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EXHIBIT 4.11
EXHIBIT B-2(B)
THIS WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF THE HOLDER
THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS
THE RESALE OR OTHER DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
WARRANT TO PURCHASE SHARES
ISSUED: _________________ OF AURORA ELECTRONICS, INC.
VOID AFTER FIVE (5) YEARS COMMON STOCK
AURORA ELECTRONICS, INC.
COMMON STOCK
PURCHASE WARRANT
THIS IS TO CERTIFY that, for value received and subject to the terms
and conditions hereof, WCAS Capital Partners II, L.P. is entitled to purchase up
to the number of shares of the common stock, $.03 par value per share, of Aurora
Electronics, Inc., a Delaware corporation, as set forth in Section 2 of this
Warrant, at the price per share set forth in Section 2 of this Warrant.
This Warrant is subject to the following additional terms and
conditions:
1. DEFINITIONS
a. AEG shall mean Aurora Electronics Group, Inc., a California
corporation and wholly-owned subsidiary of Aurora.
b. Agent shall mean The Chase Manhattan Bank (formerly known
as Chemical Bank), as agent for the lenders named in the Credit Agreement dated
March 29, 1996 between AEG and Agent.
c. Aurora shall mean Aurora Electronics, Inc., a Delaware
corporation.
d. Common Stock shall mean the common stock of Aurora, $.03
par value per share, as more specifically set forth in Section 13 hereof.
e. Exercise Period shall mean from [date of issuance] until
[fifth anniversary of date of issuance].
f. Exercise Price shall mean (i) with respect to the First
Warrant Tranche, the average closing price of the Common Stock as reported by
the American Stock Exchange for the
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five trading days preceding the date of this Warrant and (ii) with respect to
the Second Warrant Tranche, Third Warrant Tranche or Final Warrant Tranche, the
lower of the average closing price of the Common Stock as reported by the
American Stock Exchange for the five trading days preceding (x) the date of this
Warrant or (y) the applicable Warrant Accrual Date.
g. Fair Market Value shall mean the value of the Common Stock
as determined in accordance with Section 5 hereof.
h. Second Guarantee shall mean the guarantee issued by WCAS
and its affiliate, Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P., to secure the
indebtedness of AEG under the acquisition credit facility with Agent and certain
other banks, up to a maximum of $9,000,000.
i. Guaranteed Amount shall mean $9,000,000, which is the
maximum principal amount of indebtedness under the Second Guarantee.
j. Purchase Price shall mean the Exercise Price multiplied by
the number of shares of Common Stock subject to this Warrant pursuant to Section
2 hereof.
k. Warrant Accrual Date shall mean (i) the date of this
Warrant with respect to the First Warrant Tranche (as hereinafter defined), (ii)
[nine months following First Warrant Tranche date] with respect to the Second
Warrant Tranche (as hereinafter defined), (iii) [eighteen months following First
Warrant Tranche date] with respect to the Third Warrant Tranche (as hereinafter
defined), and (iv) the date that the Second Guarantee is called with respect to
the Final Warrant Tranche (as hereinafter defined).
l. Warrant Shares shall mean the number of shares of Common
Stock as determined by the following formula:
[(Guaranteed Amount)/(Exercise Price)] x (WCAS Interest).
m. WCAS shall mean WCAS Capital Partners II, L.P.
n. WCAS Interest shall mean 3.4%, which is the percentage of
the Guaranteed Amount that is guaranteed by WCAS.
2. NUMBER OF SHARES SUBJECT TO WARRANT
The number of shares subject to this Warrant will be calculated as
follows:
a. From [date of issuance] until [nine months following date
of issuance], WCAS shall have the right to purchase a number of shares of Common
Stock equal to twenty percent (20%) of the Warrant Shares (the "First Warrant
Tranche"), exercisable at the Exercise Price.
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b. If as of [nine months plus one day following date of
issuance] the Second Guarantee is still outstanding, then from [nine months plus
one day following date of issuance] until [eighteen months following date of
issuance], WCAS shall have the right to purchase an additional number of shares
of Common Stock equal to an additional twenty percent (20%) of the Warrant
Shares (or, a total of 40% of the Warrant Shares) (the "Second Warrant
Tranche"), exercisable at the Exercise Price.
c. If as of [eighteen months plus one day following date of
issuance] the Second Guarantee is still outstanding, then from [eighteen months
plus one day following date of issuance] until [fifth anniversary date of
issuance], WCAS shall have the right to purchase an additional number of shares
of Common Stock equal to an additional twenty percent (20%) of the Warrant
Shares (or, a total of 60% of the Warrant Shares) (the "Third Warrant Tranche"),
exercisable at the Exercise Price.
d. If the WCAS Second Guarantee is called at any time by
Agent, WCAS shall have the right to purchase an additional number of shares of
Common Stock equal to the difference between 100% of the Warrant Shares and the
aggregate percentage of Common Stock for which this Warrant is then exercisable
pursuant to Section 2(a), Section 2(b) and Section 2)(c) hereof (or, a total of
100% of the Warrant Shares) (the "Final Warrant Tranche"), exercisable at the
Exercise Price.
3. METHOD OF EXERCISE
The rights represented by this Warrant may be exercised by the
holder hereof, in whole at any time or from time to time in part, but not as to
a fractional share of Common Stock, by the surrender of this Warrant (properly
endorsed) at the office of Aurora as it may designate by notice in writing to
the holder hereof at the address of such holder appearing on the books of
Aurora, and by payment as provided below. The holder may make payment in respect
of the exercise of this Warrant as follows:
i) Cash Exercise. By payment to Aurora of the Exercise price
in cash or by certified or official bank check, for each share being
purchased;
ii) Notes Exercise. By surrender to Aurora of any promissory
notes or other obligations issued by Aurora, with all such notes or
other obligations of Aurora so surrendered being credited against the
Exercise Price in an amount equal to the principal amount thereof plus
the amount of any interest thereon to the date of such surrender;
iii) Securities Exercise. By delivery to Aurora of any other
securities issued by Aurora, with such securities being credited
against the Exercise Price in an amount equal to the fair market value
thereof;
iv) Net Issue Exercise. By an election to receive shares the
aggregate fair market value of which as of the date of exercise is
equal to the fair market value of this Warrant (or the portion thereof
being exercised) on such date, in which event Aurora,
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upon receipt of notice of such election, shall issue to the holder
hereof a number of shares of Common stock equal to (A) the number of
shares of Common Stock acquirable upon exercise of all or any portion
of this Warrant being exercised, as at such date, multiplied by (B) the
balance remaining after deducting (x) the Exercise Price, as in effect
on such date, from (y) the Fair Market Value of one share of Common
Stock as at such date and dividing the result by (c) such Fair Market
Value; or
v) Combined Payment Method. By satisfaction of the Exercise
Price for each share being acquired in any combination of the methods
described in clauses (i) through (iv) above.
4. DELIVERY OF STOCK CERTIFICATES
Within ten (10) days after the payment of the Purchase Price
following the exercise of this Warrant, Aurora shall issue in the name of and
deliver to WCAS a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock to which WCAS shall be entitled upon such
exercise and payment. WCAS shall for all purposes be deemed to have become
holder of record of such shares of Common Stock on the date by which this
Warrant was surrendered and payment of the Purchase Price was made, irrespective
of the date of delivery of the certificate or certificates representing the
Common Stock; provided, that if the date by which such surrender and payment is
made is a date when the stock transfer books of Aurora are closed, such person
shall be deemed to have become holder of record of such shares of Common Stock
at the close of business on the next succeeding date on which the stock transfer
books are open.
5. DEFINITION OF FAIR MARKET VALUE
For the purposes of this Warrant, the Fair Market Value of the Common
Stock shall be determined as follows: (i) if the Common stock is listed or
admitted to trading on one or more national securities exchanges, the average of
the last reported sales prices per share regular way or, in case no such
reported sales take place or such day, the average of the last reported bid and
asked prices per share regular way, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
for the five trading days immediately preceding the date of the exercise of this
Warrant (the "Determination Date"); (ii) if the Common Stock is not listed or
admitted to trading on a national securities exchange but is quoted by NASDAQ,
the average of the last reported sales prices per share regular way or, in case
no reported sale takes place on any such day or the last reported sales prices
are not then quoted by NASDAQ, the average of the last reported bid and asked
prices per share, for the five trading days immediately preceding the
Determination Date as furnished by the National Quotation Bureau Incorporated or
any similar successor organization; and (iii) if the Common Stock is not listed
or admitted to trading on a national securities exchange or quoted by NASDAQ or
any other nationally recognized quotation service, the Fair Market Value shall
be the fair value thereof determined jointly by the Board of Directors of Aurora
and the holders of Warrants outstanding representing a majority of the shares of
Common Stock acquirable upon exercise of the Warrants; provided, however, that
if such parties are unable to reach agreement within a
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reasonable time, the Fair Market Value shall be determined in good faith by an
independent investment banking firm selected jointly by the Board of Directors
of Aurora and the holders of Warrants outstanding representing a majority of the
shares of Common Stock issuable upon exercise of the Warrants or, if that
selection cannot be made within fifteen (15) days, by an independent investment
banking firm selected by the American Arbitration Association in accordance with
its rules. Anything in this Section 5 to the contrary notwithstanding, the Fair
Market Value of this Warrant or any portion thereof as of any Determination Date
shall be equal to (A) the Fair Market Value of the shares of Common Stock
issuable upon exercise of this Warrant (or such portion thereof) (determined in
accordance with the foregoing provisions of this paragraph) minus (B) the
aggregate Exercise Price of the Warrant (or such portion thereof).
6. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER
OR SALE
If any capital reorganization or reclassification of the
capital stock of Aurora or any consolidation or merger of Aurora with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provisions
shall be made whereby each holder of the Warrants shall thereafter have the
right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
receivable upon the exercise of such Warrants, such shares of stock, securities
or assets (including cash) as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provisions shall be made with respect to the
rights and interests of such holder to the end that the provisions hereof
(including without limitation provisions for adjustments of the Exercise Price)
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise of such
exercise rights (including an immediate adjustment, by reason of such
reorganization or reclassification, of the Exercise Price to the value for the
Common Stock reflected by the terms of such reorganization or reclassification
if the value so reflected is less than the Exercise Price in effect immediately
prior to such reorganization or reclassification). In the event of a merger or
consolidation of Aurora as a result of which a greater or lesser number of
shares of common stock of the surviving corporation are issuable to holders of
Common Stock of Aurora outstanding immediately prior to such merger or
consolidation, the Exercise Price in effect immediately prior to such merger or
consolidation shall be adjusted in the same manner as though there were a
subdivision or combination of the outstanding shares of Common Stock of Aurora.
Aurora will not effect any such consolidation, merger or any sale of all or
substantially all of its assets of properties, unless prior to the consummation
thereof the successor corporation (if other than Aurora) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument executed and mailed or delivered to each holder of the
Warrants at the last address of such holder appearing on the books of Aurora,
the obligation to deliver to such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to receive.
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7. ADJUSTMENTS TO EXERCISE PRICE FOR DISTRIBUTIONS,
SUBDIVISIONS AND COMBINATIONS
In the event that Aurora, after the date hereof: (a) pays a
stock dividend with respect to the Common Stock; (b) subdivides its outstanding
shares of Common Stock; (c) combines its outstanding shares of Common Stock into
a smaller number of shares of any class of Common Stock or (d) issues shares of
its capital stock in a reclassification of the Common Stock, including any such
reclassification in connection with a consolidation or merger in which Aurora is
the surviving corporation (any one of which actions is herein referred to as an
"Adjustment Event"), the Exercise Price shall be adjusted by multiplying such
Exercise Price immediately prior to such Adjustment Event by a fraction, the
numerator of which shall be the number of shares of Common Stock issued and
outstanding immediately prior to such Adjustment Event, and the denominator of
which shall be the number of shares of Common Stock issued and outstanding
immediately thereafter.
Whenever the Exercise Price is adjusted in accordance with
this Section 7, WCAS shall be entitled to purchase at the new Exercise Price the
number of shares of Common Stock obtained by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of shares of Common
Stock purchasable pursuant to the terms of this Warrant immediately prior to
such adjustment and dividing the product thereof by the new Exercise Price.
8. ADJUSTMENTS TO EXERCISE PRICE FOR ISSUANCES BELOW MARKET
PRICE
If Aurora issues any shares of Common Stock for a
consideration per share less than the then Fair Market Value, then upon such
issuance the Exercise Price shall be reduced to the price determined by
multiplying the Exercise Price in effect immediately prior to the time of such
issue or sale by a fraction, the numerator of which shall be the sum of (a) the
number of shares of Common Stock outstanding immediately prior to such issue or
sale multiplied by the Fair Market Value of the Common Stock immediately prior
to such issue or sale plus (b) the consideration received by Aurora upon such
issue or sale, and the denominator of which shall be the product of (x) the
total number of shares of Common Stock outstanding immediately after such issue
or sale multiplied by (y) the Fair Market Value of the Common Stock immediately
prior to such issue or sale.
Whenever the Exercise Price is adjusted in accordance with
this Section 8, WCAS shall be entitled to purchase at the new Exercise Price the
number of shares of Common Stock obtained by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of shares of Common
Stock purchasable pursuant to the terms of this Warrant immediately prior to
such adjustment and dividing the product thereof by the new Exercise Price.
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9. FRACTIONAL SHARES
No fractional shares shall be issued upon the exercise of this
Warrant. In lieu of fractional shares, Aurora shall pay WCAS a sum in cash equal
to the Fair Market Value of the fractional shares on the date of exercise.
10. STOCK TO BE RESERVED
Aurora will at all times reserve and keep available out of its
authorized Common Stock or its treasury shares, solely for the purpose of issue
upon the exercise of this Warrant as herein provided, such number of shares of
Common Stock as shall then be issuable upon the exercise of this Warrant. Aurora
covenants that all shares of Common Stock which shall be so issued shall be duly
and validly issued and fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issue thereof, and, without limited the
generality of the foregoing, Aurora covenants that it will from time to time
take all such action as may be requisite to assure that the par value per share
of the Common Stock is at all times equal to or less than the effective Exercise
Price. Aurora will take all such action as may be necessary and within its
control to assure that all such shares of Common Stock may be so issued without
violation of any applicable law or regulation, or of any requirements of any
national securities exchange upon which the Common Stock of Aurora may be
listed. Aurora will not take any action which results in any adjustment of the
Exercise price if the total number of shares of Common Stock issued and issuable
after such action upon exercise of this Warrant would exceed the total number of
shares of Common Stock then authorized by Aurora's Articles of Incorporation.
Aurora has not granted and will not grant any right of first refusal with
respect to shares issuable upon exercise of this Warrant, and there are no
preemptive rights associated with such shares.
11. ISSUE TAX
The issuance of certificates for shares of Common Stock upon
exercise of the Warrants shall be made without charge to the holders of such
Warrants for any issuance tax in respect thereof provided that Aurora shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of any holder of the Warrants.
12. CLOSING OF BOOKS
Aurora will at no time close its transfer books against the
transfer of the shares of Common Stock issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant.
13. DEFINITION OF COMMON STOCK
As used herein the term "Common Stock" shall mean and include
the Common Stock, $.03 par value, of Aurora as authorized on the date hereof,
and also any capital stock of any class of Aurora hereinafter authorized which
shall not be limited to a fixed sum or
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percentage in respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of Aurora; provided, however, that the
shares purchasable pursuant to this Warrant shall include only shares designated
as Common Stock, $.03 par value, of Aurora on the date hereof, or shares of any
class or classes resulting from any reclassification or reclassifications
thereof which are not limited to any such fixed sum or percentage and are not
subject to redemption by Aurora and, in case at any time there shall be more
than one such resulting class, the shares of each class then so issuable shall
be substantially in the proportion which the total number of shares of such
class resulting from all such reclassification bears to the total number of
shares of all such classes resulting from all such reclassifications.
14. NOTICES OF RECORD DATES
In the event of (i) any taking by Aurora of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution (other
than cash dividends out of earned surplus), or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or (ii) any capital
reorganization of Aurora, any reclassification or recapitalization of the
capital stock of Aurora or any transfer of all or substantially all the assets
of Aurora to or consolidation or merger of Aurora with or into any other
corporation, or (iii) any voluntary or involuntary dissolution, liquidation or
winding-up of Aurora, then, and in each such event, Aurora will give notice to
the holder of this Warrant specifying (x) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right and stating
the amount and character of such dividend, distribution or right, and (y) the
date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock will be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be given at least
twenty (20) days and not more than ninety (90) days prior to the date therein
specified, and such notice shall state that the action in question or the record
date is subject to the effectiveness of a registration statement under the
Securities Act of 1933, as amended, or to a favorable vote of stockholders, if
either is required.
15. INVESTMENT REPRESENTATION AND LEGEND
The holder, by acceptance of the Warrant, represents and
warrants to Aurora that it is acquiring the Warrant and the shares of Common
Stock (or other securities) issuable upon the exercise hereof for investment
purposes only and not with a view towards the resale or other distribution
thereof and agrees that Aurora may affix upon this Warrant the following legend:
"This Warrant has been issued in reliance upon the
representation of the holder that it has been acquired for investment
purposes and not with a view towards the resale or other distribution
thereof. Neither this Warrant nor the
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shares issuable upon the exercise of this Warrant have been registered
under the Securities Act of 1933, as amended."
The holder, by acceptance of this Warrant, further agrees that Aurora may affix
the following legend to certificates for shares of Common Stock issued upon
exercise of this Warrant:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN
REGISTERED UNDER THE ACT OR UNLESS IN THE OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION AN EXEMPTION FROM REGISTRATION IS
AVAILABLE."
16. NO SHAREHOLDER RIGHTS
This Warrant shall not entitle WCAS to any voting rights or
any other rights as a shareholder of Aurora or to any other rights whatsoever
except the rights stated herein; and no dividend or interest shall be payable or
shall accrue in respect of this Warrant or the Common Stock issuable upon
conversion of this Warrant, until and to the extent that this Warrant shall be
exercised. No provision hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Warrant Exercise Price or as a stockholder of
Aurora, whether such liability is asserted by Aurora or by creditors of Aurora.
17. CONSTRUCTION
THE VALIDITY AND INTERPRETATION OF THE TERMS AND PROVISIONS OF
THIS WARRANT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION. The descriptive headings of the several sections of this
Warrant are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions thereof.
18. LOST WARRANT CERTIFICATE
If this Warrant is lost, stolen, mutilated or destroyed,
Aurora shall issue a new Warrant of like denomination, tenor and date as this
Warrant, subject to Aurora's right to require WCAS to give Xxxxxx x xxxx or
other satisfactory security sufficient to indemnify Aurora against any claim
that may be made against it (including any expense or liability) on account of
the alleged loss, theft, mutilation or destruction of this Warrant or the
issuance of such new Warrant.
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19. WAIVERS AND AMENDMENTS
This Warrant, or any provision hereof, may be changed, waived,
discharged or terminated only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
20. NOTICES
All notices, requests and other communications required or
permitted to be given or delivered hereunder shall be in writing, and shall be
delivered, or shall be sent by certified or registered mail, postage prepaid and
addressed, if to the holder to such holder at the address shown on such holder's
Warrant or shares of Common Stock issued upon exercise thereof or at such other
address as shall have been furnished to Aurora by notice from such holder. All
notices, requests and other communications required or permitted to be given or
delivered hereunder shall be in writing, and shall be delivered, or shall be
sent by certified or registered mail, postage prepaid and addressed to Aurora at
such address as shall have been furnished to the holder by notice from Aurora.
IN WITNESS WHEREOF, Aurora has executed this Warrant as of the date
first written above.
AURORA ELECTRONICS, INC.
By: ______________________
Name: ______________________
Title: ______________________
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ELECTION TO PURCHASE
To: Aurora Electronics, Inc.
The undersigned hereby irrevocably elects to purchase ________________
shares of Common Stock issuable upon the exercise of this Warrant, and requests
that certificates for such shares shall be issued in the name of and delivered
to the address of the undersigned, at the address stated below, and
____ i) makes cash payment herewith in full therefor at
the price per share provided by such Warrant;
____ ii) surrenders to Aurora promissory notes or other
obligations issued by Aurora, in accordance
with Section 3 (ii) of such Warrant, as payment
herewith in full therefor at the price per
share provided by such Warrant;
____ iii) delivers to Aurora other securities issued by
the Company, in accordance with Section 3 (iii)
of such Warrant, as payment herewith in full
therefor at the price per share provided by
such Warrant; and/or
____ iv) elects Net Issue Exercise as provided in
Section 3(iv) of such Warrant.
(Check any combination of (i) through (iv) above).
Dated: _____________
Name and signature of holder of Warrant:
WCAS Capital Partners II, L.P.
By: _________________________
Name: _______________________
Title: _______________________
