrant
certificate shall be canceled by Holdings. Canceled Warrant certificates shall
thereafter be disposed of in a manner satisfactory to Holdings in accordance
with any applicable laws. Whenever any Warrant certificates are surrendered for
exchange, Holdings shall execute and deliver the Warrant certificates that the
Warrant holder making the exchange is entitled to receive. All Warrant
certificates issued upon any registration of transfer or exchange of Warrant
certificates shall be the valid obligations of Holdings, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the
Warrant certificates surrendered for such registration of transfer or exchange.
Every Warrant certificate surrendered for registration of transfer or exchange
shall (if so required by Holdings) be duly endorsed, or be accompanied by a
written instrument of transfer in the form of Exhibit B attached hereto, duly
executed by the Warrant holder or its attorney duly authorized in writing. No
service charge will be made for any registration of transfer or exchange upon
surrender of Warrant certificates or any issuance of Warrant certificates
pursuant to Section 3 or this Section 6, but Holdings may require payment of a
sum sufficient to cover any stamp or other governmental charge or tax which may
be imposed in connection with any such transfer or exchange. Any Warrant
certificate when duly endorsed in blank (with signature guaranteed) shall be
deemed negotiable. The holder of any Warrant certificate duly endorsed in blank
may be treated by Holdings and all other Persons dealing therewith as the
absolute owner thereof for any purpose and as the Person entitled to exercise
the rights represented thereby, or to the transfer thereof on the register of
Warrants maintained by Holdings, any notice to the contrary notwithstanding; but
until such transfer on such register, Holdings may treat the registered Warrant
holder as the owner for all purposes. In addition to any other legend which may
be required by applicable law, each Warrant certificate representing Warrants
and each certificate representing Warrant Shares issued upon exercise of the
Warrant shall have endorsed to the extent appropriate, upon its face the
following words:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
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AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED,
ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE
UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION
FROM REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW,
RELATING TO THE DISPOSITION OF SECURITIES, INCLUDING RULE 144.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE HOLDINGS OPERATING
AGREEMENT OF AMERICAN REPROGRAPHICS HOLDINGS, L.L.C. ("HOLDINGS"), DATED
AS OF APRIL 10, 2000, AND INVESTOR UNITHOLDERS AGREEMENT OF HOLDINGS,
DATED AS OF APRIL 10, 2000, COPIES OF EACH OF WHICH MAY BE OBTAINED FROM
HOLDINGS. NO TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF
HOLDINGS UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF
SUCH AGREEMENTS.
Prior to any transfer or attempted transfer of any Warrants, the holder of
such Warrants shall give 10 days' prior written notice (a "Transfer Notice") to
Holdings of such holder's intention to effect such transfer, describing the
manner and circumstances of the proposed transfer, and, if requested by
Holdings, obtain from counsel to such holder, who shall be reasonably
satisfactory to Holdings, an opinion that the proposed transfer of such Warrants
may be effected without registration under the Securities Act, unless such
requirement is waived by Holdings. After receipt of the Transfer Notice and
opinion (unless waived by Holdings), Holdings shall, within five days thereof,
so notify the holder of such Warrants and such holder shall thereupon, subject
to compliance with the other restrictions on transfer contained herein, be
entitled to transfer such Warrants, in accordance with the terms of the Transfer
Notice. Each Warrant issued upon such transfer shall bear the restrictive legend
with respect to the Securities Act set forth above, unless, in the opinion of
counsel to such holder (which opinion must be reasonably satisfactory to
Holdings and its counsel), such legend is not required in order to ensure
compliance with the Securities Act. The holder of the Warrants giving the
Transfer Notice shall not be entitled to transfer such Warrants until receipt of
notice from Holdings under this Section 6.
In addition to the transfer restrictions set forth in the preceding
paragraph, no Warrants may be transferred in violation of the Holdings Operating
Agreement or the Co-Sale Agreement, as long as they remain in effect. So long as
the Holdings Operating Agreement and the Co-Sale Agreement remain in effect,
each transferee of any Warrant, as a condition to such transfer, shall become a
party to the Holdings Operating Agreement and to the Co-Sale Agreement and agree
to be bound by their respective terms. Each Warrant issued upon such transfer
shall bear the restrictive legend with respect to the Holdings Operating
Agreement and the Co-Sale Agreement
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set forth above, unless the Holdings Operating Agreement and the Co-Sale
Agreement shall terminate in accordance with their respective terms.
SECTION 7. TERMS OF WARRANTS; EXERCISE OF WARRANTS.
Subject to the terms of this Agreement, the Warrants may be exercised at
any time after the date hereof. Each Warrant, when exercised in accordance with
the terms hereof and upon payment in cash (or by tendering the Holdings Notes,
as provided in the next succeeding paragraph) of the exercise price of $1,382.59
per unit (the "Exercise Price") will entitle the holder thereof to acquire from
Holdings (and Holdings shall issue to such holder of a Warrant) one fully paid
and nonassessable unit of Holdings' authorized but unissued Common Units
(subject to adjustment as provided in Section 11). No cash dividend shall be
paid to a holder of Warrant Shares issuable upon the exercise of Warrants unless
such holder was, as of the record date for the declaration of such dividend, the
record holder of such Warrant Shares.
A Warrant may be exercised upon surrender to Holdings at the Register
Office of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, together with payment to Holdings of the Exercise Price
for each Warrant Share then exercised. To the extent any holder of a Warrant
surrenders with such Warrant any Holdings Note then held by such holder, such
holder shall be deemed to have paid that portion of the aggregate Exercise Price
for all Warrant Shares then exercised equal to 100% of that portion of the
Accreted Value (as defined in the Holdings Indenture) of, together with all
accrued and unpaid interest on such portion of, any Holdings Note of such holder
cancelled pursuant to this paragraph up to but excluding the date of such
issuance of such Holdings Note which the holder thereof directs Holdings to
accept as payment of such aggregate Exercise Price, which Holdings Note shall be
cancelled and not reissued. To the extent the face amount of such surrendered
Holdings Note is greater than the aggregate amount of the Exercise Price for all
Warrant Shares then paid for by surrender thereof (exclusive of the portion of
such exercise price paid for by interest, if any, on such Surrendered Note),
Holdings shall deliver a new Holdings Note to the tendering holder thereof, in
accordance with the provisions of the Holdings Indenture, dated the date of the
original issuance of the tendered Holdings Note, in the face amount which bears
the same proportion to the face amount of such surrendered Note immediately
prior to such redemption as the unredeemed portion of the Accreted Value of such
surrendered Note bears to the Accreted Value of such surrendered Note
immediately prior to such redemption.
In lieu of payment of the Exercise Price pursuant to the preceding
paragraph, the Warrant holder shall have the right to require Holdings to
convert the Warrants, in whole or in part and at any time or times (the
"Conversion Right"), into Warrant Shares by surrendering to Holdings the
certificate or certificates evidencing the Warrant to be converted with the form
of notice of conversion on the reverse thereof duly filled in and signed. Upon
exercise of the Conversion Right, Holdings shall deliver to the Warrant holder
(without payment by the holder of the Warrant of any Exercise Price) that number
of Warrant Shares which is equal to the quotient obtained by dividing (x) the
value of the number of Warrants being exercised at the time the Warrants are
exercised (determined by subtracting the aggregate Exercise Price for all such
Warrants immediately prior to the exercise of the Warrants from the aggregate
Current Market Price (determined pursuant to Section 11(f) of that number of
Warrant Shares purchasable upon
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exercise of such Warrants immediately prior to the exercise of the Warrants
(taking into account all applicable adjustments pursuant to Section 11) by (y)
the Current Market Price of one Common Unit immediately prior to the exercise of
the Warrants.
Subject to the provisions of Section 8, upon surrender of the Warrant
certificate or certificates, Holdings shall issue and deliver with all
reasonable dispatch, to or upon the written order of the Warrant holder and in
such name or names as the Warrant holder may designate, a certificate or
certificates for the number of Warrant Shares issuable or other securities or
property to which such holder is entitled hereunder upon the exercise of such
Warrants, including, at Holdings' option, any cash payable in lieu of fractional
interests as provided in Section 13. 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.
Holdings may issue fractional Common Units upon exercise of any Warrants in
accordance with Section 13.
The Warrants shall be exercisable, at the election of the holders thereof,
either in full or from time to time in part and, in the event that a certificate
evidencing Warrants is exercised in respect of fewer than all of the Warrant
Shares issuable on such exercise at any time prior to the Expiration Date, a new
certificate evidencing the remaining Warrant or Warrants will be issued, and
Holdings will duly execute and deliver the required new Warrant certificate or
certificates pursuant to the provisions of Section 4 and this Section 7.
All Warrant certificates surrendered upon exercise of Warrants shall be
canceled by Holdings. Such canceled Warrant certificates shall then be disposed
of in a manner satisfactory to Holdings and in accordance with any applicable
law. Holdings shall account promptly in writing with respect to Warrants
exercised and all monies received for the purchase of the Warrant Shares through
the exercise of such Warrants. In the event that Holdings shall purchase or
otherwise acquire Warrants, Holdings may elect to have the Warrants canceled and
retired. Holdings shall keep copies of this Agreement and any notices given or
received hereunder available for inspection by the registered Warrant holders
during normal business hours and upon reasonable notice at the Register Office.
Upon exercise of Warrants, the holder of Warrant Shares shall be admitted
as a member of Holdings, in accordance with the Holdings Operating Agreement
(which shall so provide).
SECTION 8. PAYMENT OF TAXES.
Holdings will pay all taxes and other governmental charges attributable to
the initial issuance of Warrant Shares upon the exercise of Warrants; provided,
however, that Holdings shall not be required to pay any such taxes or charges
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 Holdings 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 Holdings the amount of such taxes or charges
or shall have established to the satisfaction of Holdings that such taxes or
charges have been paid.
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SECTION 9. MUTILATED OR MISSING WARRANT CERTIFICATES.
In case any of the Warrant certificates shall be mutilated, lost, stolen
or destroyed, Holdings may in its discretion issue in exchange and substitution
for and upon cancellation of the mutilated Warrant certificate, or in lieu of
and substitution for the Warrant certificate lost, stolen or destroyed, a new
Warrant certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence satisfactory Holdings of such loss,
theft or destruction of such Warrant certificate and indemnity and security
therefor, if requested, also satisfactory (provided that if the Warrant holder
is a Purchaser or another Warrant holder with a minimum net worth of at least
$50,000,000, such Person's own unsecured agreement of indemnity shall be deemed
to be satisfactory) to Holdings. Applicants for such substitute Warrant
certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as Holdings may prescribe.
SECTION 10. RESERVATIONS OF WARRANT SHARES.
Holdings (i) shall at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued Common
Units, for the purpose of enabling it to satisfy any obligation to issue Warrant
Shares upon exercise of Warrants, the maximum number of Common Units which would
then be deliverable upon the exercise of all outstanding Warrants if all such
outstanding Warrants were then exercisable and (ii) if then converted into a
corporation shall not take any action which results in any adjustment of the
number of Warrant Shares if the total number of Warrant Shares issuable after
the action upon the exercise of all of the Warrant Shares would exceed the total
number of shares of common stock then authorized by Holdings' articles of
incorporation and available for the purpose of issue upon such exercise.
The transfer agent for the Common Units (which may be Holdings if it is
acting as transfer agent) (the "Transfer Agent") and every subsequent transfer
agent for any units of Holdings' equity 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 units as shall be required for such
purpose. Holdings will keep a copy of this Agreement on file with the Transfer
Agent for any units of Holdings' equity issuable upon the exercise of the rights
of purchase represented by the Warrants. Holdings will supply such Transfer
Agent with duly executed stock certificates for purposes of honoring all
outstanding Warrants upon exercise thereof in accordance with the terms of this
Agreement and Holdings will provide or otherwise make available any cash which
may be payable as provided in Section 13. Holdings will furnish such Transfer
Agent a copy of all notices of adjustments and certificates related thereto
which are transmitted to each Warrant holder pursuant to Section 14.
Holdings covenants that all Warrant Shares which may be issued upon
exercise of Warrants have been duly authorized and will, upon payment of the
Exercise Price or upon the exercise of the Conversion Right and issuance, be
duly and validly issued, fully paid and nonassessable, free of preemptive rights
and free from all taxes, liens, charges and security interests with respect to
the issue thereof.
SECTION 11. ADJUSTMENT OF NUMBER OF WARRANT SHARES.
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Each Warrant will initially be exercisable by the holder thereof into one
unit of Common Stock at the Exercise Price. The number of Warrant Shares that
may be purchased upon the exercise of each Warrant (the "Exercise Rate") will be
subject to adjustment from time to time upon the occurrence of the events
enumerated in this Section 11. For purposes of this Section 11, "Common Stock"
means the Common Units and any other equity of Holdings into or for which such
Common Units are converted or exchanged as a result of a conversion of Holdings
into a corporation in connection with an IPO or pursuant to any merger,
consolidation, or recapitalization involving Holdings, in each case, for which
the Warrants may be exercised and where, as a result of this definition, the
term refers to more than one class of securities, the adjustment provisions of
this Section 11 shall be equitably adjusted to achieve as nearly as practicable
the intended result as evidenced by the text of such adjustment provisions.
(a) Adjustments for Change in Common Stock. If at any time after the
date of this Agreement Holdings:
(1) pays a dividend or makes a distribution on its Common Stock
exclusively in shares of its Common Stock;
(2) subdivides its outstanding units of Common Stock into a
greater number of units;
(3) combines its outstanding units of Common Stock into a smaller
number of units;
(4) pays a dividend or makes a distribution on its Common Stock in
units of its equity other than Common Stock; or
(5) issues by reclassification of its Common Stock any equity of
Holdings;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted upon occurrence of such event so that the holder of any
Warrant thereafter exercised may receive the aggregate number and kind of units
of equity of Holdings which such holder would have owned immediately following
such action if such Warrant had been exercised immediately prior to such action.
If upon exercise of a Warrant after an adjustment to the Exercise Rate pursuant
to clauses (4) or (5) of this Section 11(a), the holder of such Warrant may
receive units of two or more classes or series of equity of Holdings, the
exercise rights and the Exercise Rate of each class of equity shall thereafter
be subject to further adjustment on terms comparable to those applicable to
Common Stock in this Section 11. The adjustment pursuant to this Section 11(a)
shall be made successively each time that any event listed in this Section 11(a)
above shall occur.
(b) Adjustment for Rights Issue. In case Holdings shall issue to all
holders of Common Stock, or shall make a dividend or other distribution on the
Common Stock consisting exclusively of, rights, options or warrants entitling
the holders thereof to subscribe for or purchase Common Stock or securities
convertible into or exchangeable for Common Stock at a price per unit
(determined in the case of such rights, options, warrants or convertible or
exchangeable securities, by dividing (x) the total consideration payable to
Holdings upon exercise, conversion or exchange of such rights, options, warrants
or convertible or exchangeable
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securities, by (y) the total number of units of such class or series of Common
Stock covered by such rights, options, warrants or convertible or exchangeable
securities) less than the Current Market Price (determined as provided in
paragraph (f) of this Section 11) on the date fixed for the determination of
unitholders entitled to receive such rights, options, or warrants or convertible
or exchangeable securities, the number of Warrant Shares for which each Warrant
may be exercised shall be determined (and the Exercise Rate shall be
appropriately adjusted) by multiplying the number of Warrant Shares issuable
upon exercise of such Warrant immediately prior to the close of business on the
date fixed for the determination of unitholders entitled to receive such rights,
options or warrants, or convertible or exchangeable securities, by a fraction
(not less than one) of which the numerator shall be the number of units of
Common Stock outstanding immediately after giving effect to such dividend or
other distribution (and assuming that such rights, options, warrants or
convertible or exchangeable securities had been fully exercised or converted, as
the case may be) and the denominator of which shall be the number of units of
Common Stock outstanding at the close of business on the date fixed for the
determination of unitholders entitled to receive such rights, options, or
warrants or convertible or exchangeable securities plus the number of units of
Common Stock determined by dividing the aggregate consideration that would be
received by Holdings for the additional units of Common Stock to be issued,
purchased or subscribed for upon exercise of such rights, options or warrants or
upon conversion or exchange of such convertible or exchangeable securities by
the Current Market Price (determined as provided in paragraph (f) of this
Section 11) on the date fixed for the determination of unitholders entitled to
receive such rights, options or warrants, or convertible or exchangeable
securities; provided, however, that no further adjustment to the number of
Warrant Shares shall be made upon the subsequent issue or sale of Common Stock
pursuant to such rights, options or warrants or convertible or exchangeable
securities. For the purposes of this paragraph (b), the number of units of
Common Stock at any time outstanding shall include units issuable in respect of
scrip certificates issued in lieu of fractions of Common Stock.
(c) Adjustments for Issuances. In case Holdings shall issue Common Stock
or rights, options or warrants entitling the holders thereof to subscribe for or
purchase Common Stock or securities convertible into or exchangeable for Common
Stock for a consideration per unit of Common Stock (determined in the case of
such rights, options, warrants or convertible or exchangeable securities, by
dividing (x) the total amount receivable by Holdings in consideration of the
sale and issuance of such rights, options, warrants or convertible or
exchangeable securities, plus the total consideration payable to Holdings upon
exercise, conversion or exchange thereof, by (y) the total number of units of
Common Stock covered by such rights, options, warrants or convertible or
exchangeable securities) less than the Current Market Price (determined as
provided in paragraph (f) of this Section 11), the number of Warrant Shares for
which each Warrant may be exercised shall be determined (and the Exercise Price
shall be appropriately adjusted) by multiplying the number of Warrant Shares
issuable immediately prior to the close of business on the date on which
Holdings fixes the offering price of such additional units by a fraction (not
less than one) of which the numerator shall be the number of units of Common
Stock outstanding immediately after giving effect to such issuance (and
assuming, in the case of rights, options, warrants or convertible or
exchangeable securities that such rights, options, warrants or convertible or
exchangeable securities had been fully exercised or converted, as the case may
be) and the denominator of which shall be the number of units of Common Stock
outstanding at the close of business on the date on which Holdings fixes the
11
offering price of such additional units plus a number of units of Common Stock
determined by dividing the aggregate consideration received by or payable to
Holdings for the additional units of Common Stock so issued or sold or to be
issued, purchased or subscribed for upon exercise of such rights, options or
warrants or upon conversion or exchange of such convertible or exchangeable
securities by the Current Market Price (determined as provided in paragraph (f)
of this Section 11) on the date on which Holdings fixes the offering price of
such additional units; provided that, in the event that Holdings issues equity
securities as part of a unit with debt securities, the allocation of the
purchase price shall be determined in good faith by the Board of Advisors of
Holdings. The increase in the number of Warrant Shares provided for in the
preceding sentence shall not apply upon (i) the issuance of securities in
transactions described in paragraphs (a) or (b) of this Section 11, or pursuant
to the exercise, exchange or conversion of any such securities issued under this
paragraph (c); (ii) the issuance of Common Stock to unitholders of any Person
that immediately or subsequently merges with or into Holdings or any subsidiary
thereof in proportion to their stock holdings of such Person immediately prior
to such merger; (iii) the issuance of Common Stock in a bona fide underwritten
public offering; (iv) exercise of the Management Options (as defined in the
Purchase Agreement); (v) the issuance of Common Stock upon the exercise of
Management Options (as defined in the Purchase Agreement) outstanding on the
Closing Date; (vi) the issuance of Additional Warrants; (vii) issuances of
Common Stock to independent third party sellers in connection with the Permitted
Acquisitions (as defined in an indenture in respect of the Holdings Notes) has
to exceed 10% in the aggregate of the Common Stock of Holdings on a fully
diluted basis; or (viii) the issuance of Common Stock upon the exercise of
Warrants.
(d) Superseding Adjustment. If, at any time (x) after any adjustment in
the number of units issuable upon exercise of the Warrants shall have been made
pursuant to Section 11(b) or 11(c) on the basis of the issuance of rights,
options or warrants entitling the holders thereof to subscribe for or purchase
Common Stock or securities convertible into or exchangeable for Common Stock, or
(y) after new adjustments in the number of units issuable upon exercise of the
Warrants shall have been made pursuant to this Section 11(d).
(i) the right of conversion, exercise or exchange in such rights,
options or warrants, or convertible or exchangeable securities shall
expire, and the right of conversion, exercise or exchange in respect of
any or all of such rights, options or warrants, or convertible or
exchangeable securities shall not have been exercised, and/or
(ii) the consideration per unit for which units of Common Stock are
issuable pursuant to the terms of such rights, options or warrants, or
convertible or exchangeable securities shall be increased or decreased by
virtue of provisions therein or by virtue of the conversion rate or
exchange rate of such security being changed contained for an automatic
increase or decrease in such consideration per unit upon the arrival of a
specified date or the happening of a specified event or by agreement
between Holdings and the holders of such securities,
such previous adjustment shall be rescinded and annulled. Thereupon, a
recomputation shall be made of the effect of such rights, options or warrants,
or convertible or exchangeable securities on the basis of
12
(iii) treating the number of units of Common Stock, if any,
theretofore actually issued or issuable pursuant to the previous exercise
of such right of conversion, exercise or exchange as having been issued on
the date or dates of such exercise and for the consideration actually
received and receivable therefor, and treating the rights, options or
warrants, or convertible or exchangeable securities which have expired and
shall not have been exercised as if such securities had not been issued,
and
(iv) with respect to securities as to which the consideration per
unit of Common Stock has been changed, treating any such rights, options
or warrants or convertible or exchangeable securities which then remain
outstanding as having been granted or issued immediately after the time of
such increase or decrease for the consideration per unit for which units
of Common Stock are issuable under such rights, options or warrants or
convertible or exchangeable securities, and
in each such case, a new adjustment in the number of units issuable upon
exercise of the Warrants shall be made, which new adjustment shall supersede the
previous adjustment so rescinded and annulled. No adjustment in the number of
units issuable upon exercise of the Warrants pursuant to this Section 11(d)
shall change the number of or otherwise affect any units of Common Stock issued
prior to such adjustment upon exercise of the Warrants.
(e) Adjustment for Other Distributions. In case Holdings shall (i) make
a dividend or other distribution on the Common Stock (other than a distribution
covered by any of paragraphs (a), (b), or (c) of this Section 11 and other than
the Final Tax Distributions and the Estimated Tax Distributions made in
accordance with Section 6.1 of the Holdings Operating Agreement, to the extent
permitted by the Credit Agreement (as defined in the Purchase Agreement) and by
the Purchase Agreement), (ii) purchase or otherwise acquire for value any units
of Common Stock, then the number of Warrant Shares for which each Warrant may be
exercised shall be determined by multiplying the number of Warrant Shares
issuable upon exercise of such Warrant immediately prior to the close of
business on the date fixed for the determination of unitholders entitled to
receive such distribution or the date of such purchase by a fraction (not less
than one) of which the numerator shall be the Current Market Price (determined
as provided in paragraph (f) of this Section 11) on the date fixed for the
determination of unitholders entitled to receive such distribution on the date
of such purchase and the denominator of which shall be such Current Market Price
minus the result obtained by dividing the aggregate amount of cash and the fair
market value of any property distributed or paid to effect such distribution or
repurchase, as the case may be, by the number of units of Common Stock
outstanding immediately prior to the date fixed for the determination of
unitholders entitled to receive such distribution on the date of such purchase;
provided that, any particular adjustment of the number of Warrant Shares
pursuant to this paragraph (e) shall be of no force and effect if Holdings pays
in respect of a distribution or a purchase which gave rise to such adjustment to
each Warrant holder, upon exercise of such Warrant holder's Warrant(s), an
amount of consideration to which such Warrant holder would have been entitled in
connection with such distribution or purchase had such Warrant holder exercised
its Warrant(s) immediately prior to the close of business on the date fixed for
the determination of unitholders entitled to receive such distribution or the
date of such purchase.
13
(f) Current Market Price. For the purpose of any computation under this
Section 11, the current market price (the "Current Market Price") per unit of
Common Stock of Holdings or any other security) (the "Applicable Share") on any
date shall be deemed to be the average of the daily closing prices of such
Applicable Share on the principal national securities exchange, on which the
Applicable Shares are listed or admitted to trading or, if the Applicable Shares
are not so listed, the average daily closing bid prices of such Applicable
Shares on the NASDAQ National Market System if the Applicable Shares are quoted
thereon, in any such case, for the 20 consecutive trading days ending on the 5th
trading day before the date in question. If, on any date on which computation of
the Current Market Price is to be made hereunder, the Applicable Shares are not
so listed or quoted on a national securities exchange or the NASDAQ National
Market System, the Current Market Price (except as otherwise provided herein)
shall be determined in accordance with Section 12.
(g) No Amendments. Holdings will not, by amendment of the Holdings
Operating Agreement or through any consolidation, merger, reorganization,
transfer of assets, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Agreement, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Warrant holders
thereof against dilution or other impairment. Without limiting the generality of
the foregoing, Holdings (i) will take all such action as may be necessary of
appropriate in order that Holdings may validly and legally issue Common Stock on
the exercise of the Warrants from time to time outstanding and (ii) will not
take any action which results in any adjustment of the number of Warrant Shares
if the total number of units of Common Stock issuable after the action upon the
exercise of all of the Warrants would exceed the total number of units of Common
Stock then authorized by Holdings' articles of organization and available for
the purposes of issue upon such exercise.
(h) Voluntary Increases. Holdings may, but shall not be obligated to,
make such increases in the number of Warrant Shares, in addition to those
required by paragraphs (a) through (c) of this Section 11, as it considers to be
advisable in order that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients or if that is not possible, to diminish any income taxes that are
otherwise payable because of such event.
(i) When De Minimis Adjustment May Be Deferred. No adjustment in the
number of Warrant Shares shall be required unless such adjustment (plus any
other adjustments not previously made by reason of this paragraph (i)) would
require an increase or decrease of at least 0.5% in the number of Warrant
Shares; provided, however, that any adjustments which by reason of this
paragraph (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(j) Consolidation, Merger, Reorganization or Recapitalization of
Holdings. In case at any time Holdings shall be a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all of Holdings' assets, liquidation or recapitalization of the
Common Stock not subject to adjustment under any of the paragraphs (a) through
(h) of this Section 11) in which the previously outstanding Common Stock shall
be converted or changed into or exchanged for different securities of Holdings
or Common Stock or other securities of
14
another corporation or interests in a non-corporate entity or other property
(including cash) or any combination of the foregoing (each such transaction
being herein called a "Transaction"), then, as a condition of the consummation
of the Transaction, lawful and adequate provision shall be made so that each
holder of a Warrant, upon the exercise thereof at any time on or after the
consummation of the Transaction, shall be entitled to receive, and such Warrant
shall thereafter represent the right to receive, in lieu of the Common Stock
issuable upon such conversion prior to such consummation, the securities, cash
or other property to which such holder would have been entitled upon
consummation of the Transaction if such holder had exercised such Warrant
immediately prior thereto (subject to adjustments from and after the
consummation date as nearly equivalent as possible to the adjustments provided
for in this Section 11). Holdings will not effect any Transaction unless prior
to the consummation thereof each corporation or entity (other than Holdings)
which may be required to deliver any securities or other property upon the
exercise of the Warrants as provided herein shall assume, by written instrument
delivered to each holder of the Warrants, the obligation to deliver to such
holder such securities or other property as in accordance with the foregoing
provisions such holder may be entitled to receive, and such corporation or
entity shall have similarly mailed or delivered to each holder of the Warrants
an opinion of counsel for such corporation or entity, reasonably satisfactory to
the holders of a majority of the Warrants then outstanding, which opinion shall
state that all of the outstanding Warrants, including, without limitation, the
provisions of this Section 11, shall thereafter continue in full force and
effect and shall be enforceable against Holdings and such corporation or entity
in accordance with the terms hereof and thereof, together with such other
matters as such holders may reasonably request. The foregoing provisions of this
Section 11(j) shall similarly apply to successive mergers, consolidations, sales
of assets, liquidations and recapitalizations.
(k) Consideration Received. For purposes of any computation respecting
consideration received pursuant to this Section 11, the following shall apply:
(1) in the case of the issuance of units 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 Holdings for any underwriting of the
issue or otherwise in connection therewith;
(2) in the case of the issuance of units 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 accordance with Section 12; and
(3) in the case of the issuance of securities convertible into or
exchangeable for units, the aggregate consideration received
therefor shall be deemed to be the consideration received by
Holdings for the issuance of such securities plus the additional
minimum consideration, if any, to be received by Holdings upon the
conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (1) and (2) of
this paragraph (k)).
(l) When Issuance or Payment May Be Deferred. In any case in which this
Section 11 shall require that an adjustment in the Exercise Rate be made
effective as of a record date for
15
a specified event, Holdings 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 equity of Holdings, if any, issuable upon such
exercise over and above the Warrant Shares and other equity of Holdings, if any,
issuable upon such exercise on the basis of the Exercise Rate and (ii) paying to
such holder any amount in cash in lieu of a fractional unit pursuant to Section
13; provided, however, that Holdings shall deliver to such holder a due xxxx or
other appropriate instrument evidencing such holder's right to receive such
additional Warrant Shares, other equity and cash upon the occurrence of the
event requiring such adjustment.
(m) Form of Warrants. Irrespective of any adjustments in the Exercise
Price or the Exercise Rate or kind of units or other assets purchasable upon the
exercise of the Warrants, Warrants theretofore or thereafter issued may continue
to express the same price and number and kind of units or other assets as are
stated in the Warrants initially issuable pursuant to this Agreement.
(n) Adjustment in Exercise Price. Upon each adjustment in the number of
Warrant Shares for which a Warrant is exercisable pursuant to this Section 11,
the Exercise Price for such Warrant shall be adjusted to equal an amount per
unit of Common Stock equal to the Exercise Price before such adjustment
multiplied by a fraction, of which the numerator is the number of Warrant Shares
for which a Warrant is exercisable immediately before giving effect to such
adjustment and the denominator of which is the number of Warrant Shares for
which a Warrant is exercisable immediately after giving effect to such
adjustment; provided, however, that in no event shall the Exercise Price be
reduced below the par value (if any) of the Common Stock for which the Warrant
is exercisable.
(o) No Dilution or Impairment. If any event shall occur as to which the
provisions of Section 11 are not strictly applicable but the failure to make any
adjustment would adversely affect the purchase rights represented by the
Warrants in a way that is contrary to the manifest and essential intent and
principles of Section 11, then, in each such case, Holdings shall appoint an
Independent Financial Expert, which shall give its opinion upon the adjustment,
if any, on a basis consistent with the essential intent and principles
established in Section 11 of this Agreement to preserve, without dilution, such
exercise rights. Upon receipt of such opinion, Holdings will promptly mail a
copy thereof to the holders and shall make the adjustments described therein.
Holdings will at all times in good faith assist in the carrying out of the terms
of this Agreement.
SECTION 12. VALUATION BY INDEPENDENT FINANCIAL EXPERT.
For purposes of this Agreement, the Current Market Price of Warrant Shares
or other property shall be equal to the Fair Market Value (as defined below) of
such Warrant Shares or property, as the case may be, and will be determined as
follows. At any time the Current Market Price of Warrant Shares or other
property is to be determined under this Agreement, Holdings and the Warrant
holders holding Warrants representing a majority of the Warrant Shares will
each, within thirty (30) days of receipt by the relevant party of such notice or
within thirty (30) days after the date fixed under this Agreement for such
determination, (i) appoint a nationally recognized investment bank with
experience in transactions of comparable size and magnitude (an "Independent
Financial Expert") to determine the Fair Market Value of such Warrant Shares
16
or other property, as the case may be, and (ii) cause the Independent Financial
Expert so appointed by it as promptly as possible after such appointment, to
prepare and to deliver to the other party or parties hereto a written report (a
"Value Report") specifying such Fair Market Value within the time period
specified below. Should one party (or the Independent Financial Expert selected
by such party) fail to act timely to appoint an Independent Financial Expert or
cause such Independent Financial Expert to deliver its Value Report within the
time period specified below, then the Independent Financial Expert appointed by
the other party shall alone determine the Fair Market Value of the Warrant
Shares or other property, as the case may be, which determination shall be
conclusive for all purposes hereof. If the two Value Reports so delivered by
each Independent Financial Expert provide values such that the higher one is not
more than 20% greater than the lower one, the average of the two values will be
taken as the Fair Market Value of the Warrant Shares or other property, as the
case may be, which average shall be conclusive for all purposes of establishing
such Fair Market Value hereunder. If the valuations specified in the two Value
Reports differ by more than 20%, Holdings and Warrant holders holding Warrants
representing a majority of the Warrant Shares will jointly appoint an additional
Independent Financial Expert (the "Independent Expert") to perform a third
valuation and prepare a third Value Report. If Holdings and such Warrant holders
are unable to agree on the selection of the Independent Expert, a body agreed to
by both parties or, on the failure of such agreement, American Arbitration
Association will be requested by Holdings and the Warrant holders jointly to
appoint another Independent Expert to perform a third valuation. Such
Independent Expert shall not have performed significant work for either Holdings
or the Warrant holders during the immediately preceding one year. In such
circumstance, the Fair Market Value of the Warrant Shares or other property, as
the case may be, will be equal to (i) if the Fair Market Value specified in the
Value Report prepared by the Independent Expert is in between the valuations
specified on the two other Value Reports, an amount equal to the average of the
two valuations that are closest in amount, (ii) if the Fair Market Value
specified in the Value Report prepared by the Independent Expert is equal to or
greater than the highest of the two valuations specified in the two initial
Value Reports, an amount equal to the highest of such two initial valuations and
(iii) if the Fair Market Value specified in the Value Report prepared by the
Independent Expert is equal to or lower than the lowest of the two valuations
specified in the two initial Value Reports, an amount equal to the lower of such
two initial valuations. Holdings shall provide all Independent Financial Experts
with the same financial and operational information for conducting their
valuation. Holdings shall use its best efforts to ensure that the information
shall be complete and accurate in all material respects and that any forecasts
shall be based on unbiased assessments made in good faith. Holdings shall
cooperate fully with such Independent Financial Experts in the conduct of their
valuation, including making management reasonably available and offering access
to the premises of Holdings to the Independent Financial Experts during regular
business hours and on reasonable notice. The Independent Expert shall not be
apprised by either party of the two initial valuations prior to delivery of its
own Value Report.
"Fair Market Value" of the Warrant Shares or other property, as the case
may be, as of the date of determination shall mean the price that a willing
buyer would pay to a willing seller for the relevant Warrant Shares or other
property, as the case may be, in an arm's length transaction, with neither party
being under any immediate obligation or need to consummate the transaction, it
being understood that the buyer and seller in arriving at such price in
determining the value of Warrant Shares would each consider, among other
factors, the past and prospective earnings of Holdings, the initial public
offering value of Holdings if Common Units of Holdings
17
were offered to the public in a widely distributed initial public offering and
listed on one or more major stock exchanges, and comparable stock market
valuations assuming such Common Units are publicly traded and widely distributed
with no discount for lack of liquidity; provided that such valuation shall
exclude any minority discount.
The Fair Market Value for the Warrant Shares or other property, as the
case may be, shall be stated in U.S. dollars. Holdings and the Warrant holders
shall each be responsible for all compensation of the Independent Financial
Expert appointed by them and the costs of a third Independent Financial Expert,
if required, shall be borne by a party whose valuation is not included in
computing the final Fair Market Value. The Independent Financial Experts shall
submit their valuations simultaneously to Holdings and the Warrant holders at
12:00 noon New York time on the thirtieth day after being jointly instructed by
Holdings and the Warrant holders to initiate the valuation calculation or, if
such day is not a business day, on the next business day. If a third valuation
is required, the Independent Expert shall submit its valuation to the parties
within 60 days of its appointment or, if such day is not a business day, on the
next business day.
SECTION 13. FRACTIONAL INTERESTS.
Holdings shall not be required to issue fractional Warrant Shares on the
exercise of Warrants, although it may do so in its sole discretion. 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 13,
be issuable upon the exercise of any such Warrants (or specified portion
thereof), Holdings shall notify the Warrant holder exercising the Warrants in
writing of the amount to be paid in lieu of the fraction of a Warrant Share and
concurrently shall pay to the Warrant holder an amount in cash equal to the
Current Market 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 cent.
SECTION 14. NOTICES TO WARRANT HOLDERS; RIGHTS OF WARRANT HOLDERS.
Upon any adjustment of the number of Warrant Shares pursuant to Section
11, Holdings shall promptly thereafter (i) file with the Register Office a
certificate of the Senior Financial Officer of Holdings (unless the Purchasers
request a certificate of a firm of independent public accountants of recognized
standing selected by the Board (who may be the regular auditors of Holdings))
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment, upon exercise of a Warrant and (ii) give to each of the
registered holders of the Warrant certificates at his or her address appearing
on the Warrant register 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 14.
In case Holdings shall authorize:
18
(a) the issuance of any dividend or other distribution on the Common
Units, whether in cash, equity, or other securities, evidences of indebtedness
or other property; or
(b) any action which would require an adjustment of the number of
Warrant Shares pursuant to Section 11; or
(c) any conversion of Holdings into a corporation in connection with an
IPO or otherwise; or
(d) any tender offer or exchange offer by Holdings for Common Units or
Common Units open market repurchase program, in either case, involving more than
3% of the outstanding Common Units; or
(e) of the voluntary or involuntary dissolution, liquidation or winding
up of Holdings;
then Holdings shall cause to be filed with the Register Office and shall give to
each of the registered holders of the Warrant certificates at the address
appearing on the Warrant register, a written notice delivered by any method
provided in Section 16, at least 20 business days (or 10 business days in any
case specified in clause (b) above) prior to the applicable record date
hereinafter specified, or, in the case of events for which there is no record
date, at least 20 business days before the effective date of such event or the
commencement of such tender offer, exchange offer, or repurchase program;
provided that such notice period shall be extended by the number of days that
the Warrant Shares cannot be exercised under Section 7. Any written notice
provided pursuant to this Section 14 shall state (i) the date as of which the
holders of record of Common Units are entitled to receive any such rights,
options, warrants or distribution are to be determined, or (ii) the commencement
date of any tender offer, exchange offer or repurchase program for Common Units,
or (iii) the date on which any such consolidation, merger, conveyance, transfer,
reclassification, 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 Common Units shall be entitled to exchange such units for
securities or other property, if any, deliverable upon such consolidation,
merger, conveyance, transfer, reclassification, dissolution, liquidation or
winding up. The failure to give the notice required by this Section 14 or any
defect therein shall not affect the legality or validity of any issuance, right,
option, warrant, distribution, tender offer, exchange offer, repurchase program,
consolidation, merger, conveyance, transfer, reclassification, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant certificates
shall be construed as conferring upon the holders thereof the right to vote or
to consent or to receive notice of meetings of unitholders or the appointment of
managers of Holdings or any other matter, or any other rights of unitholders of
Holdings, including any right to receive dividends. In addition, the holders of
Warrant certificates shall have no preemptive rights and shall not be entitled
to share in the assets of Holdings in the event of the liquidation, dissolution
or winding up of Holdings' affairs.
SECTION 15. NOTICES.
Any notice or demand authorized by this Agreement to be given or made by
Holdings or by the registered holder of any Warrant certificate to Holdings
shall be sufficiently given or
19
made when deposited in the mail, first class or registered, postage prepaid,
addressed, or when sent via facsimile, as follows:
American Reprographics Company Holdings, L.L.C.
000 Xxxx Xxxxxx
Xxxxx Xxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Manager
with copies to:
Code Xxxxxxxx & Xxxxxxx L.L.C.
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
and
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
Any notice pursuant to this Agreement to be given by Holdings to the
Purchaser shall be sufficiently given when deposited in the mail, first-class or
registered, postage prepaid, addressed (until another address is provided in
writing by such Purchaser to Holdings) to the Purchaser, or when sent via
facsimile, as follows:
GS Mezzanine Partners, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx, Esq.
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
SECTION 16. SUPPLEMENTS AND AMENDMENTS.
Holdings may from time to time supplement or amend this Agreement without
the approval of any holders of Warrant certificates in order to cure any
ambiguity or to correct or
20
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 Holdings may deem necessary or
desirable and which shall not in any way adversely affect the interests of the
holders of Warrant certificates. Any amendment or supplement to this Agreement
that has an adverse effect on the interests of holders of Warrant certificates
shall require the written consent of registered holders of fifty percent of the
then outstanding Warrants. The consent of each holder of a Warrant affected
shall be required for any amendment pursuant to which the Exercise Price would
be increased or the number of Warrant Shares for or into which a Warrant may be
exercised or convertible would be decreased (other than in connection with a
waiver of any provisions of Section 10). Notwithstanding anything herein to the
contrary, if this Agreement is amended pursuant to Section 2.4(e) of the
Purchase Agreement, such amendment shall require the written consent of the
Company and the Purchasers only.
SECTION 17. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit
of Holdings shall bind and inure to the benefit of their respective successors
and assigns hereunder. If Holdings is converted into a corporation, the terms of
this Agreement shall be modified to provide the same substantive rights but in
the form appropriate for a corporation.
SECTION 18. TERMINATION.
This Agreement shall terminate on the date on which all Warrants have been
exercised or lapsed.
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 WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REQUIRE THE APPLICATION OF
THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
SECTION 20. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person other
than Holdings and the registered holders of Warrant certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of Holdings and the registered holders of
the Warrant certificates.
SECTION 21. HEADINGS.
The descriptive headings of the several Sections and paragraphs of this
Agreement inserted for convenience only, do not constitute a part of this
Agreement and shall not affect in any way the meanings or interpretation of this
Agreement.
SECTION 22. SUBMISSION TO JURISDICTION.
21
If any action, proceeding or litigation shall be brought by the
Purchasers, any holder of Warrants or Holdings in order to enforce any right or
remedy under this Agreement the parties hereto hereby consent and will submit,
and will cause each of its subsidiaries to submit, to the jurisdiction of any
state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Agreement. The
parties hereto hereby irrevocably waive any objection, including, but not
limited to, any objection to the laying of venue or based on the grounds of
forum non conveniens, which they may now or hereafter have to the bringing of
any such action, proceeding or litigation in such jurisdiction.
SECTION 23. WAIVER OF JURY TRIAL.
THE PARTIES HERETO HEREBY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE WARRANTS.
SECTION 24. SERVICE OF PROCESS.
Nothing herein shall affect the right of any holder of a Security to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against Holdings in any other jurisdiction.
SECTION 25. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
AMERICAN REPROGRAPHICS HOLDINGS,
L.L.C.
By: /s/ X. X. XXXX
------------------------------------
Name: XXXX XXXX
Title: CHIEF FINANCIAL OFFICER AND
SECRETARY
GS MEZZANINE PARTNERS II, L.P.
By: GS MEZZANINE ADVISORS II, L.L.C.,
its general partner
By: /s/ X. X. XXXXXX
------------------------------------
Name: XXXX X. XXXXXX
Title: VICE PRESIDENT
22
GS MEZZANINE PARTNERS OFFSHORE II, L.P.
By: GS MEZZANINE ADVISORS II, L.L.C.,
its general partner
By: /s/ X. X. XXXXXX
------------------------------------
Name: XXXX X. XXXXXX
Title: VICE PRESIDENT
23
EXHIBIT A
Form of Warrant Certificate
[Face]
[Date]
No. ___ _____ Warrants
Warrant Certificate
AMERICAN REPROGRAPHICS HOLDINGS. L.L.C.
This Warrant Certificate certifies that ______________________________ ,
or registered assigns, is the registered holder of _____________ Warrants (the
"Warrants") to purchase an aggregate of common units (the "Common Units"), of
American Reprographics Holdings, L.L.C., a ____________________________ limited
liability company (the "Company"). Each Warrant entitles the holder upon
exercise to purchase from Holdings at any time after the date hereof
[_____________________________________ of] a fully paid and nonassessable Common
Unit (a "Warrant Share") upon surrender of this Warrant Certificate and payment
in full for such Warrant Share at the Register Office of Holdings, subject to
the conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. The number of Warrant Shares purchasable upon exercise thereof
are subject to adjustment upon the occurrence of certain events set forth in the
Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, which 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 authenticated by
countersignature of the Warrant Agent, as such term is used in the Warrant
Agreement.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
IN WITNESS WHEREOF, American Reprographics Holdings. L.L.C., has caused
this Warrant Certificate to be signed by its duly authorized Manager as of the
date first above written.
AMERICAN REPROGRAPHICS HOLDINGS,
L.L.C.
By:____________________________________
Name:
Title:
1
Form of Warrant Certificate
[Reverse]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT OR APPLICABLE
STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM REGISTRATION UNDER SUCH
ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO THE DISPOSITION OF
SECURITIES, INCLUDING RULE 144.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE HOLDINGS OPERATING
AGREEMENT OF AMERICAN REPROGRAPHICS HOLDINGS, L.L.C. ("HOLDINGS"), DATED
AS OF APRIL 10, 2000, AND THE INVESTOR UNITHOLDERS AGREEMENT OF HOLDINGS,
DATED AS OF APRIL 10, 2000, COPIES OF EACH OF WHICH MAY BE OBTAINED FROM
HOLDINGS. NO TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF
HOLDINGS UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF
SUCH AGREEMENTS.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants entitling the holder on exercise to receive Common
Units of Holdings (the "Common Units"), and are issued or to be issued pursuant
to a Warrant Agreement, dated as of April 10, 2000 (the "Warrant Agreement"),
between Holdings and the other parties thereto, 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 Holdings and the holders (the
words "holders" or "holder" meaning the registered holders or registered holder)
of the Warrants. All terms not otherwise defined herein shall have the meanings
set forth in the Warrant Agreement. A copy of the Warrant Agreement may be
obtained by the holder hereof upon written request to Holdings.
Warrants may be exercised at any time after the date hereof. The holder of
Warrants evidenced by this Warrant Certificate may exercise such Warrants by
surrendering this Warrant Certificate, with the form of election to purchase set
forth hereon properly completed and executed, together with payment to Holdings
of the Exercise Price for each Warrant then exercised, which payment may be made
either in cash or by tendering any Holdings Note then held by such holder or a
portion thereof in the face amount equal to the 100% of the portion of the
Exercise Price being so paid or by a combination thereof. In lieu of payment of
the Exercise Price pursuant to the preceding sentence, the holder of the
Warrants may convert the Warrants,
1
in whole or in part and at any time or times, into Common Units by surrendering
to Holdings this Warrant Certificate with the form of notice of conversion set
forth hereon properly completed and executed. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any dividends
on any Common Units issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the number of Warrant Shares may, subject to certain conditions, be adjusted.
Holdings will not be required to issue fractional Warrant Shares on the exchange
of Warrants, although it may do so in its sole discretion. If fractional units
are not issued, Holdings will pay the cash value of such fractional units as
determined in accordance with the provisions of the Warrant Agreement.
Warrant certificates, when surrendered at the office of Holdings 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.
Upon due presentation for registration of transfer of this Warrant
certificate at the office of Holdings, 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.
Holdings 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 Holdings shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant certificate entitles any holder hereof to
any rights of a unitholder of Holdings.
2
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 _________________________
Common Units and hereby tenders for payment for such units to the order of
American Reprographics Company Holdings. L.L.C.
$_______________________________ of the Accreted Value of Holdings Note
(as defined in the Warrant Agreement),
cash in the amount of $ ___________________________
in accordance with the terms hereof.
The undersigned requests that a certificate for such units be registered
in the name of _______________________________________, whose address is
_____________________________________ and that such units be delivered to
_________________________________ whose address is ____________________________.
If said number of Warrant Shares is less than all of the Common Units
purchasable hereunder, the undersigned requests that a new Warrant certificate
representing the remaining balance of such units be registered in the name of
______________________________________, whose address is _______________________
_______________________________________, and that such Warrant certificate be
delivered to ________________________________________________ , whose address is
________________________________________________.
______________________________________
(Signature)
Date:_________________________
1
Form of Notice of Conversion
(To Be Executed Upon Conversion of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant certificate, to convert Warrants represented hereby
into ____________________ Common Units in accordance with the terms hereof.
The undersigned requests that a certificate for such units be registered
in the name of __________________________________, whose address is __________
_______________________________ and that such units be delivered to __________
________________________________ whose address is ____________________________
_______________________________________.
If said number of Warrant Shares is less than all of the Common Units
purchasable hereunder, the undersigned requests that a new Warrant certificate
representing the remaining balance of such units be registered in the name of
_____________________________________, whose address is _______________________
_________________________________, and that such Warrant certificate be
delivered to __________________________________, whose address is _____________
_________________________________________.
______________________________________
(Signature)
Date:_________________________
1
EXHIBIT B
Form of Transfer
(To Be Executed Upon Transfer of Warrant)
FOR VALUE RECEIVED, the undersigned registered holder of this Warrant
certificate hereby sells, assigns and transfers unto the Assignee(s) named below
(including the undersigned with respect to any Warrants constituting a part of
the Warrants evidenced by this Warrant certificate not being assigned hereby)
all of the rights of the undersigned under this Warrant certificate, with
respect to the number of Warrants set forth below:
Name of Assignee(s) Address Social Security, EIN or Number of Warrants
other identifying number of
assignee(s)
and does hereby irrevocably constitute and appoint Holdings as the undersigned's
attorney to make such transfer on the register maintained by Holdings for that
purpose, with full power of substitution in the premises.
Date:
_________________________________________
(Signature of Owner)
_________________________________________
(Xxxxxx Xxxxxxx)
_________________________________________
(City) (State) (Zip Code)
1
SCHEDULE A
Issuance of Original Warrants
Name and Address of Purchaser Number of Original Warrants
--------------------------------------- ---------------------------
GS MEZZANINE PARTNERS II, L.P. 2,743.54
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx, Esq.
GS MEZZANINE PARTNERS II OFFSHORE, L.P. 836.70
c/o GS Mezzanine Partners L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx, Esq.
1
TABLE OF CONTENTS*
PAGE
SECTION 1. DEFINITIONS............................................................. 1
SECTION 2. WARRANT CERTIFICATES.................................................... 4
SECTION 3. ISSUANCE OF WARRANTS.................................................... 4
SECTION 4. EXECUTION OF WARRANT CERTIFICATES....................................... 4
SECTION 5. REGISTRATION............................................................ 5
SECTION 6. REGISTRATION OF TRANSFERS AND EXCHANGES................................. 5
SECTION 7. TERMS OF WARRANTS; EXERCISE OF WARRANTS................................. 7
SECTION 8. PAYMENT OF TAXES........................................................ 8
SECTION 9. MUTILATED OR MISSING WARRANT CERTIFICATES............................... 9
SECTION 10. RESERVATIONS OF WARRANT SHARES.......................................... 9
SECTION 11. ADJUSTMENT OF NUMBER OF WARRANT SHARES.................................. 9
(a) Adjustments for Change in Common Stock...................................... 10
(b) Adjustment for Rights Issue................................................. 10
(c) Adjustments for Issuances................................................... 11
(d) Superseding Adjustment...................................................... 12
(e) Adjustment for Other Distributions.......................................... 13
(f) Current Market Price........................................................ 14
(g) No Amendments............................................................... 14
(h) Voluntary Increases......................................................... 14
(i) When De Minimis Adjustment May Be Deferred.................................. 14
(j) Consolidation, Merger, Reorganization or Recapitalization of Holdings....... 14
(k) Consideration Received...................................................... 15
(l) When Issuance or Payment May Be Deferred.................................... 15
(m) Form of Warrants............................................................ 16
(n) Adjustment in Exercise Price................................................ 16
(o) No Dilution or Impairment................................................... 16
SECTION 12. VALUATION BY INDEPENDENT FINANCIAL EXPERT............................... 16
-----------------------
*This table of Contents does not constitute a part of this Agreement or have any
bearing upon the interpretation of any of its terms or provisions.
-i-
TABLE OF CONTENTS
(continued)
PAGE
SECTION 13. FRACTIONAL INTERESTS.................................................... 18
SECTION 14. NOTICES TO WARRANT HOLDERS; RIGHTS OF WARRANT HOLDERS................... 18
SECTION 15. NOTICES................................................................. 19
SECTION 16. SUPPLEMENTS AND AMENDMENTS.............................................. 20
SECTION 17. SUCCESSORS.............................................................. 21
SECTION 18. TERMINATION............................................................. 21
SECTION 19. GOVERNING LAW........................................................... 21
SECTION 20. BENEFITS OF THIS AGREEMENT.............................................. 21
SECTION 21. HEADINGS................................................................ 21
SECTION 22. SUBMISSION TO JURISDICTION.............................................. 21
SECTION 23. WAIVER OF JURY TRIAL.................................................... 22
SECTION 24. SERVICE OF PROCESS...................................................... 22
SECTION 25. COUNTERPARTS............................................................ 22
EXHIBIT A. FORM OF WARRANT CERTIFICATE............................................. A-1
EXHIBIT B. FORM OF TRANSFER........................................................ B-1
SCHEDULE A ISSUANCE OF WARRANTS.................................................... A-1
-ii-
