NONQUALIFIED STOCK OPTION AGREEMENT
This NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement"),
is entered into this 8th day of June, 2004 (the "Date of Grant"), by and
between GLOBAL SIGNAL INC., a Delaware corporation (the "Company"), and FRIT
PINN LLC, a Delaware limited liability corporation (the "Optionee").
This Agreement is a nonqualified stock option (an "Option")
to purchase shares of the Company's common stock. This Option is granted for
the purpose of compensating FRIT PINN LLC for its successful efforts in
raising capital for the Company in connection with the Company's initial
public offering.
Terms and Conditions of the Option
1. Number of Shares and Option Price. The Option entitles
the Optionee to purchase 560,000 shares (the "Firm Option Shares") of the
Company's common stock, par value $0.01 per share (the "Common Stock"), at an
exercise price of $18.00 per share (the "Option Price") subject to adjustment
as set forth herein. In the event the Underwriters, as such term is defined in
that Underwriting Agreement among the Company, Xxxxxx Xxxxxxx & Co.
Incorporated, Banc of America Securities LLC, Xxxxxx Brothers Inc. and Xxxxxxx
Xxxxx & Associates, Inc., as representatives of the underwriters named
therein, dated June 2, 2004 (the "Underwriting Agreement"), elect to exercise
an option to purchase up to an additional 1,050,000 shares of Common Stock in
accordance with the terms of the Underwriting Agreement (the "Underwriters'
Option"), then the Option also entitles the Optionee to purchase 84,000 shares
of Common Stock (the "Additional Option Shares" and together with the Firm
Option Shares, the "Option Shares") at the Option Price subject to adjustment
as set forth herein.
2. Period of Option. This Option may be exercised or
exchanged as provided herein at any time from and after the Date of Grant
until 5:00 p.m., New York City time, on the date that is ten (10) years after
the Date of Grant or if such date is not a business day on the next succeeding
business day (the "Expiration Date"). Upon the occurrence of the Expiration
Date, all rights of the Optionee hereunder, with respect to the Option, shall
cease.
3. Conditions of Exercise or Exchange. Subject to the
provisions of this Agreement, the Option shall be fully vested and immediately
exercisable or exchangeable in accordance with Section 4 below.
4. Exercise or Exchange of Option. The Option may be
exercised or exchanged, as provided herein, in whole or in part, at any time
or from time to time until the Expiration Date in the manner described in this
Section 4. In the case of exercise, the Optionee shall deliver to the Company
written notice specifying the number of Option Shares to be acquired pursuant
to such exercise, together with either (a) cash in an amount equal to the
aggregate Option Price, (b) the number of shares of Common Stock having a Fair
Market Value (as of the date of exercise) equal to the aggregate Option Price
or (c) any combination of cash or shares of Common Stock, the sum of which
equals the aggregate Option Price. In the case of exchange, the Optionee shall
deliver to the Company written notice that the Optionee has elected to
exchange all or a portion of this Option and to receive, in such exchange, a
number of Option Shares in an amount equal to the number of shares of Common
Stock to which the exchanged portion of this Option relates minus the number
of shares of Common Stock having the aggregate Fair Market Value (as of the
date of exercise) equal to the aggregate Option Price that would be payable
upon exercise of such exchanged portion. The Optionee shall also deliver to
the Company a certificate from a duly authorized officer of such Optionee to
the effect that the covenants, representations and warrants set forth in
Section 6(a) hereof are true and correct in all material respects with the
same force and effect as though expressly made at the time of this Agreement.
Upon the Company's receipt of the Optionee's written notice of exercise or
exchange and certificate, and in the case of exercise the cash, shares or
notice require by clause (a), (b) or (c) above, the Company shall promptly
deliver to the Optionee the number of Option Shares set forth in such notice.
In addition, the Optionee shall be entitled to exercise or
exchange the Option in any other manner approved by the Board of Directors of
the Company (the "Board") or any committee thereof appointed by the Board to
administer the Option (either, hereinafter referred to as the
"Administrator").
For purposes of this Agreement, Fair Market Value as of a
particular date shall mean the fair market value of a share of Common Stock as
determined by the Administrator in its sole discretion; provided, however,
that (i) if the Common Stock is admitted to trading on a national securities
exchange, Fair Market Value of a share of Common Stock on any date shall be
the closing sale price reported for such share on such exchange on the last
day preceding such date on which a sale was reported, (ii) if the Common Stock
is admitted to quotation on the National Association of Securities Dealers
Automated Quotation ("Nasdaq") System or other comparable quotation system and
has been designated as a National Market System ("NMS") security, Fair Market
Value of a share of Common Stock on any date shall be the closing sale price
reported for such share on such system on the last date preceding such date on
which a sale was reported, or (iii) if the Common Stock is admitted to
quotation on the Nasdaq System but has not been designated as an NMS security,
Fair Market Value of a share of Common Stock on any date shall be the average
of the highest bid and lowest asked prices of such share on such system on the
last date preceding such date on which both bid and asked prices were
reported.
5. Nontransferability of Option. Except as permitted by the
Company in writing or, if applicable, by will or laws of descent and
distribution, the Optionee shall not be permitted to sell, transfer, pledge or
assign the Option. The Option shall be exercisable only by the Optionee or any
subsequent party or parties having the right to exercise the Option pursuant
to the foregoing sentence. Any attempted assignment, transfer, pledge or other
disposition of the Option contrary to the provisions hereof shall be null and
void and without effect.
6. Covenants, Representations and Warranties.
a. Covenants, Representations and Warranties of Optionee.
Optionee hereby covenants, represents and warrants to the Company as follows:
(1) Optionee has full power and authority to execute,
deliver and perform its obligations under this Agreement and this
Agreement is a valid and binding obligation of Optionee, enforceable in
accordance with its terms.
(2) Optionee has been given access to all Company
documents, records, and other information, has received physical delivery
of all such documents, records and information which Optionee has
requested and has had adequate opportunity to ask questions of, and
receive answers from, the Company's officers, employees, agents,
accountants, and representatives concerning the Company's business,
operations, financial condition, assets, liabilities and all other
matters relevant to its investment in the Option and the Option Shares.
Except as expressly set forth herein, the Company does not make any
representations or warranties regarding the Option and the Option Shares,
the Optionee's investment in the Company or the financial condition,
assets, liabilities, business or prospects of the Company, and all of
such representations and warranties are hereby disclaimed.
(3) Optionee is acquiring the Option and the Option
Shares for investment, for its own account, and not as a nominee or agent
for any other person, firm or corporation, and not with a view to the
sale or distribution of all or any part thereof, and it has no present
intention of selling, granting participation in, or otherwise
distributing any of the Option or the Option Shares.
(4) Optionee is an accredited investor within the
definition of such term under paragraph (a)(1), (a)(2), (a)(3),(a)(7) or
(a)(8) of Rule 501 of Regulation D under the Securities Act. Optionee has
such knowledge and experience in financial and business matters that
Optionee is capable of evaluating the merits and risks of acquiring the
Option and the Option Shares pursuant to this Agreement and of protecting
the Optionee's interests in connection therewith. The Optionee is able to
bear the economic risk of its investment in the Option and the Option
Shares for an indefinite period of time because the Option and the Option
Shares have not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or
an exemption from such registration is available.
(5) Optionee understands that the Option and the Option
Shares are characterized as "restricted securities" under the Securities
Act as they are being acquired from the Company in a transaction not
involving a public offering and that under the Securities Act and
applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited
circumstances. In this connection, Optionee understands Rule 144
promulgated under the Securities Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities
Act.
(6) Optionee agrees that in no event will it make a
disposition of the Option or any Option Shares or any interest therein,
unless such Option or Option Shares are registered under the Securities
Act or unless and until (i) it shall have notified the Company of the
proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition, and
(ii) it shall have furnished the Company with an opinion of counsel
reasonably satisfactory in form and content to the Company to the effect
that (A) such disposition will not require registration of such Option or
the Option Shares under the Securities Act or applicable state securities
laws, or (B) that appropriate action necessary for compliance with the
Securities Act and applicable state securities laws has been taken, or
(iii) the Company shall have waived, expressly and in writing, the
provisions of clauses (i) and (ii) of this subsection.
(7) Optionee acknowledges that it is represented by
counsel or that Optionee has determined not to be represented by counsel
in connection with this Agreement with full knowledge and understanding
of the risks involved with such determination.
b. Covenants, Representations and Warranties of the Company.
The Company hereby covenants, represents and warrants to Optionee as follows:
(1) Neither the Company, nor any other person acting on
the Company's behalf, has directly or indirectly engaged in any form of
general solicitation or general advertising with respect to the Option or
the Option Shares nor have any such persons made any offers or sales of
any security or solicited any offers to buy any security under
circumstances that would require registration of the Option or the Option
Shares under the Securities Act or cause this offering of the Option or
the Option Shares to be integrated with any prior offering of securities
of the Company for purposes of the Securities Act.
(2) The Company has full power and authority to
execute, deliver and perform its obligations under this Agreement and
this Agreement is a valid and binding obligation of the Company,
enforceable in accordance with its terms.
(3) The execution, delivery and performance by the
Company of this Agreement require no action by or in respect of, or
filing with, any governmental body, agency or official and do not and
will not (i) violate the certificate of incorporation or bylaws of the
Company, (ii) violate any law, rule, regulation, judgment, injunction,
order or decree applicable to the Company or (iii) require any consent or
other action by any person, constitute a default, or give rise to
termination, cancellation or acceleration of any right or obligation of
the Company under any provision of any agreement or other instrument
binding upon the Company.
(4) The Company has reserved for issuance upon exercise
or exchange of this Option the total number of shares of Common Stock
issuable upon exercise or exchange of this Option and all other options
granted pursuant to similar Nonqualified Stock Option Agreements on or
about the date hereof (collectively, the "IPO Options"). All shares of
Common Stock issuable upon exercise or exchange of the IPO Options have
been duly authorized and validly reserved and, when issued in accordance
with the terms of this Agreement and the other agreements governing the
IPO Options, as the case may be, will be duly and validly issued, fully
paid and non-assessable, free and clear of all liens, and the issuance
thereof will not be subject to any preemptive rights or right of first
refusal or similar right.
7. Notices. Any notice required or permitted under this
Agreement shall be deemed given when delivered personally, or when
deposited in a United States Post Office, postage prepaid, addressed, as
appropriate, to the Optionee either at its address set forth below or
such other address as it may designate in writing to the Company, or to
the Company: 000 Xxxxx Xxxxxxxxx Xxxx, xxxxx 000, Xxxxxxxx, Xxxxxxx,
00000, Attention: Xxxxx Xxxxx, President (or his designee), at the
Company's address or such other address as the Company may designate in
writing to the Optionee.
8. Failure to Enforce Not a Waiver. The failure of the
Company or Optionee to enforce at any time any provision of this
Agreement shall in no way be construed to be a waiver of such provision
or of any other provision hereof.
9. Governing Law. This Agreement shall be governed by
and construed according to the laws of the State of Delaware without
regard to its principles of conflict of laws.
10. Adjustments. In the event of any increase,
reduction, or change or exchange of shares of Common Stock for a
different number or kind of shares or other securities or property by
reason of a (i) merger, consolidation, reclassification,
recapitalization, or other reorganization, (ii) stock dividend, stock
split or reverse stock split, (iii) combination or exchange of shares,
(iv) other change in corporate structure or (v) declaration of a special
dividend or other distribution (each, a "Change in Capitalization"), an
equitable substitution or proportionate adjustment shall be made, in each
case, as may be determined by the Administrator, in its sole discretion,
in the kind and number of shares and the Exercise Price subject to the
Option as may be determined by the Administrator, in its sole discretion,
provided, however, that any fractional shares resulting from the
adjustment shall be eliminated. Such other equitable substitutions or
adjustments shall be made as may be determined by the Administrator, in
its sole discretion. Without limiting the generality of the foregoing, in
connection with a Change in Capitalization, the Administrator may
provide, in its sole discretion, for the cancellation of the Option
granted hereunder in exchange for payment in cash or other property of
the aggregate Fair Market Value of the Option Shares covered by this
Option, reduced by the aggregate Exercise Price or purchase price
thereof, if any. The Administrator's determinations pursuant to this
Section 10 shall be final, binding and conclusive.
11. Amendments. This Agreement may be amended or
modified at any time by an instrument in writing signed by the parties
hereto.
12. Rights as a Stockholder. Neither the Optionee nor
any successor in interest shall have rights as a stockholder of the
Company with respect to any of the Option Shares until the date of
issuance of a stock certificate for such Option Shares.
13. Securities Laws Requirements. The Option shall not
be exercisable or exchangeable to any extent, and the Company shall not
be obligated to transfer any Option Shares to the Optionee upon exercise
or exchange of such Option, if such exercise or exchange, in the opinion
of counsel for the Company, would violate the Securities Act (or any
other Federal or state securities laws as may be in effect at that time).
14. Protections Against Violations of Agreement. No
purported sale, assignment, mortgage, hypothecation, transfer, pledge,
encumbrance, gift, transfer in trust (voting or other) or other
disposition of, or creation of a security interest in or lien on, any of
the Option or any interest therein by any holder thereof in violation of
the provisions of this Agreement will be valid, and the Company will not
transfer any of said Option on its books nor will any of said Option
Shares be entitled to vote, nor will any dividends be paid thereon,
unless and until there has been full compliance with said provisions to
the satisfaction of the Company. The foregoing restrictions are in
addition to and not in lieu of any other remedies, legal or equitable,
available to enforce said provisions.
15. Authority of the Administrator. The Administrator
shall have full authority to interpret and construe the terms of this
Agreement. The determination of the Administrator as to any such matter
of interpretation or construction shall be final, binding and conclusive.
Signatures on Following Page
IN WITNESS WHEREOF, the parties have executed this Agreement on this
8th day of June, 2004.
FRIT PINN LLC
By: /s/Xxxxxx X. Xxxxxxx
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Its: Vice President and Secretary
Address for Notices:
--------------------
1251 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
Fax: 000-000-0000
With a copy to:
--------------
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax: 000-000-0000
The undersigned hereby accepts and agrees to all
the terms and provisions of the foregoing
Agreement
GLOBAL SIGNAL INC.
/s/Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President, Chief Financial
Officer and Assistant Secretary
