WARRANT PURCHASE AGREEMENT dated as of
September 17, 1997, between APOLLO
INVESTMENT FUND III, L.P., a Delaware
limited partnership ("AIF"), APOLLO UK
PARTNERS III, L.P., a Delaware limited
partnership ("Apollo UK"), APOLLO OVERSEAS
PARTNERS III, L.P., a Delaware limited
partnership ("Overseas," and together with
AIF and Apollo UK, "Apollo"), and CHASE
EQUITY ASSOCIATES, L.P., a California
limited partnership ("CEA," and together
with its successors and assigns hereunder,
the "Holders," and individually, a
"Holder").
Reference is made to the Stock Purchase Agreement dated as of the date
hereof (as the same may be amended from time to time, the "Purchase Agreement")
among Apollo LCA Acquisition Corp., a Delaware corporation (together with its
successors, the "Corporation"), and the Purchasers (as defined therein),
including Apollo and CEA. Apollo and CEA are entering into this Agreement to
provide for CEA's purchase from Apollo of warrants to purchase shares of capital
stock of the Corporation that will be acquired by Apollo from the Corporation
simultaneously with the closing hereunder, all on the terms and subject to the
conditions set forth in this Agreement.
ACCORDINGLY, the parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banks are authorized or required to be closed in New York, New
York; provided, however, that any determination of a Business Day relating to a
securities exchange shall mean a Business Day on which such exchange is open for
trading.
"Common Stock" shall mean the Common Stock, $.01 par value, of the
Corporation.
"Closing" shall have the meaning given to such term in Section 2.1.
"Closing Date" shall have the meaning given to such term in Section
2.1.
"Corporation" shall have the meaning given to such term in the
Preamble.
"Exercise Price" shall mean $.001 per share of Common Stock, subject
to adjustment from time to time in the manner provided in the Warrant.
"Governmental Authority" shall mean any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or foreign.
"Holder" shall have the meaning given to such term in the Preamble.
"HSR Act" shall mean the Xxxx-Xxxxx Xxxxxx Anti-Trust Improvements
Act of 1976, as amended.
"Person" is to be construed in the broadest sense, and shall include
any natural person, company, partnership, joint venture, corporation, business
trust, unincorporated organization or Governmental Authority.
"Warrant" shall have the meaning given to such term in Section 2.2.
"Warrant Shares" shall mean (a) the shares of Common Stock
transferred or transferable upon exercise or exchange of a Warrant, (b) all
other securities or other property transferred or transferable upon any such
exercise or exchange in accordance with this Agreement, and (c) any securities
of the Corporation or its successor distributed with respect to the securities
referred to in the preceding clauses (a) and (b).
ARTICLE II
CLOSING; ISSUANCE OF WARRANT
2.1. Closing; Termination of Agreement.
The closing (the "Closing") for the purchase, sale and delivery of the
Warrant shall take place simultaneously with the closing under the Purchase
Agreement of the transactions contemplated thereby. The date on which the
Closing occurs is called the "Closing Date" herein. The obligations hereunder of
each of Apollo and CEA at the Closing shall be subject to the satisfaction or
waiver by Apollo or CEA, as the case may be, at or prior to the Closing, of the
conditions set forth in Section 6(b) of the Purchase Agreement and the
representations and warranties contained in Sections 3.1 and 3.2, respectively,
being true and correct in all material respects on the Closing Date as if made
on and as of the Closing Date. Anything contained herein to the contrary
notwithstanding, this Agreement shall terminate simultaneously with the
termination of the Purchase Agreement as between CEA and the Corporation, if the
Closing hereunder shall not theretofore have occurred.
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2.2. Purchase and Sale of Warrant.
At the Closing, Apollo shall execute, sell and deliver to CEA, and CEA
shall purchase and take from Apollo, a warrant in substantially the form of
Exhibit A, and otherwise in form and substance satisfactory to Apollo and CEA
(the "Warrant"), evidencing the right to purchase a total of 197,531 shares of
Common Stock of the Corporation, comprised of 180,109 shares to be purchased
from AIF, 6,657 shares to be purchased from Apollo UK and 10,765 shares to be
purchased from Overseas, at a price per share equal to the Exercise Price. The
purchase price to be paid at the Closing by CEA to Apollo for the Warrant shall
be $7,999,807.80, and shall be payable at the Closing by wire transfer of
immediately available funds (i) in an amount equal to $7,294,234.30 to an
account or accounts designated by AIF, (ii) in an amount equal to $269,601.84 to
an account or accounts designated by Apollo UK and (iii) in an amount equal to
$435,971.73 to an account or accounts designated by Overseas. The number of
Warrant Shares which may be purchased upon exercise of such Warrant and the
Exercise Price to be paid for such Warrant Shares are subject to adjustment in
the manner provided in the Warrant.
ARTICLE III
3.1. Representations and Warranties of Apollo.
Apollo hereby makes the following representations and warranties to
CEA, which representations and warranties shall survive the execution hereof.
(a) Apollo has the right, power and authority to execute, deliver and
perform the terms and provisions of this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by Apollo and no other proceedings on the
part of Apollo are necessary to authorize this Agreement or to consummate the
transactions so contemplated.
(b) The execution, delivery and performance by Apollo of the terms and
provisions of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate any provision of any agreement
or instrument to which Apollo is a party or by which it is bound, or to which
any of its properties or assets is subject, or of any applicable law. Apollo has
duly executed and delivered this Agreement. This Agreement constitutes the
legal, valid and binding obligations of Apollo, enforceable against Apollo in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(c) No consent, authorization or order of, or filing or registration
with, any governmental authority or other person including, without limitation,
the HSR Act, is required to be obtained or made by Apollo for the execution,
delivery and performance by Apollo of this Agreement or the consummation of any
of the transactions contemplated hereby except for those that will have been
made or obtained on or prior to the Closing Date.
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3.2. Representations, Warranties, Etc. of CEA.
CEA hereby represents, warrants, acknowledges and agrees to and with
Apollo as follows, which representations, warranties, acknowledgments and
agreements shall survive the execution hereof.
(a) CEA has the right, power and authority to execute, deliver and
perform the terms and provisions of this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by CEA and no other proceedings on the
part of CEA are necessary to authorize this Agreement or to consummate the
transactions so contemplated.
(b) The execution, delivery and performance by CEA of the terms and
provisions of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate any provision of any agreement
or instrument to which CEA is a party or by which it is bound, or to which any
of its properties or assets is subject, or of any applicable law. CEA has duly
executed and delivered this Agreement. This Agreement constitutes the legal,
valid and binding obligations of CEA, enforceable against CEA in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
(c) No consent, authorization or order of, or filing or registration
with, any governmental authority or other person including, without limitation,
the HSR Act, is required to be obtained or made by CEA for the execution,
delivery and performance by CEA of this Agreement or the consummation of any of
the transactions contemplated hereby except for those that will have been made
or obtained on or prior to the Closing Date.
(d) CEA has conducted its own due diligence in connection with its
investment in the Warrant and the Warrant Shares and regarding the Corporation
and Living Centers of America, Inc., and GranCare, Inc., and Apollo may
therefore have information different from, or additional to, the information
possessed by CEA. In addition, although Apollo may have shared information
received by them (including information contained in third party reports
prepared for Apollo) with CEA, no representation or warranty is being made with
respect to such information by Apollo or any such third party.
(e) (i) The Warrant and all Warrant Shares purchased or otherwise
acquired by CEA pursuant to the Warrant are being or will be acquired by CEA for
its own account for investment and not with a view to resale or distribution
within the meaning of the Securities Act of 1933, as amended (the "Act") in a
manner that violates the Act, (ii) CEA is an "accredited investor" as such term
is defined in Rule 501 of Regulation D promulgated under the Act or a "qualified
institutional buyer" as such term is defined in Rule 144A of the Act, (iii)
CEA's financial situation is such that it can afford to bear the economic risk
of holding the Warrant and the Warrant Shares for an indefinite period of time
and suffer complete loss of its investment, (iv) CEA's knowledge and experience
in financial and business matters are such that it is capable of evaluating the
merits and risks of an investment in the Warrant and the Warrant Shares, and (v)
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CEA will not sell or otherwise dispose of the Warrant or any Warrant Shares
except in compliance with the Act, the rules and regulations of the Securities
and Exchange Commission (the "Commission") thereunder and the terms of this
Agreement, the Stockholders Agreement and the Proxy Agreement (each as defined
in the Purchase Agreement). By making payment for, or taking delivery of, any
Warrant Shares, CEA shall be deemed to have reaffirmed such representation at
and as of the date of such payment or delivery.
(f) CEA will be unable to sell the Warrant or any Warrant Shares
without either registration under the Act or the existence of an exemption from
such registration requirement, and that the shares of LCA Common Stock (as
defined in the Purchase Agreement) into which the original shares will convert
by virtue of the Merger (as defined in the Purchase Agreement), will by virtue
of Rule 145 adopted by the Commission be subject to significant restrictions on
resale so long as the Proxy Agreement remains in effect.
(g) Each certificate delivered to represent the Warrant or issued to
represent Warrant Shares, or any certificate issued in exchange for any
similarly legended certificate, shall bear the following legend until such time
as, in the opinion of counsel reasonably acceptable to Apollo, the legend
specified below is no longer required under the applicable requirements of the
Act or applicable state securities or "blue sky" laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND MAY BE
OFFERED AND SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
(h) Neither Apollo nor the Corporation shall have any liability or
obligation whatsoever to a Holder who is a Regulated Holder (as defined in the
form of Warrant attached hereto) with respect to any Regulatory Problem (as
defined in the form of Warrant attached hereto) that such Holder may have as a
result of this Purchase Agreement or transactions contemplated hereby (except
that this sentence shall not in any way amend, modify or otherwise affect in any
way the provisions of Section 6.4 of the Stockholders Agreement (as defined in
the Purchase Agreement).
ARTICLE IV
MISCELLANEOUS
4.1 Notices.
All notices, demands and requests of any kind to be delivered to any
party hereto in connection with this Agreement shall be in writing (i) delivered
personally, (ii) sent by nationally-recognized overnight courier, (iii) sent by
first class, registered or certified mail, return receipt requested or (iv) sent
by facsimile, in each case to such party at its address on the
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signature attached hereto. Any notice, demand or request so delivered shall
constitute valid notice under this Agreement and shall be deemed to have been
received (i) on the day of actual delivery in the case of personal delivery,
(ii) on the next Business Day after the date when sent in the case of delivery
by nationally-recognized overnight courier, (iii) on the fifth Business Day
after the date of deposit in the U.S. mail in the case of mailing or (iv) upon
receipt in the case of a facsimile transmission. Any party hereto may from time
to time by notice in writing served upon the other as aforesaid designate a
different mailing address or a different Person to which all such notices,
demands or requests thereafter are to be addressed.
4.2. Amendments and Waivers.
Any provision of this Agreement may be amended or waived, but only
pursuant to a written agreement signed by Apollo and the Holder.
4.3. Assignment of Agreement.
Neither this Agreement nor any right, benefit or obligation hereunder
may be assigned, transferred or delegated by any party hereto except with the
prior written consent of the other parties hereto; provided, however, that a
party may assign its rights or delegate its obligations hereunder to one or more
of its Affiliates without such consent so long as such Affiliate agrees in
writing for the benefit of the other parties hereto to be bound by and to comply
with this Agreement.
4.4. Counterparts.
This Agreement may be executed in two or more counterparts each of
which shall constitute an original but all of which when taken together shall
constitute but one agreement.
4.5. Governing Law.
ALL QUESTIONS CONCERNING THE CONSTRUCTION, INTERPRETATION AND VALIDITY
OF THIS AGREEMENT AND THE WARRANTS SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER IN THE
STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE WILL CONTROL THE
INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH
JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF
SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
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4.6. Headings.
Section headings in this Agreement have been inserted for convenience
of reference only and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
4.7. Binding Effect.
Except as otherwise provided herein, this Agreement will bind and inure
to the benefit of and be enforceable by Apollo and its successors and permitted
assigns and CEA and any permitted subsequent holders of Warrants or Warrant
Shares and their respective successors and permitted assigns, so long as they
hold Warrants or Warrant Shares.
4.8. Further Assurances.
Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the provisions of this
Agreement and the consummation of the transactions contemplated hereby.
4.9. Tax Treatment
Apollo and CEA agree that the Closing and the issuance of the Warrant
constitute for federal, state and local income tax purposes a purchase of the
Warrant Shares by the Holders at the Closing for an amount equal to the purchase
price paid at closing plus the aggregate Exercise Price with respect to the
Warrant Shares. Apollo and the Holders covenant and agree to file all income tax
returns and reports in a manner consistent with the preceding sentence.
4.10. Specific Performance.
Due to the fact that the securities of the Corporation cannot be
readily purchased or sold in the open market, and for other reasons, the parties
will be irreparably damaged in the event that this Agreement is not specifically
enforced. In the event of a breach or threatened breach of the terms, covenants
and/or conditions of this Agreement by any of the parties hereto, the other
parties shall, in addition to all other remedies, be entitled (without any bond
or other security being required) to a temporary and/or permanent injunction,
without showing any actual damage or that monetary damages would not provide an
adequate remedy, and/or a decree for specific performance, in accordance with
the provisions hereof.
* * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their authorized officers, all as of the date and
year first above written.
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.
its General Partner
By: Apollo Capital Management II, Inc.
its General Partner
By: /s/ Xxxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: VP
Address:
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy of notices and other communications to:
Sidley & Austin
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
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APOLLO UK PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
its General Partner
By: Apollo Capital Management II, Inc.
its General Partner
By: /s/ Xxxxxxxx X. Xxxx
-------------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: VP
Address:
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy of notices and other communications to:
Sidley & Austin
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
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APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
its General Partner
By: Apollo Capital Management II, Inc.
its General Partner
By: /s/ Xxxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: VP
Address:
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy of notices and other communications to:
Sidley & Austin
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
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CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners
its General Partner
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Partner
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy of notices and other communications to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
EXHIBIT A TO WARRANT AGREEMENT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF AND HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION UNDER SUCH ACT OR LAWS AND THE
RULES AND REGULATIONS THEREUNDER. IN ADDITION, THIS WARRANT, AND THE WARRANT
SHARES TRANSFERABLE UPON THE EXERCISE HEREOF, ARE SUBJECT TO THE TERMS OF (A)
THE STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER __, 1997, BY AND AMONG PARAGON
HEALTH NETWORK, INC., AND THE STOCKHOLDERS PARTY THERETO, AND (B) THE PROXY AND
VOTING AGREEMENT DATED AS OF OCTOBER __, 1997, BY AND AMONG APOLLO MANAGEMENT,
L.P., AND THE STOCKHOLDERS PARTY THERETO.
October __, 1997
Warrant to Purchase 197,531 Shares
of Common Stock, $.01 par value,
of Apollo LCA Acquisition Corp., a Delaware corporation
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This certifies that, for value received, Chase Equity Associates, L.P.,
a California limited partnership ("CEA"; and together with its successors and
assigns (the "Holder"), is entitled to purchase from APOLLO INVESTMENT FUND III,
L.P., a Delaware limited partnership ("AIF"), APOLLO UK PARTNERS III, L.P., a
Delaware limited partnership ("Apollo UK"), and APOLLO OVERSEAS PARTNERS III,
L.P., a Delaware limited partnership ("Overseas," and together with AIF and
Apollo UK, "Apollo"), an aggregate of 197,531 shares of Common Stock, $.01 par
value (the "Corporation Common Stock"), of APOLLO LCA ACQUISITION CORP., a
Delaware corporation (the "Corporation"), at a per share price equal to U.S.
$0.001 (as adjusted from time to time as provided in Section 3 hereof, the
"Exercise Price"), at any time or from time to time after the date hereof.
This Warrant is one of one or more warrants (the "Warrants") of the
same form and having the same terms as this Warrant (other than differences in
the number of Warrant Shares issuable), entitling the holders of such Warrants
(collectively, the "Holders" and each, individually, a "Holder") initially to
purchase up to an aggregate of 197,531 shares of Corporation Common Stock,
comprised of 180,109 shares to be purchased from AIF, 6,657 shares to be
purchased from Apollo UK and 10,765 shares to be purchased from Overseas. The
Warrants have been issued pursuant to a certain Warrant Purchase Agreement dated
as of September 17, 1997 (as amended from time to time, the "Purchase
Agreement"), between AIF, Apollo UK, Overseas and CEA.
Certain terms used in this Warrant are defined in Section 11 herein.
SECTION 1. Exercise of Warrant.
(a) The rights represented by this Warrant may be exercised by the
Holder hereof, in whole or in part at any time or from time to time (provided
that any such exercise shall be deemed to have been made pro rata with respect
to the Warrant Shares held by each of AIF, Apollo UK and Overseas), by
delivering to Apollo at their office set forth on the signature pages hereof (or
at such other office of Apollo as they may designate by notice in writing to the
Holder at the address of such Holder appearing on the signature pages hereof),
the following three items:
(i) a written notice executed by the Holder (or its authorized
representative) electing to exercise all or any portion of this Warrant, and
if the Holder is exercising this Warrant in part, identifying the number of
Warrant Shares to be acquired, such notice to be substantially in the form
of the Notice of Exercise attached hereto,
(ii) this Warrant, and
(iii) payment to each of AIF, Apollo UK and Overseas of the
Exercise Price for each share being purchased from it by delivery of any
combination of one or more of the following:
(A) cash, wire transfer or check, and/or
(B) delivery of securities of the Corporation valued
for such purposes at their Market Price (as defined below) on the date of
exercise.
Upon any exercise of this Warrant, if the Warrant Shares are to be transferred
to a Person other than the Holder, the Notice of Exercise shall also state the
name of the Person to whom the certificates for the Warrant Shares are to be
transferred, and if the number of Warrant Shares to be transferred does not
include all the Warrant Shares purchasable hereunder, it shall also state the
name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be delivered. In the event of any exercise of the rights
represented by this Warrant, Apollo shall submit to the Corporation (or its
transfer agent) within a reasonable period of time, not exceeding ten Business
Days, after such exercise a certificate or certificates representing the Warrant
Shares, and any other documentation reasonably requested by the Corporation (or
its transfer agent), for transfer to the Person entitled to receive the same,
such number of Warrant Shares to be transferred upon such exercise, and shall
deliver to the Person entitled to receive the same, within a reasonable time,
not exceeding ten days, after the rights represented by this Warrant shall have
been so exercised, a new Warrant representing the number of Warrant Shares, if
any, with respect to which this Warrant shall not then have been exercised. The
Person in whose name any certificate for Warrant Shares is transferred upon
exercise of this Warrant shall for all purposes be deemed to have become the
Holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate. The Holder shall pay all expenses, transfer
taxes and other charges payable in connection with the preparation and delivery
of certificates for the Warrant Shares and new Warrants for any unexercised
portion.
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(b) Anything contained in this Warrant to the contrary notwithstanding,
if the Holder is a Regulated Holder, then in no event may such Regulated Holder
exercise or assign or transfer this Warrant as any portion hereof to the extent
that such exercise or assignment or transfer would result in such Regulated
Holder having a Regulatory Problem, as determined by such Regulated Holder in
its sole discretion. Apollo and the Corporation shall be entitled to rely on the
Holder's determination of its status as a Regulated Holder and its determination
as to whether or not it may have a Regulatory Problem, and neither Apollo nor
the Corporation shall have any liability or obligation whatsoever to the Holder
with respect to such determinations made by the Holder.
SECTION 2. Covenants of Apollo. Apollo covenants and agrees that:
(a) Notwithstanding any other provision hereof, if the exercise of any
portion of this Warrant is to be made in connection with a public offering of
the Securities of the Corporation or sale of effective voting control of the
Corporation, the exercise of any portion of this Warrant may, at the election of
the Holder, be conditioned upon the consummation of the public offering or sale
in which case such exercise shall not be deemed to be effective until the
consummation of such transaction.
(b) Apollo shall not avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, 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 to protect the rights of the Holder
hereof against impairment.
(c) Apollo shall hold at all times a sufficient number of shares of
Corporation Common Stock so that Apollo will be able to deliver to the Holder
the number of Warrant Shares obtainable upon exercise of this Warrant (provided,
however, that Apollo may transfer such shares of Corporation Common Stock to a
third party, reasonably acceptable to the Holder, in connection with or upon the
consummation of the sale or other transfer of Apollo's investment in the
Corporation Common Stock, and upon such transfer and the execution and delivery
to the Holder of a similar Warrant of like tenor by such transferee, Apollo and
its affiliates and agents shall be released from their obligations under this
Warrant).
SECTION 3. Adjustment of Number of Shares and Exercise Price. In order to
prevent dilution or avoidance of the rights granted under this Warrant, the
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 3, and the number of Warrant Shares obtainable upon exercise of
this Warrant shall be subject to adjustment from time to time as provided in
this Section 3.
(a) Subdivision or Combination of Corporation Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend or other
distribution payable in shares of Corporation Common Stock, recapitalization or
otherwise) the outstanding shares of Corporation Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately increased. If
the Corporation at any time combines (by reverse stock split or otherwise) the
outstanding shares of
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Corporation Common Stock into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased
and the number of Warrant Shares obtainable upon exercise of this Warrant shall
be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization (other than a subdivision or combination of Corporation
Common Stock described in Section 3(a) hereof), reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Corporation's assets (determined on a consolidated basis) to another Person or
other transaction which is effected in such a way that holders of Corporation
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, cash, securities or assets with respect to or in exchange
for Corporation Common Stock is referred to herein as an "Organic Change". In
the event of any Organic Change, the Holder shall thereafter have the right to
acquire and receive in lieu of or addition to (as the case may be) the Warrant
Shares immediately theretofore acquirable and receivable upon the exercise of
this Warrant, such shares of stock, cash, securities or assets as such Holder
would have received in connection with such Organic Change if such Holder had
exercised such Warrant immediately prior to such Organic Change.
(c) Notices. To the extent it receives written notice from the
Corporation, Apollo shall:
(i) promptly upon any adjustment of the Exercise Price, give
written notice thereof to the Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment;
(ii) give written notice to the Holder promptly after
becoming aware that the Corporation proposes to take any action or of the
date on which the Corporation closes its books or takes a record (A) with
respect to any dividend or distribution upon the Corporation Common Stock,
(B) with respect to any pro rata subscription offer to holders of
Corporation Common Stock or (C) for determining rights to vote with respect
to any Organic Change, dissolution or liquidation; and
(iii) also give written notice to the Holder of the date on
which any Organic Change, dissolution or liquidation shall take place.
SECTION 4. Dividends; Purchase Rights.
(a) If the Corporation declares or pays a dividend upon the Corporation
Common Stock payable (i) in cash out of earnings or earned surplus (determined
accordance with generally accepted accounting principles, consistently applied)
(a "Cash Dividend") or (ii) otherwise than in cash out of earnings or earned
surplus (determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of
Corporation Common Stock (a "Liquidating Dividend"), then Apollo shall pay to
the Holder of this Warrant at the time of payment thereof the Liquidating
Dividend or Cash Dividend, as the case may be, which would have been paid to
such Holder on the Warrant Shares had this Warrant been fully exercised
immediately prior to the date on which a record is taken for such
4
Liquidating Dividend or Cash Dividend, as the case may be, or, if no record is
taken, the date as of which the record holders of Corporation Common Stock
entitled to such dividends are to be determined.
(b) If at any time the Corporation grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Corporation Common
Stock (the "Purchase Rights"), then the Holder of this Warrant shall be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate number or amount of such stock, warrants, securities or other property
which such Holder could have acquired if such Holder had held the Warrant Shares
acquirable upon complete exercise of this Warrant immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
Corporation Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights.
SECTION 5. No Voting Rights. The Holder shall not be entitled to any voting
rights as a stockholder of the Corporation by reason of the rights granted under
this Warrant until the Holder shall purchase shares of Corporation Common Stock
hereunder.
SECTION 6. Exchange and Transfer of Warrant.
(a) Exchange of Warrant. The Holder may exchange this Warrant for
another Warrant or Warrants of like kind and tenor representing in aggregate
the right to purchase the same number of Warrant Shares which could be purchased
pursuant to this Warrant. In order to effect such exchange, the Holder shall
deliver this Warrant to Apollo accompanied by a written request signed by the
Holder specifying the number and denominations of Warrants to be issued in such
exchange and the names in which such Warrants are to be issued. As soon as
reasonably practicable after receipt of such a request, Apollo shall execute and
deliver to the Holder the Warrant or Warrants to be issued in such exchange.
(b) Transfer of Warrant. This Warrant may be transferred by the Holder
hereof (but only with the prior written consent of Apollo if the transferee is
not an Affiliate of CEA) by delivering this Warrant to Apollo accompanied by a
properly completed Assignment Form and executed copies of the Stockholders
Agreement dated as of October __, 1997, and the Proxy and Voting Agreement,
dated as of October ___, 1997, duly executed by such transferee, the written
affirmation by such transferee of the representations, warranties,
acknowledgments and agreements contained in Section 3.2 of the Purchase
Agreement, and any other documents reasonably requested by Apollo. As soon as
reasonably practicable after receipt of such Assignment Form, Apollo shall
execute and deliver to the Holder a new Warrant or Warrants of like kind and
tenor representing in the aggregate the right to purchase the same number of
Warrant Shares which could be purchased pursuant to the Warrant being
transferred. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or a copy thereof, duly certified, shall be delivered
to and shall remain with Apollo. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced and may be required to be
deposited and remain with Apollo in its discretion.
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SECTION 7. Loss, Theft, Destruction of Warrant Certificates. Upon receipt of
evidence satisfactory to Apollo of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to
Apollo (it being understood and agreed that if the Holder of such Warrant is CEA
or one of its Affiliates, then a written agreement of indemnity given by such
Person alone shall be satisfactory to Apollo and no further security shall be
required) or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, Apollo will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of Warrant Shares.
SECTION 8. Successors. All the provisions of this Warrant by or for the
benefit of the Issuer or the Holder shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 9. Headings. The headings of sections of this Warrant have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
SECTION 10. Remedies; Amendment and Waiver.
(a) No failure or delay of any party in exercising any power or right
hereunder shall operate as a waiver thereof (except where a specific time period
for the exercise of such power or right is expressly set forth herein), nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No notice or demand on any party in any case shall entitle such
party to any other or future notice or demand in similar or other circumstances.
The rights and remedies of the Holder or the Issuer are cumulative and not
exclusive of any rights or remedies which it would otherwise have.
(b) This Warrant may only be amended or modified by a written
instrument signed by the Holder and Apollo. The provisions of this Warrant may
be waived only by a writing signed by the party to be charged with such waiver.
SECTION 11. Severability. Whenever possible, each provision of this
Warrant will be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable in any respect under any Applicable Law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void. It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.
SECTION 12. Definitions, Interpretation.
(a) Definitions The following terms have meanings set forth below:
6
(i) "Affiliate" means, with respect to any Person, (i) a
director, officer or stockholder of such Person, (ii) a spouse, parent,
sibling or descendant of such Person (or spouse, parent, sibling or
descendant of any director or executive officer of such Person), and (iii)
any other Person that, directly or indirectly through one or more
intermediaries, Controls, or is Controlled by, or is under common Control
with, such Person.
(ii) "Applicable Law" means, with respect to any Person,
property, transaction or event, all present or future applicable laws,
statutes, regulations, treaties, judgments and decrees and all applicable
official directives, rules, consents, approvals, authorizations, orders,
guidelines and policies of any Governmental Authority or Persons having
authority over or applicable to such Person or any of its assets or
properties.
(iii) "Business Day" means any day other than a Saturday,
Sunday or a day on which banks are authorized or required to be closed in
New York, New York.
(iv) "Control" means, with respect to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
(v) "Convertible Securities" means any stock or other
securities convertible into or exchangeable for Corporation Common Stock.
(vi) "Governmental Authority" means any federal, state,
provincial, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, or any court, in each case whether of the
United States of America or any political subdivision thereof, or of any
other country.
(vii) "Options" means any rights or options to subscribe for
or to purchase Corporation Common Stock.
(viii) "Person" shall be construed broadly and shall include
an individual, a partnership, a corporation, a limited liability company, an
association a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity (or any department,
agency or political subdivision thereof).
(ix) "Regulated Holder" means any holder of the
Corporation's Securities that is (or that is a subsidiary of a bank holding
company that is) subject to the various provisions of Regulation Y of the
Board of Governors of the Federal Reserve Systems, 12 C.F.R., Part 225 (or
any successor to Regulation Y).
(x) "Regulatory Problem" means (i) any set of facts or
circumstances wherein it has been asserted by any governmental regulatory
agency (or CEA believes that there is a significant risk of such assertion)
that such Person (or any bank holding company that controls such Person) is
not entitled to hold, or exercise any
7
material right with respect to, all or any portion of the Securities of the
Corporation which such Person holds or (ii) when such Person and its
Affiliates would own, control or have power (including voting rights) over a
greater quantity of Securities of the Corporation than is permitted under
any law or regulation or any requirement of any Governmental Authority
applicable to such Person or to which such Person is subject.
(xi) "Securities" means, with respect to any Person, such
Person's capital stock or any options, warrants or other Securities which
are directly or indirectly convertible into, or exercisable or exchangeable
for, such Person's capital stock (whether or not such derivative Securities
are issued by the Corporation). Whenever a reference herein to Securities
refers to any derivative Securities, the rights of CEA shall apply to such
derivative Securities and all underlying Securities directly or indirectly
issuable upon conversion, exchange or exercise of such derivative
Securities.
(xii) "Subsidiary" means, with respect to the Corporation,
(i) any Person of which either (x) 50% or more of the shares of stock or
other interests entitled to vote in the election of directors or comparable
Persons performing similar functions (excluding shares or other interests
entitled to vote only upon the failure to pay dividends thereon or other
contingencies) or (y) a 50% or greater interest in the profits or capital of
such Person, are at the time owned directly or indirectly through one or
more Subsidiaries by the Corporation, or (ii) whose net earnings, or
portions thereof, are consolidated with the net earnings of the Corporation
and are recorded on the books of the Corporation for financial reporting
purposes in accordance with generally accepted accounting principles.
(xiii) "US$" and "United States Dollars" shall each mean
lawful currency of the United States.
(xiv) "Warrant Shares" means the shares of Corporation
Common Stock issued or issuable upon exercise of this Warrant; provided
however, that if there is a change such that the securities issuable upon
exercise of this Warrant are issued by an entity other than the Corporation
or there is a change in the class of securities so issuable, then the term
"Warrant Shares" shall mean the securities issuable upon exercise of this
Warrant.
(b) Terms Generally. The definitions contained in this Warrant shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed by the phrase "without limitation."
(c) Currency. Unless otherwise specified herein, all statements or
references to dollar amounts or $ set forth herein shall refer to United States
Dollars.
SECTION 13. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
INTERPRETATION AND VALIDITY OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC
8
LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF
LAW PROVISION OR RULE (WHETHER IN THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF DELAWARE.
SECTION 14. Notices. All notices, demands and requests of any kind to be
delivered to any party hereto in connection with this Warrant shall be in
writing, (a) delivered personally, (b) sent by internationally-recognized
overnight courier, (c) sent by first class, registered or certified mail, return
receipt requested or (d) by telecopy, telegram or other means of recorded
telecommunication with confirmed receipt (with hard copy to follow). Any
notice, demand or request so delivered shall constitute valid notice under this
Warrant and shall be deemed to have been received (i) on the day of actual
delivery in the case of personal delivery, (ii) on the next Business Day after
the date when sent, in the case of delivery by internationally-recognized
overnight courier, (iii) on the fifth Business Day after the date of deposit in
the U.S. mail in the case of mailing or (iv) one business day after being sent
by telecopy with confirmed receipt (with hard copy to follow). The mailing
addresses of Apollo and CEA are set forth on the signature pages hereto. Any
party hereto may, from time to time by notice in writing served upon the other
as aforesaid, designate a different mailing address or a different person to
which all such notices, demands or requests thereafter are to be addressed.
SECTION 15. Conflicting Agreements. Apollo shall not enter into any
agreements or arrangements of any kind with any Person with respect to the
Warrant Shares containing terms inconsistent with the provisions of this
Warrant, including agreements or arrangements with respect to the acquisition or
disposition of securities of the Corporation in a manner which is inconsistent
with this Warrant.
9
IN WITNESS WHEREOF, the Issuer, has caused this Warrant to be executed
by its duly authorized officers under its corporate seal, and this Warrant to be
dated as of the date first set forth above.
[APOLLO]
By:
---------------------------------
Name:
Title:
Address: c/o Apollo Management, L.P.
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
ACCEPTED:
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners
Its General Partner
By:
---------------------------
Partner
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy of notices and other communications to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
10
FORM OF EXERCISE
[To be signed upon exercise of Warrant]
To APOLLO INVESTMENT FUND III, L.P., a Delaware limited partnership
("AIF"), APOLLO UK PARTNERS III, L.P., a Delaware limited partnership ("Apollo
UK"), and APOLLO OVERSEAS PARTNERS III, L.P., a Delaware limited partnership
("Overseas"):
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder,____ shares of Corporation Common Stock of Apollo LCA
Acquisition Corporation and herewith tenders payment of [identify amount and
form of payment] in full payment of the purchase price for such shares, and
requests that such shares be transferred to, and the certificates for such
shares be issued in the name of, and be delivered to, ______, whose address is
____________________.
In connection with such exercise, the Holder hereby reaffirms the
representations, warranties, acknowledgments and agreements contained in Section
3.2 of the Purchase Agreement (as defined in the within Warrant).
Dated:
------------------------
----------------------------------------
(Signature)
(Address)
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FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and transfers
unto ________________, all of the rights represented by the within Warrant to
purchase shares of Common Stock of Apollo LCA Acquisition Corporation to which
the within Warrant relates.
Dated:
----------------------------
----------------------------------
(Signature)
(Address of Assignor)
Signed in the presence of:
Address of Assignee:
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