Exhibit 10.12
EXECUTION COPY
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of January 7, 2005 by and between COURT
SQUARE CAPITAL LIMITED, a Delaware corporation (the "Purchaser"), and GMH
Holding Company, a Delaware corporation (the "Company"). Capitalized terms used
herein shall have the meanings given to such terms in Section V(A) hereof.
WHEREAS, pursuant to that certain Senior Subordinated Credit
Agreement, dated as of the date hereof (as amended, restated or modified from
time to time, the "Credit Agreement"), by and among the Purchaser, Gallarus
Media Holdings, Inc. ("Holdco"), the Company, and certain other parties thereto,
the Purchaser is lending to Holdco and certain other parties the aggregate sum
of $25,000,000 (the "Loan") in accordance with the terms of the Credit
Agreement;
WHEREAS, the Purchaser is acquiring from the Company a warrant in the
form attached as Exhibit A hereto (the "Warrant"), representing the right to
purchase from the Company 585,926.70 Warrant Shares (as adjusted from time to
time pursuant to the provisions of the Warrant) on the terms and conditions set
forth in the Warrant; and
WHEREAS, the Warrant is being issued as an inducement and partial
consideration for the Purchaser to enter into the Credit Agreement and to make
the Loan to Holdco and the other Borrowers (as defined in the Credit Agreement),
and without such issuance, the Purchaser will not enter into the Credit
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
I. Purchase Price and Closing.
A. Closing. The closing of the issuance of the Warrant to the
Purchaser (the "Closing") shall take place simultaneously with the closing
pursuant to the Credit Agreement. The date of such Closing is hereinafter
referred to as the "Closing Date."
B. Transactions on Closing Date. At the Closing, the Company
shall deliver to the Purchaser the duly issued Warrant.
II. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser as follows:
A. Good Standing. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
B. Authority Relative to this Agreement. The Company has all
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to issue and deliver the Warrant to the
Purchaser. The execution, delivery, and performance by the Company of its
obligations under this Agreement, including the issuance and delivery of the
Warrant to the Purchaser, have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been duly executed and
delivered by the Company and (assuming due execution and delivery by the
Purchaser) is a legal, valid, and binding obligation of the Company and is
enforceable against the Company in accordance with its terms.
C. No Conflict or Violation. The execution and delivery of this
Agreement by the Company, the performance by the Company of its terms and the
issuance and delivery of the Warrant to the Purchaser will not on the Closing
Date conflict with or result in a violation of (i) the Amended and Restated
Certificate of Incorporation or By-Laws of the Company as in effect on the
Closing Date, or (ii) any agreement, instrument, law, rule, regulation, order,
writ, judgment, or decree to which the Company is a party or is subject, except
for such conflicts and violations which will not, in the aggregate, have a
material adverse effect on the business, prospects, assets, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries (taken as a whole) and will not deprive the Purchaser' of any
material benefit under this Agreement.
D. Validity, of Issuance. The Warrant to be issued to the
Purchaser pursuant to this Agreement and the Warrant Shares issued upon exercise
of the Warrant will, when issued, be duly and validly issued, fully paid and
nonassessable (assuming in the case of the Warrant Shares, payment of the
exercise price is made in accordance with the terms of the Warrant).
E. Ownership. Immediately following the consummation of the
transactions contemplated by, referenced in or made in connection with each of
the Operative Documents (as defined in the Credit Agreement), and each of the
documents, instruments and agreements executed or delivered in connection
therewith, the Warrant Shares constitute 3.0% of the Common Stock on a Fully
Diluted Basis.
III. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
A. Investment Intention. The Purchaser is acquiring the Warrant,
and if any portion of the Warrant is exercised, the Warrant Shares, for
investment solely for its own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The Purchaser
agrees and acknowledges that it will not, directly or indirectly, offer,
transfer, or sell the Warrant or any Warrant Shares, or solicit any offers to
purchase or acquire the Warrant or any Warrant Shares, unless the transfer or
sale is permitted by the terms of the Warrant and such transfer or sale is (i)
pursuant to an effective registration statement under the Securities Act of
1933, as amended, and the rules and regulations thereunder (the "Securities
Act") and has been registered under any applicable state securities or "blue
sky" laws, or (ii) pursuant to an exemption from registration under the
Securities Act and applicable state securities or "blue sky" laws.
B. Legend. The Purchaser has been advised by the Company that
certificates representing the Warrant will bear any legend required pursuant to
the Stockholders Agreement and will bear the following legends:
THIS WARRANT WAS ORIGINALLY ISSUED ON AND EFFECTIVE AS OF JANUARY 7,
2005 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE
RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF SECTION 6 OF
THIS WARRANT THIS WARRANT IS ALSO SUBJECT TO (A) A WARRANT AGREEMENT,
DATED AS OF JANUARY 7, 2005, BY AND BETWEEN GMH HOLDING COMPANY (THE
"COMPANY") AND THE ORIGINAL HOLDER HEREOF AND (B) A SECURITIES
PURCHASE AND HOLDERS AGREEMENT, DATED AS OF JANUARY 7, 2005, BY AND
AMONG THE COMPANY, CERTAIN STOCKHOLDERS OF THE COMPANY, AND THE
ORIGINAL HOLDER HEREOF (THE "STOCKHOLDERS AGREEMENT"), IN EACH CASE AS
AMENDED
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FROM TIME TO TIME. A COPY OF THE WARRANT AGREEMENT AND THE
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY
TO THE HOLDER HEREOF UPON REQUEST.
Upon reasonable request of the Company in connection with any permitted transfer
of the Warrant or any Warrant Shares (other than a transfer pursuant to a public
offering registered under the Securities Act, pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or any similar rules then in effect), or
to an affiliate of the Purchaser), the Purchaser will deliver, if requested by
the Company, an opinion of counsel knowledgeable in securities laws reasonably
satisfactory to the Company to the effect that such transfer may be effected
without registration under the Securities Act. The Company agrees to issue
certificates evidencing the Warrant Shares that do not contain such legend upon
receipt of an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to the effect that registration under the
Securities Act is not required because of the availability of an exemption from
such registration.
C. Additional Investment Representations. The Purchaser is an
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act.
IV. Inspection Rights. Until the Company is a Public Company, the
Company shall permit one representative of any holder of (x) the Warrant or (y)
the Warrant Shares (as selected by the holders of the majority of the Warrant
Shares) (assuming for purposes of this section that the Warrant has been fully
exercised), upon reasonable notice and during normal business hours and such
other times as any such holder may reasonably request, to (i) visit and inspect
any of the properties of the Company and its subsidiaries, (ii) examine the
corporate and financial records of the Company and its subsidiaries and make
copies thereof or extracts therefrom, and (iii) discuss the affairs, finances
and accounts of any such corporations with the directors, officers, key
employees, and independent accountants of the Company and its subsidiaries.
V. Miscellaneous
A. Definitions. For the purposes of this Agreement, the following
terms shall have the following meanings:
"Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of New York or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close.
"Class A Common" means, collectively, the Class A Common Stock,
par value $0.001 per share, and any securities into which such Class A Common
Stock is hereafter converted or exchanged.
"Class B Common" means, collectively, the Class B Common Stock,
par value $0.001 per share, and any securities into which such Class B Common
Stock is hereafter converted or exchanged.
"Class L Common" means, collectively, the Class L Common Stock,
par value $0.001 per share, and any securities into which such Class L Common
Stock is hereafter converted or exchanged.
"Common Stock" means, collectively, (i) the Class A Common, (ii)
the Class B Common, (iii) the Class L Common, (iv) any other class or series of
the Company's common stock, and
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(v) any other capital stock issuable with respect to the securities referred to
in clauses (i), (ii), (iii) or (iv) above by way of stock split, stock dividend,
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization.
"Fully Diluted Basis" means, at any given time, the number of
shares of all classes of Common Stock outstanding at such time, calculated after
giving effect to, and including, the exercise, conversion, or exchange, as
applicable, of all existing options, warrants or other securities directly or
indirectly convertible into or exchangeable for Common Stock, without regard to
any contingencies or time periods applicable thereto.
"Public Company" means a company (i) which is subject to the
reporting requirements of Section 15(d) of the Securities Exchange Act of 1934,
as amended from time to time (the "Exchange Act"), or (ii) any of whose equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of January 7, 2005, by and among the Company and certain of
the Company's stockholders party thereto, as amended, restated or modified from
time to time.
"Stockholders Agreement" means the Securities Purchase and
Holders Agreement, dated as of January 7, 2005, by and among the Company, the
Purchaser, and certain other stockholders of the Company party thereto, as
amended, restated or modified from time to time.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (a) such Person,
(b) such Person and one or more Subsidiaries of such Person or (c) one or more
Subsidiaries of such Person.
"Warrant Shares" means shares of the Company's Class A Common
issuable upon exercise of this Warrant; provided, that if the securities
issuable upon exercise of the Warrant are issued by an entity other than the
Company or there is a change in the class or series of securities so issuable,
then the term "Warrant Shares" shall mean shares of the security issuable upon
exercise of the Warrant if such security is not issuable in shares, or shall
mean the equivalent units in which such security is issuable if such security is
not issuable in shares.
B. Other Agreements. The parties hereto acknowledge that upon the
exercise of the Warrant, the Warrant Shares and the holders thereof shall be
subject to the terms and conditions of each of the Stockholders Agreement and
the Registration Rights Agreement.
C. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and delivered personally, mailed by certified or registered mail,
return receipt requested and postage prepaid, sent via a nationally recognized
overnight courier, or via facsimile. Such notices, demands and other
communications will be sent to the address indicated below:
To the Company:
GMH Holding Company
C/o Citigroup Venture Capital Equity Partners, L.P.
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000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with copies (which shall not constitute notice to the
Company) to:
Dechert LLP
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
To Purchaser:
Court Square Capital, Ltd.
000 Xxxx Xxxxxx
00xx Xxxxx - Xxxx 0
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx, Jr.
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice to Purchaser)
to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
Facsimile No.: (212) 446-490
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party;
provided, that the failure to deliver copies of notices as indicated above shall
not affect the validity of any notice. Any such communication shall be deemed to
have been received (i) when delivered, if personally delivered, or sent by
nationally-recognized overnight courier or sent via facsimile or (ii) on the
third Business Day following the date on which the piece of mail containing such
communication is posted if sent by certified or registered mail.
D. Assignment. This Agreement and all the provisions hereof shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any rights or obligations hereunder shall be assigned by the Company without
the prior written consent of the Purchaser.
E. Amendment. This Agreement may be amended only by a written
instrument signed by the Company and the Purchaser.
F. Waiver. Either party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions herein. Any agreement on the part of a
party
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hereto to any such extension or waiver shall be valid as to such party if set
forth in an instrument in writing signed by such party.
G. Severability. In the event that any one or more of the
provisions hereof, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, it being
intended that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
H. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS OR CHOICE OF
LAWS OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION WHICH WOULD RESULT IN
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THOSE OF THE STATE OF
DELAWARE.
I. Expenses. All reasonable fees and expenses incurred by the
Purchaser in connection with the preparation of this Agreement and the
transactions referred to herein, including the reasonable fees of the
Purchaser's counsel, shall be paid by the Company, whether or not the issuance
of the Warrant, the execution and delivery of the Credit Agreement or any other
transaction contemplated hereby is consummated.
J. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
K. Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of the terms contained herein.
*****
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IN WITNESS WHEREOF, each of the parties hereto have caused this
Warrant Agreement to be signed by its duly authorized officer and to be dated as
of the date hereof.
GMH HOLDING COMPANY
By: /s/ Xxx X. Xxxxxx
------------------------------------
Name: Xxx X. Xxxxxx
Title:
---------------------------------
COURT SQUARE CAPITAL LIMITED
By: /s/ Xxxxxxx Xxxxxxxx, Jr.
------------------------------------
Name: Xxxxxxx Xxxxxxxx, Jr.
----------------------------------
Title:
---------------------------------
THIS WARRANT WAS ORIGINALLY ISSUED ON AND EFFECTIVE AS OF JANUARY 7,
2005 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE
RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF SECTION 6 OF
THIS WARRANT. THIS WARRANT IS ALSO SUBJECT TO (A) A WARRANT AGREEMENT,
DATED AS OF JANUARY 7, 2005, BY AND BETWEEN GMH HOLDING COMPANY (THE
"COMPANY") AND THE ORIGINAL HOLDER HEREOF, AS AMENDED AND (B) A
SECURITIES PURCHASE AND HOLDERS AGREEMENT, DATED AS OF JANUARY 7,
2005, BY AND AMONG THE COMPANY, CERTAIN STOCKHOLDERS OF THE COMPANY,
AND THE ORIGINAL HOLDER HEREOF, AS AMENDED (THE "STOCKHOLDERS
AGREEMENT"), IN EACH CASE AS AMENDED FROM TIME TO TIME. A COPY OF THE
WARRANT AGREEMENT AND THE STOCKHOLDERS AGREEMENT WILL BE FURNISHED
WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.
STOCK PURCHASE WARRANT
Date of Issuance: January 7, 2005 Certificate No. W-1
For value received, GMH Holding Company, a Delaware corporation (the
"Company"), hereby grants to Court Square Capital Limited, a Delaware
corporation ("Court Square"), or its transferees and assigns, the right to
purchase from the Company a total of 585,926.70 Warrant Shares (as defined
herein) at a price per share of $0.01 (the "Initial Exercise Price"). This
Warrant is the warrant (the "Warrant") issued pursuant to the terms of the
Warrant Agreement, dated as of January 7, 2005, between the Company and Court
Square and is being issued in connection with the Senior Subordinated Credit
Agreement, dated as of January 7, 2005, by and between Court Square and Gallarus
Media Holdings, Inc. ("Holdco") (as amended, restated or modified from time to
time, the "Credit Agreement"). The Initial Exercise Price and number of Warrant
Shares (and the amount and kind of other securities) for which this Warrant is
exercisable shall be subject to adjustment as provided herein. Certain
capitalized terms used herein are defined in Section 5 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by this Warrant
may be exercised, in whole or in part, at any time and from time to time after
the date hereof to and including 5:00 p.m., New York time, on January 7, 2015
or, if such day is not a Business Day, on the next preceding Business Day (the
"Exercise Period").
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when all
of the following items have been delivered to the Company (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in Section
1C below, executed by the Person exercising all or part of the purchase rights
represented by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II attached hereto
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (i) a check or wire transfer payable to the
Company in an amount equal to the product of the Exercise Price (as such term is
defined in Section 2) multiplied by the number of Warrant Shares being purchased
upon such exercise (the "Aggregate Exercise Price"), (ii) the surrender to the
Company of securities of the Company or its Subsidiaries having a value equal to
the Aggregate Exercise Price of the Warrant Shares being purchased upon such
exercise (which value in the case of debt securities shall be the principal
amount thereof and in the case of shares of Common Stock shall be the Fair
Market Value thereof), or (iii) the delivery of a notice to the Company that the
Purchaser is exercising the Warrant by authorizing the Company to reduce the
number of Warrant Shares subject to the Warrant by the number of shares having
an aggregate Fair Market Value equal to the Aggregate Exercise Price.
(ii) Certificates for Warrant Shares purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu of a
fraction of a share pursuant to the provisions of Section 13 hereof. Unless this
Warrant has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall, within such five-day period, deliver
such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(iii) The Warrant Shares issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time, and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, that the Company shall not be required to pay any
taxes in respect of the Warrant or Warrant Shares, with respect to any transfer
of the Warrants, which taxes shall be paid by the transferee prior to the
issuance of such Warrant Shares.
(v) The Company shall not close its books against the transfer of
this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price then in effect. In the event that the Company fails to comply
with its obligations set forth in the foregoing sentence, the Purchaser may (but
shall not be obligated to) purchase Warrant Shares hereunder at par value, and
the Company shall be obligated to reimburse the Purchaser for the aggregate
amount of consideration paid in connection with such exercise in excess of the
Exercise Price then in effect.
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(vi) The Company shall assist and cooperate with the Registered
Holder or any Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or a sale of the Company (pursuant to a merger, sale of stock, or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. All Warrant Shares which are so
issuable shall, when issued and upon the payment of the applicable Exercise
Price, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges except those created by actions of the holder
hereof. The Company shall take all such actions as may be necessary to ensure
that all such Warrant Shares may be so issued without violation by the Company
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock or other
securities constituting Warrant Shares may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance). The Company will use its best efforts to cause the Warrant Shares,
immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of Common Stock or other securities constituting Warrant
Shares are listed, if any, at the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of this
Warrant are convertible into or exchangeable for any other stock or securities
of the Company, the Company shall, at the Purchaser's option and upon surrender
of this Warrant by such Purchaser as provided above together with any notice,
statement or payment required to effect such conversion or exchange of Warrant
Shares, deliver to such Purchaser (or as otherwise specified by such Purchaser)
a certificate or certificates representing the stock or securities into which
the Warrant Shares issuable by reason of such conversion are convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such Purchaser has specified.
(x) The Company shall not, and shall not permit its Subsidiaries
to, directly or indirectly, by any action (including, without limitation,
reincorporation in a jurisdiction other than Delaware, amending its certificate
or articles of incorporation or through any Organic Change (as defined in
Section 2D), issuance or sale of securities or any other voluntary action) avoid
or seek to avoid the observance or performance of any of terms of this Warrant
or impair or diminish its value (except for any action which ratably affects all
Warrant Shares and shares of Common Stock), but shall at all times in good faith
assist in the carrying out of all such terms of this Warrant Without limiting
the generality of the foregoing, the Company shall (a) use its reasonable best
efforts to obtain all such authorizations, exemptions, or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant, and (b) not undertake
any reverse stock split, combination, reorganization, or other reclassification
of its capital stock which would have the effect of making this Warrant
exercisable for less than one share of Common Stock.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth as Exhibit I attached hereto, except that if the Warrant
Shares are not to be issued in the name of the Registered Holder, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the Warrant Shares are to be issued, and if the number of Warrant Shares to be
issued does not include all of the Warrant Shares
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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 issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In order
to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (as so adjusted, the "Exercise Price"), and the number of
Warrant Shares obtainable upon exercise of this Warrant shall be subject to
adjustment from time to time, each as provided in this Section 2; provided, that
there shall be no adjustment to the Exercise Price or to the number of Warrant
Shares acquirable upon exercise of the Warrant, as provided in this Section 2
(an "Adjustment"), unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance of
Common Stock.
(i) If and when, on or after the date hereof, the Company issues
or sells, or in accordance with Section 2B is deemed to have issued or sold
(other than Purchase Rights (as defined in Section 3A), pursuant to a Permitted
Issuance or as described in Section 2C hereof) any shares of Common Stock for a
per share consideration that is less than the per share Fair Market Value of the
Common Stock determined as of the date of such issuance or sale, then
immediately upon such issuance or sale, the Exercise Price shall be reduced to
equal the amount determined by multiplying the Exercise Price in effect
immediately prior to such issuance or sale by a fraction, the numerator of which
will be the sum of (x) the number of shares of Common Stock Deemed Outstanding
immediately prior to such issuance or sale multiplied by the Fair Market Value
of the Common Stock determined as of the date of such issuance or sale, and (y)
the consideration, if any, received by the Company upon such issuance or sale,
and the denominator of which will be the product derived by multiplying such
Fair Market Value of the Common Stock by the number of shares of Common Stock
Deemed Outstanding immediately after such issuance or sale.
(ii) Upon each such adjustment of the Exercise Price hereunder,
the number of Warrant Shares acquirable upon exercise of this Warrant shall be
adjusted to equal the number of shares determined by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment. For the purposes of this Section 2, the calculation of the
number of shares of Common Stock Deemed Outstanding shall exclude the Warrant
Shares.
2B. Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 2A, the following
provisions shall be applicable:
(i) Issuance of Rights or Options. If the Company grants in any
manner any rights or options (other than Purchase Rights or pursuant to a
Permitted Issuance) to subscribe for or to purchase Common Stock or any stock or
other securities convertible into or exchangeable for Common Stock (including,
without limitation, convertible common stock) (such rights or options being
herein called "Options" and such convertible or exchangeable stock or securities
being herein called "Convertible Securities") and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities is less than the Fair Market Value of
the Common Stock in effect on the date such Options are granted, then the total
4
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to be outstanding and to have been issued and sold by the Company for
such price per share. For purposes of this paragraph, the "price per share for
which Common Stock is issuable upon exercise of such Options or upon conversion
or exchange of such Convertible Securities" is determined by dividing (A) the
total amount, if any, received or receivable by the Company as consideration for
the granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such Options, plus
in the case of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the issuance or sale of such Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon exercise of such Options or upon the conversion or exchange of all
such Convertible Securities issuable upon the exercise of such Options. No
further adjustment of the Exercise Price shall be made upon the actual issuance
of such Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Common Stock upon conversion or
exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities (other than Purchase Rights or
a Permitted Issuance) and the price per share for which Common Stock is issuable
upon the conversion or exchange of such Convertible Securities is less than the
per share Fair Market Value of the Common Stock then in effect, then the maximum
number of shares of Common Stock issuable upon conversion or exchange of such
Convertible Securities shall be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. For the purposes of this
paragraph, the "price per share for which Common Stock is issuable upon such
conversion or exchange" is determined by dividing (A) the total amount received
or receivable by the Company as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities. No further
adjustment of the Exercise Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustments of the Exercise Price have been or are to be
made pursuant to other provisions of this Section 2B, no further adjustment of
the Exercise Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If either the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Common Stock shall change at any time, the Exercise Price in
effect at the time of such change shall be adjusted to the Exercise Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares shall be
correspondingly readjusted.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Securities, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Shares acquirable hereunder shall be adjusted to the Exercise
Price and the number of shares which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.
5
(v) Calculation of Consideration Received. If any Common Stock,
Options, or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount received by the Company therefor. In case any Common Stock,
Options, or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of marketable securities, in which case the amount of
consideration received by the Company shall be the market price thereof as of
the date of receipt. In case any Common Stock, Options, or Convertible
Securities are issued to the owners of the non-surviving entity in connection
with any merger or other business combination in which the Company is the
surviving entity, the amount of consideration therefor shall be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash or marketable securities shall be determined by the Company, unless such
consideration is paid by an Affiliate of the Company, in which case the fair
value of such consideration shall be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Required Holders, whose determination
shall be final and binding on the Company and all Registered Holders of the
Warrant. The fees and expenses of such appraiser shall be paid by the Company.
(vi) Integrated Transactions. Other than Permitted Issuances, in
case any Option is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such Options by the parties
thereto, the Option shall be deemed to have been issued for no consideration;
provided, that if such other securities are debt securities (such debt
securities so issued are herein referred to as the "Debt") of the Company or any
of its Subsidiaries, the Option shall be deemed to have been issued for
consideration equal to the excess, if any, of (a) the aggregate face amount (the
"Estimated Face Amount") of debt securities with terms identical to the terms of
the Debt which the Company or such Subsidiary would have had to issue had no
Options been issued in connection therewith, given the prevailing market
conditions at the time of the issuance of the Debt, in order to receive the same
aggregate net proceeds as is actually received from the issuance of the Debt,
over (b) the aggregate face amount of the Debt. The Estimated Face Amount shall
be as mutually agreed between the Company and the Registered Holder or, if no
such mutual agreement is reached, as set forth in the written opinion, addressed
to the Registered Holder, of an investment bank of national recognition,
retained by the Company and reasonably acceptable to the Registered Holder;
provided, that if no such mutual agreement is reached or written opinion is
received, the Estimated Face Amount shall be deemed to be zero (0); and
provided, further, that the fees and expenses of such investment bank shall be
borne by the Company.
Example: If the Company issues $20 million in aggregate principal amount of
10% subordinated debentures with a 10-year maturity (and receives
aggregate net proceeds of $20 million), and in connection
therewith issues warrants, and in accordance with the provisions
of Section 2B(vi) of the Warrant, the Company and the Registered
Holder mutually agree or an investment bank determines that the
Estimated Face Amount of the subordinated debentures (with terms
otherwise identical to the securities issued) would have been $21
million to the Company), had the warrants not been issued, then
such warrants would be deemed to have been issued for $1 million.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary of the Company and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
6
(viii) Record Date. If the Company takes a record of the holders
of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options, or Convertible Securities
or (B) to subscribe for or purchase Common Stock, Options, or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
2C. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization, or
otherwise) the Common Stock into a greater number of shares or pays a dividend
or makes a distribution to holders of the Common Stock in the form of shares of
Common Stock, 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. Subject to
clause (b) of Section 1B(x) above, if the Company at any time combines (by
reverse stock split or otherwise) the 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.
2D. Organic Change. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities, or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change". Subject
to the provisions of the Stockholders Agreement, prior to the consummation of
any Organic Change, the Company shall make appropriate provision to ensure that
each Registered Holder of Warrants shall thereafter have the right to acquire
and receive upon exercise thereof, in lieu of or addition to (as the case may
be) the Warrant Shares immediately theretofore acquirable and receivable upon
exercise of such Registered Holder's Warrants, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange for the
number of Warrant Shares immediately theretofore acquirable and receivable upon
exercise of such Registered Holder's Warrants had such Organic Change not taken
place. In any such case, the Company shall make appropriate provision with
respect to such Registered Holder's rights and interests to insure that the
provisions hereof (including this Section 2) shall thereafter be applicable to
the Warrants (including, in the case of any such Organic Change in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Exercise Price to the per share value for the Common Stock
reflected by the terms of such Organic Change and a corresponding immediate
adjustment in the number of Warrant Shares acquirable and receivable upon
exercise of the Warrants, if the per share value so reflected is less than the
Fair Market Value of the Common Stock in effect immediately prior to such
Organic Change). The Company shall not effect any such Organic Change unless,
prior to the consummation thereof, the successor entity (if other than the
Company) resulting from such Organic Change (including a purchaser of all or
substantially all the Company's assets) assumes by written instrument the
obligation to deliver to each Registered Holder of Warrants such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Registered Holder may be entitled to acquire upon exercise of Warrants.
2E. Certain Events. If any event occurs of the type contemplated by
the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features but excluding
any Permitted Issuance), then the Company's Board of Directors shall make an
appropriate and equitable adjustment in the Exercise Price and the number of
Warrant Shares obtainable upon exercise of this Warrant so as to protect the
rights of the Registered Holder of this Warrant.
7
2F. Notices.
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least thirty (30) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution
upon the Common Stock, (B) with respect to any pro rata subscription offer to
holders of Common Stock, or (C) for determining rights to vote with respect to
any Organic Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the
Registered Holder at least thirty (30) days prior to the date on which any
Organic Change, dissolution, or liquidation shall take place.
SECTION 3. Other Rights.
3A. Purchase Rights. If at any time the Company 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 the
Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of 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 Common Stock are to be determined for
the grant, issue, or sale of such Purchase Rights.
3B. Limited Preemptive Rights.
(i) Except (A) for the conversion of shares of one class or
series of Common Stock into shares of another class or series of Common Stock,
or (B) as otherwise contemplated pursuant to Section 3A, prior to any issuance
by the Company to CVC of any shares of Common Stock or any securities containing
options or rights to acquire any shares of Common Stock or any securities
convertible or exchangeable for Common Stock in each case, after the date hereof
("Proposed Issuance"), the Company will offer to sell to each Registered Holder,
in accordance with, the provisions of the Securities Act, a number of such
securities ("Offered Shares") so that the Ownership Ratio immediately after the
issuance of such securities for each Registered Holder would be equal to the
Ownership Ratio for such Registered Holder immediately prior to such issuance of
securities to CVC. The Company shall give each Registered Holder at least
fifteen (15) days prior written notice of any Proposed Issuance to CVC, which
notice shall disclose in reasonable detail the proposed terms and conditions of
such issuance and the number of Offered Shares available for such Registered
Holder to purchase (the "Issuance Notice"). Each Registered Holder will be
entitled to purchase such securities at the same price, on the same terms, and
at the same time as the securities are issued to CVC by delivery of written
notice to the Company of such election (the "Election Notice") within fifteen
(15) days after delivery of the Issuance Notice (the "Election Period");
provided, that if more than one type of security was issued to CVC, each
Registered Holder shall, if it exercises its rights pursuant to this Section 3B.
purchase such securities in the same ratio as issued to CVC. If any Registered
Holder fails to deliver an Election Notice prior to the expiration of the
Election Period and CVC does not acquire the Offered Shares described in the
related Issuance Notice within thirty (30) days after the expiration of the
Election Period, such Offered Shares shall again be subject to the provisions of
this Section 3B. If any of the Registered Holders have elected
8
to purchase any Offered Shares, the sale of such Offered Shares shall be
consummated as soon as practical (but in any event within ten (10) days) after
the delivery of the Election Notice.
(ii) Notwithstanding the requirements contained in this Section
3B. the Company may consummate a Proposed Issuance without complying with the
related fifteen day prior notice requirement to Registered Holders contained in
Section 3B(i) so long as (A) the Company deposits into escrow with an
independent third party reasonably acceptable to the Registered Holders (the
"Escrow Agent") a number of shares of Common Stock in an aggregate amount equal
to the number of Offered Shares that would have been available for Registered
Holders to purchase pursuant to Section 3B(i) above and (B) CVC agrees to
purchase any Offered Shares not purchased by the Registered Holders pursuant to
this Section 3B(ii). Within ten days after the date on which the Proposed
Issuance is consummated, the Company shall notify each Registered Holder in
wilting of the Proposed Issuance (a "Preemptive Escrow Notice"). The Preemptive
Escrow Notice shall disclose in reasonable detail the terms and conditions on
which the Proposed Issuance was consummated, the number of Offered Shares
available for such Registered Holder to purchase and calculated in accordance
with the provisions of Section 3B(i) (the "Escrowed Offered Shares"), and the
identity of the Escrow Agent. Each Registered Holder will be entitled to
purchase the Escrowed Offered Shares at the same price and on the same terms as
the Proposed Issuance by written election delivered to the Company within thirty
(30) days after the delivery of the Preemptive Escrow Notice that identifies the
number of Escrowed Offered Shares to be so purchased (the "Escrow Purchase
Election"); provided, that if more than one type of security was issued to CVC
pursuant to the Proposed Issuance, each Registered Holder shall, if it exercises
its rights pursuant to this Section 3B(ii), purchase such securities in the same
ratio as issued to CVC. If a Registered Holder elects to purchase any Escrowed
Offered Shares, the sale of such Escrowed Offered Shares shall be consummated as
soon as practical (but in any event within 10 days) after the delivery of the
Escrow Purchase Election. Any Escrowed Offered Shares not purchased by the
Registered Holders pursuant to this Section 3B(ii) shall be sold to CVC on the
terms and conditions identified in the Preemptive Escrow Notice.
(iii) In the event that any Registered Holder elects to purchase
Offered Shares or Escrowed Offered Shares, as the case may be, at such
Registered Holder's request (which request shall be included in the Election
Notice or the Preemptive Escrow Notice, respectively), the Company shall issue
to such Registered Holder, in lieu of the securities constituting Offered Shares
or Escrowed Offered Shares, as the case may be, nonvoting securities which shall
otherwise be identical in all respects to such securities constituting Offered
Shares or Escrowed Offered Shares, as the case may be, except that it (A) shall
be nonvoting, (B) shall be convertible into a voting security (including the
securities constituting Offered Shares or Escrowed Offered Shares, as the case
may be) on such terms as are requested by such Registered Holder in light of the
applicable regulatory considerations then prevailing, and (C) may be, at
Registered Holder's request, in the form of an option or warrant to purchase
such securities.
(iv) In the event any Registered Holder elects not to exercise
its rights pursuant to this Section 3B, no other Registered Holder shall have
the right to purchase the securities offered to such Registered Holder. This
Section 3B will terminate automatically, and be of no further force and effect,
upon the consummation of an underwritten public offering registered under the
Securities Act of the Common Stock.
SECTION 4. Definitions. The following terms have the meanings set
forth below:
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or
9
beneficially, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities
or by contract or otherwise.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"Capital Stock" means (a) any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (b) in the case of a partnership, partnership interests (whether general
or limited), (c) in the case of a limited liability company, membership
interests and (d) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Class A Common" means the Class A Common Stock, par value $0.001 per
share, and any securities into which such Class A Common Stock is hereafter
converted or exchanged.
"Class B Common" means the Class B Common Stock, par value $0.001 per
share, and any securities into which such Class B Common Stock is hereafter
converted or exchanged.
"Class L Common" means the Class L Common Stock, par value $0.001 per
share, and any securities into which such Class L Common Stock is hereafter
converted or exchanged.
"Common Stock" means, collectively, (i) the Class A Common, (ii) the
Class B Common, (iii) the Class L Common, (iv) any other class or series of the
Company's common stock, and (iv) any other capital stock issuable with respect
to the securities referred to in clauses (i), (ii), (iii) or (iv) above by way
of stock split, stock dividend, or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Common Stock Deemed Outstanding" means, at any given time, the number
of shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Section 2B(i) or
2B(ii) hereof.
"Credit Agreement" means that certain Senior Subordinated Credit
Agreement, dated as of the date hereof, by and among Court Square, Holdco and
certain other parties thereto, as amended, restated or modified from time to
time.
"CVC" means Citicorp Venture Capital Equity Partners, L.P., a Delaware
limited partnership, and its Affiliates (other than Court Square).
"Fair Market Value" means (i) the average of the closing sales prices
of the Common Stock on all domestic securities exchanges on which the Common
Stock is listed, or (ii) if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or (iii) if on any day the Common Stock is not
so listed, the sales price for the Common Stock as of 4:00 P.M., New York time,
as reported on the Nasdaq National Market, or (iv) if the Common Stock is not
reported on the Nasdaq National Market, the average of the representative bid
and asked quotations for the Common Stock as of 4:00 P.M., New York time, as
reported on the Nasdaq interdealer quotation system, or any similar successor
organization, in each such case averaged over a period of twenty-one (21)
trading days consisting of the day as of which "Fair Market Value" is being
determined and the 20 consecutive trading days prior to such day.
Notwithstanding the foregoing, if at any time of determination either (x) the
Common Stock is not registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended, and either listed on
10
a national securities exchange or authorized for quotation in the Nasdaq system,
or (y) less than 25% of the outstanding Common Stock is held by the public free
of transfer restrictions under the Securities Act of 1933, as amended, then Fair
Market Value shall mean the price that would be paid per share for the entire
common equity interest in the Company in an orderly sale transaction between a
willing buyer and a willing seller, taking into account the appropriate lack of
liquidity of the Company's securities, using valuation techniques then
prevailing in the securities industry and assuming full disclosure of all
relevant information and a reasonable period of time for effectuating such sale.
Fair Market Value shall be determined by the Company's Board of Directors in its
good faith judgment. A majority of the Required Holders shall have the right to
require that an independent investment banking firm mutually acceptable to the
Company and the Required Holders determine Fair Market Value, which firm shall
submit to the Company and the Warrant holders a written report setting forth
such determination. The expenses of such firm will be borne by the Company, and
the determination of such firm will be final and binding upon all parties.
"Fully Diluted Basis" means, at any given time, the number of shares
of all classes of Common Stock outstanding at such time, calculated after giving
effect to, and including, the exercise, conversion, or exchange, as applicable,
of all existing options, warrants or other securities directly or indirectly
convertible into or exchangeable for Common Stock, without regard to any
contingencies or time periods applicable thereto.
"Ownership Ratio" means, as to the Registered Holders at the time of
determination, the percentage obtained by dividing (i) the number of the Warrant
Shares (assuming full exercise of the Warrant) and any other shares of Common
Stock Deemed Outstanding held by such holders on a fully diluted basis at such
time by (ii) the aggregate amount of shares of Common Stock Deemed Outstanding
held by CVC on a fully diluted basis at such time.
"Permitted Issuance" means any issuance by the Company of shares of
Common Stock (a) on or prior to the date hereof; (b) upon exercise of this
Warrant; (c) upon the conversion or exchange of any shares of any class or
series of Common Stock into another class or series of Common Stock; (d)
pursuant to an underwritten offering of Common Stock registered under the
Securities Act of 1933, as amended; (e) with respect to which the Registered
Holder exercises its limited preemptive rights pursuant to Section 3B: (f) to
members of management of the Company and its Subsidiaries as determined by the
Board of Directors of the Company, or (g) after which the Ownership Ratio of the
Registered Holder remains equal to or is greater than the Ownership Ratio prior
to giving effect to such issuance.
"Person" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization or government or
department or agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
the records of the Company maintained pursuant to the provisions of Section 12.
"Required Holders" means the holders of a majority of the purchase
rights represented by this Warrant as originally issued which remain outstanding
and unexercised.
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders Agreement" means the Securities Purchase and Holders
Agreement, dated as of January 7, 2005, by and among the Company, certain
shareholders of the Company and Court Square, as amended, restated or modified
from time to time in accordance with the terms thereof.
11
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (a) such Person,
(b) such Person and one or more Subsidiaries of such Person or (c) one or more
Subsidiaries of such Person.
"Warrant Shares" means shares of the Company's Class A Common issuable
upon exercise of the Warrant; provided, that if the securities issuable upon
exercise of the Warrant are issued by an entity other than the Company or there
is a change in the class or series of securities so issuable, then the term
"Warrant Shares" shall mean shares of the security issuable upon exercise of the
Warrant if such security is issuable in shares, or shall mean the equivalent
units in which such security is issuable if such security is not issuable in
shares.
SECTION 5. No Voting Rights; Limitations of Liability. This Warrant
shall not entitle the Registered Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the Company.
SECTION 6. Transferability. Subject to the terms of the Stockholders
Agreement, this Warrant and all rights hereunder are transferable, in whole or
in part, without charge to the Registered Holder, upon surrender of this Warrant
with a properly executed Assignment (in the form of Exhibit II hereto) at the
principal office of the Company. The Registered Holder agrees that it will not
sell, transfer, or otherwise dispose of any Warrant Shares, in whole or in part,
except in accordance with the terms of the Stockholders Agreement. Each
certificate evidencing the Warrant Shares issued upon such transfer shall bear
the restrictive legends required by the Stockholders Agreement, to the extent
required therein.
SECTION 7. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. At the request of the Registered Holder
(pursuant to a transfer of Warrants or otherwise), this Warrant may be exchanged
for one or more Warrants to purchase Common Stock. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued. All
Warrants representing portions of the rights hereunder are referred to herein as
the "Warrants."
SECTION 8. Exchange. In the event that it becomes unlawful or, in the
reasonable judgment of any Registered Holder of this Warrant, unduly burdensome
by reason of a change in legal or regulatory considerations or the
interpretation thereof affecting the ability of financial institutions or their
affiliates to hold equity securities, or any material change (including a
reduction in the number of shares of Common Stock outstanding) in the capital
structure of the Company, to hold any or all of the Warrant or Warrant Shares,
the Registered Holder of this Warrant shall have the right to require all or
part of such Registered Holder's Warrant or Warrant Shares to be exchanged for
nonvoting stock or similar interests that convey equivalent economic benefits to
such Warrant or Warrant Shares and include, in the case of the Warrant,
equivalent anti-dilution protection. Any such exchange shall occur as soon as
practicable but in any event within sixty (60) days after written notice by the
Registered Holder of this Warrant to the Company (or such earlier date if
required to comply with applicable law).
12
SECTION 9. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction, or mutilation
of any certificate evidencing this Warrant, and in the case of any such loss,
theft, or destruction, upon receipt of indemnity reasonably satisfactory to the
Company (provided, that if the Registered Holder is a financial institution or
other institutional investor its own Agreement shall be satisfactory), or, in
the case of any such mutilation upon surrender of such certificate, the Company
shall (at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the same rights represented by such lost,
stolen, destroyed, or mutilated certificate and dated the date of such lost,
stolen, destroyed, or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly provided herein,
all notices and deliveries referred to in this Warrant shall be in writing,
shall be delivered personally, sent by registered or certified mail, return
receipt requested and postage prepaid or sent via nationally recognized
overnight courier or via facsimile, and shall be deemed to have been given when
so delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices, and (ii) to a Registered
Holder, at such Registered Holder's address as it appears in the records of the
Company (unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided herein,
the provisions of the Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the prior written consent of the Required
Holders.
SECTION 12. Warrant Register. The Company shall maintain at its
principal executive offices books for the registration and the registration of
transfer of the Warrant. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 13. Fractions of Shares. The Company may, but shall not be
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a share which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Share on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
*****
13
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officer to be dated as of the date hereof.
GMH HOLDING COMPANY
By: /s/ Illegible
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Name:
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Title:
---------------------------------
Attest:
/s/ Illegible
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Name:
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EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
--------------------------------- ---------------------------------
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-________), hereby agrees to subscribe for the
purchase of _____________ Warrant Shares covered by such Warrant and makes
payment herewith in full therefor at the price per share provided by such
Warrant.
Signature
------------------------------
Address
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Exhibit I, Page 1
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-________) with respect to the number of the Warrant Shares
covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
----------------- ------- -------------
Dated: Signature:
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Witness:
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