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Exhibit 10.49 Execution Version WARRANT
AGREEMENT THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER THE SECURITIES ACT AND UNDER ANY RELEVANT STATE LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED. Warrant No. 4 Cusip # 016275
133 THIS WARRANT AGREEMENT
("Agreement" or "Warrant Agreement") is made as of this 29th day of
August, 2008, between Alion Science and Technology Corporation, a
Delaware corporation (the "Company"), Alion Science and Technology
Corporation Employee Ownership, Savings and Investment Trust (the
"Trust") (for the purposes of Sections 6, 7, 15 and 17
through 25 of this Agreement only) and Illinois Institute of
Technology, an Illinois not-for-profit corporation ("IIT").
WHEREAS, the Company and IIT Research
Institute ("IITRI") entered into that certain Seller Note
Securities Purchase Agreement as of December 20, 2002 (the
"Seller Securities Purchase Agreement"), pursuant to which the
Company issued to IITRI its 6% junior subordinated promissory note
in the principal amount of Thirty-Nine Million Nine Hundred
Thousand United States Dollars ($39.9 million);
WHEREAS, as of July 1, 2004,
IITRI transferred to IIT all its rights and interests in the Seller
Securities Purchase Agreement, and IIT and the Company amended the
Seller Securities Purchase Agreement as of that date;
WHEREAS, the Company and IIT entered
into an agreement captioned First Amendment to the Seller Note
Securities Purchase Agreement as of June 30, 2006 (the "Seller
Note Securities Purchase Agreement First Amendment");
WHEREAS, the Company and IIT entered
into an agreement captioned Second Amendment to the Seller Note
Securities Purchase Agreement as of January 9, 2007 (the
"Seller Note Securities Purchase Agreement Second Amendment");
WHEREAS, the Company, IITRI and the
Trust entered into a Rights Agreement as of December 20, 2002
(the "Original Rights Agreement" and as amended by the Seller Note
Securities Purchase Agreement Third Amendment (as defined below),
the "Amended Rights Agreement"), pursuant to which the parties
agreed to certain registration and director nomination rights
relating to warrants held by IITRI, and IIT is IITRI’s
successor in interest under the Rights Agreement;
WHEREAS, contemporaneously with
the execution of this Agreement, the Company and IIT are entering
into that certain Third Amendment to the Seller Note Securities
Purchase Agreement and First Amendment to Rights Agreement, of even
date herewith, (the "Seller Note Securities Purchase Agreement
Third Amendment" and collectively with the Seller Note Securities
Purchase Agreement, the Seller Note Securities Purchase Agreement
First Amendment, and the Seller Note Securities Purchase Agreement
Second Amendment, the "Amended Seller Note Securities Purchase
Agreement"), and the Company has issued to IIT that certain Junior
Subordinated Second Amended and Restated Seller Note, dated of even
date herewith; and WHEREAS, in
connection with the Seller Note Securities Purchase Agreement Third
Amendment, the Company has agreed to issue to IIT new warrants to
purchase up to five hundred fifty thousand (550,000) shares of the
Company’s $0.01 par value per share common stock ("Common
Stock") subject to the terms hereof.
NOW, THEREFORE, in consideration of
the premises set forth above, the covenants, representations and
warranties contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
Section 1.
Grant of Warrant .
(a) Notwithstanding
any other provision in this Agreement, the parties hereto hereby
agree that this Agreement shall terminate immediately and be of no
further force or effect upon the rescission of the Seller Note
Securities Purchase Agreement Third Amendment in accordance with
the terms thereof.
(b) Upon
the terms and subject to the conditions hereinafter set forth, the
Company hereby grants to IIT, or its permitted registered
transferees (subject to the restrictions set forth herein), an
irrevocable right (the "Warrant") to purchase up to Five Hundred
Fifty Thousand (550,000) shares of Common Stock upon exercise of
the Warrant (the "Shares") at an exercise price of $36.95 per share
(the "Exercise Price"), and to exercise the other rights, powers
and privileges hereinafter set forth. The Exercise Price and the
number of Shares shall be subject to adjustment from time to time
as provided in Section 3 hereof. IIT hereby
acknowledges its previous receipt of the Warrant, and that no
additional warrants are issued or committed to be issued by means
of this amendment of the Agreement.
Section 2.
Duration and Exercise of Warrant . Subject to
Sections 2(b), 4, 5, 6 and 7 herein, the parties hereto
agree as follows,
(a) Subject
to the remaining provisions of this Agreement, the Warrant may be
exercised, in whole or in part, by IIT and/or its permitted
transferees (IIT and its permitted transferees are hereinafter
referred to individually or collectively as the "Holder") on any
business day on or after April 30, 2009 and through and
including September 5, 2013 (the "Expiration Date"). At 5:00
P.M., Eastern Standard Time, on the Expiration Date, the Warrant
shall be and become void and of no value to the extent it has not
been exercised prior to such time.
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(b) The
Holder shall not be entitled to exercise any portion of the Warrant
unless it has delivered written notice in the form of the Form of
Election to Purchase attached hereto as Exhibit A (the
"Exercise Notice") to the Company in accordance with
Section 15 of this Warrant Agreement ninety
(90) days prior to the proposed effective date of such
exercise. Subject to the terms of Sections 2(h), 6(b) and
7(b) , the Warrant or a portion thereof, as appropriate, shall
be deemed to be exercised ninety (90) days from the date (the
"Exercise Date") the Company receives the Exercise Notice.
(c) The
Holder shall make payment for the exercise of the Warrant, or a
portion thereof, as appropriate, in the form of cash, or in lieu of
cash, the Holder may elect to receive such number of Shares equal
to the value (as determined below) of the exercised Warrant, or
portion thereof, by indicating in the Exercise Notice the
Holder’s desire to consummate a cashless exercise ("Cashless
Exercise Notice"), in which event the Company shall issue to the
Holder a number of Shares computed using the following formula:
Where:
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X =
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The number of Shares to be issued to the Holder;
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Y =
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The number of Shares purchasable under the Warrant if exercised
in full, or the exercised portion thereof, as appropriate;
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A =
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The then current Fair Value (as determined in accordance with
Section 3(c) herein); and
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B =
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The then current Exercise Price.
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(d) Upon
exercise of any portion of the Warrant and payment of the Exercise
Price therefor, the Company shall issue to the Holder stock
certificates representing the shares of Common Stock underlying
such exercised portion of the Warrant, or representing such number
of Shares as computed in accordance with Section 2(c)
above, as appropriate.
(e) If
this Warrant is exercised in respect of less than all of the Shares
at the time purchasable hereunder, the Holder hereof shall be
entitled to receive a new Warrant covering the number of Shares in
respect of which this Warrant shall not have been exercised and
setting forth the aggregate Exercise Price applicable to such
shares, in which case the Holder shall at the same time surrender
this Warrant to the Company for cancellation.
(f) The
Shares issuable upon the exercise of this Warrant by the Holder
under this Section 2 shall be deemed to have been issued to
the Holder at the Exercise Date, and the Holder shall be deemed for
all purposes to have become the record holder of such Shares at the
Exercise Date.
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(g) The
Company shall not close its books against the transfer of this
Warrant or of any Share issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely
exercise of this Warrant.
(h) Notwithstanding
any other provision hereof, if an exercise of any portion of this
Warrant is to be made in connection with a public offering, a
Drag-Along Notice (as defined in Section 6 ), a Tag-Along
Notice (as defined in Section 7 ), or a sale of the
Company, the exercise of any portion of this Warrant (and the
payment of the Exercise Price related thereto) shall be conditioned
upon the consummation of the public offering, the transaction which
is the subject of such Drag-Along Notice or Tag-Along Notice, or
such sale of the Company in which case such exercise shall not be
deemed to be effective until the concurrent consummation of such
transaction.
(i) The
Company shall pay all reasonable expenses, taxes (excluding
transfer taxes) and other charges payable in connection with the
preparation, execution and delivery of stock certificates pursuant
to this Section, regardless of the name or names in which such
stock certificates shall be registered. Such stock certificates
shall be delivered within five (5) days of the applicable
Exercise Date.
(j) The
Company will at all times prior to the Expiration Date reserve and
keep available such number of authorized shares of its Common
Stock, solely for the purpose of issue upon the exercise of the
rights represented by this Warrant as may at any time be issuable
upon the exercise of this Warrant and such shares issuable upon the
exercise of this Warrant shall at no time have an aggregate par
value which is in excess of the aggregate Exercise Price.
(k) The
Company may at its option issue fractional Shares, or cash
representing the then current Fair Value of such fractional Shares,
upon any exercise of this Warrant, if appropriate.
Section 3.
Adjustment of Number of Shares and Exercise Price .
The number of shares of Common Stock
underlying the Warrant and the Exercise Price shall be subject to
adjustment from time to time as follows in each applicable
instance. With respect to any determination of adjustments to the
number of shares of Common Stock or the Exercise Price which may be
required by this Section 3 , the Company’s board
of directors shall make a good faith determination regarding any
adjustment; provided that the holders holding a majority of the
Warrant (the "Required Holders") shall be entitled to notify the
Company in accordance with Section 15 herein of their
disagreement with the board of directors’ determination
(other than the determination of Fair Value (as defined in
Section 3(c) below), which shall be determined
exclusively in accordance with the provisions of
Section 3(c) ) of the adjustment within fifteen
(15) days following receipt of the writing setting forth any
such adjustment. If the Company and the Required Holders cannot
resolve such disagreement within ten (10) days of the
Company’s receipt of the Required Holders’ notice of
disagreement, such adjustment shall be determined by an independent
accounting or investment banking firm of recognized national
standing selected by the Company and reasonably acceptable to the
Required Holders. The determination of such accounting or
investment banking firm so made shall be conclusive and binding on
the Company and the Holders. The Company shall pay all expenses of
such
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accounting or investment banking firm if the determination of
such adjustment is five percent (5%) or more greater than (i.e.,
more favorable to the Required Holders than) the determination
previously made by the board of directors; otherwise the Required
Holders shall pay all such expenses.
(a) In
the event of any change in the outstanding Common Stock of the
Company due to stock dividends, consolidations, stock splits or
reverse stock splits, the number of shares of Common Stock
underlying the Warrant and/or the Exercise Price will be
appropriately adjusted, upwards or downwards, so that the Holder
thereafter shall be entitled to purchase the number of shares of
Common Stock consistent with such change at an exercise price that
is proportionate with such change.
(b) If
the Company issues or sells any Additional Stock (as defined in
Section 3(l) below) for a consideration less than Fair
Value (as defined in Section 3(c) herein) as of the
date of execution of the binding written agreement providing for
such issuance or sale, the Exercise Price for the Warrant which was
in effect immediately prior to each such issuance shall be reduced
to the "Diluted Price". The Diluted Price shall be calculated in
accordance with the following formula for any issuance of
Additional Stock in a transaction triggering the rights afforded in
this Section 3(b) (the "Trigger Transaction"). The
product of the per share consideration and the number of shares of
Additional Stock issued in connection with the corresponding
Trigger Transaction shall hereinafter be referred to as the
"Transaction Price". The Diluted
Price shall equal the product of (i) the Exercise Price
(subject to adjustment pursuant to this Section 3 ) and
(ii) the quotient of (x) the number of then outstanding
shares of Common Stock on a fully diluted basis (assuming the
exercise of all outstanding options, rights (including, without
limitation, stock appreciation rights ("SARs")) and warrants and
the conversion into Common Stock of all convertible securities)
plus the number of shares of Additional Stock that would have been
issued for the Transaction Price if the per share consideration in
the Trigger Transaction had been equal to the Fair Value per Share
as of the date of execution of the binding written agreement
providing for the issuance of the Additional Stock, divided by
(y) the number of then outstanding shares of Common Stock on a
fully diluted basis (assuming the exercise of all outstanding
options, rights and warrants and the conversion into Common Stock
of all convertible securities) plus the number of shares of
Additional Stock issued in connection with the Trigger Transaction.
(c)
Fair Value and Current Market Price .
(i) The
"Fair Value", at any given time, shall mean the fair value of the
appropriate security (including, without limitation, any share of
Common Stock), property, assets, business or entity as determined
in good faith by the board of directors of the Company; provided
that in connection with any transaction which (1) has an
aggregate value of One Million Dollars ($1,000,000) or more, (2) is
not based upon a determination of Fair Value set forth in an
appraisal performed by an independent appraiser at the
Company’s request relating to or in connection with the Alion
Science and Technology Corporation Employee Ownership, Savings and
Investment Plan (the "ESOP") that is no more than six
(6) months old, dated from the date of execution of the
appraisal, and (3) is not based upon a determination of Fair
Value as set forth in a fairness opinion performed by an
independent investment banking firm of recognized national standing
at the Company’s request that is no more than six
(6) months old,
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dated from the date of execution of the opinion (provided that
with respect to clauses (2) and (3), no event or events have
occurred between the date of such appraisal or fairness opinion (
i.e. , the date as of which Fair Value is measured by such
appraisal or fairness opinion) and the date of execution of the
binding written agreement providing for the transaction in question
that would cause the Required Holders to reasonably conclude that
the Fair Value at such date of execution is greater than the
determination of Fair Value reflected in such appraisal or fairness
opinion), if, within fifteen (15) days following receipt of
the writing setting forth any such determination of Fair Value (a
copy of which the Company shall deliver to the Holders promptly
after such determination), the Required Holders shall notify the
Company in accordance with Section 15 herein of their
disagreement with such determination (the "Challenged
Determination"), then a new determination of Fair Value shall be
made as of the date of execution of the binding written agreement
providing for the transaction in question (the "Subsequent
Determination"). If clauses (2) or (3) above are
applicable, the Subsequent Determination shall be made by the same
appraiser or investment banking firm that made the Challenged
Determination; otherwise, the Subsequent Determination shall be
made by an independent appraiser or independent investment banking
firm of recognized national standing, selected by the Company and
reasonably satisfactory to the Required Holders, and if the Company
shall not have selected an investment banking firm or appraiser
within thirty (30) days after its receipt of a writing from
the Required Holders containing their disagreement with the board
of directors’ determination, then the Required Holders may
select such investment banking firm or appraiser. The Subsequent
Determination shall be conclusive and binding on the Company and on
the Holders. The Company shall pay all of the expenses incurred in
connection with any Subsequent Determination, including, without
limitation, the expenses of the independent investment banking firm
or appraiser engaged to make such Subsequent Determination, if the
Subsequent Determination is five percent (5%) or more greater than
(i.e., more favorable to the Required Holders than) the Challenged
Determination; otherwise the Required Holders shall pay all such
expenses. Notwithstanding the foregoing, in the case of any
security, if clauses (a), (b) or (c) of the definition of
Current Market Price are applicable to such security, then the Fair
Value of such security shall be the Current Market Price of such
security.
(ii) "Current
Market Price" of any security (including, without limitation, any
share of Common Stock) as of any date herein specified shall mean
the average of the daily closing prices for the twenty
(20) consecutive trading days immediately prior to, but not
including the day in question (or in the event that a security has
been traded for less than twenty (20) days, each of the
trading days prior to the day in question on which such security
has been traded). The closing price for each day shall be
(a) if such security is listed or admitted for trading on any
domestic national securities exchange, the closing sale price of
such security, regular way, or the average of the closing bid and
asked prices thereof if no such sale occurred, in each case as
officially reported on the principal securities exchange on which
such security is listed, or (b) if not reported as described
in clause (a), the closing sale price of such security, or the
average of the closing bid and asked prices thereof if no such sale
occurred, in each case as reported by the Nasdaq National Market,
or any similar system of automated dissemination of quotations of
securities prices then in common use, if so quoted, as reported by
any member firm of the New York Stock Exchange selected by the
Company, or (c) if not quoted as described in clause (b), the
average of the closing bid and asked prices for such security as
reported by the National Quotation Bureau Incorporated or any
similar successor organization, as reported by any member firm of
the New York Stock Exchange selected by the Company.
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(d) No
adjustment of the Exercise Price shall be made in an amount less
than one cent per share, provided that any adjustments that are not
required to be made by reason of this sentence shall be carried
forward and shall be taken into account in any subsequent
adjustment made after the date of the event giving rise to the
adjustment being carried forward.
(e)
Reorganization, Reclassification or Recapitalization of the
Company . If and whenever subsequent to the date hereof the
Company shall effect (i) any reorganization or
reclassification or recapitalization of the capital stock of the
Company (other than in the cases referred to in
Section 3(a) ), (ii) any consolidation or merger
of the Company with or into another Person, (iii) the sale,
transfer or other disposition of the property, assets or business
of the Company as an entirety or substantially as an entirety or
(iv) any other transaction (or any other event shall occur) as
a result of which holders of Shares become entitled to receive any
Common Stock or other securities and/or property of the Company,
any of its Subsidiaries or any other Person (including, without
limitation, cash) with respect to or in exchange for the Shares,
there shall thereafter be deliverable upon the exercise of this
Warrant or any portion thereof (in lieu of or in addition to the
Shares theretofore deliverable, as appropriate) the same number of
shares of Common Stock or other securities and/or the same amount
of property (including, without limitation, cash) to which the
holder of the number of Shares which would otherwise have been
deliverable upon the exercise of this Warrant or any portion
thereof at the time would have been entitled upon such
reorganization or reclassification or recapitalization of capital
stock, consolidation, merger, sale, transfer, disposition or other
transaction or upon the occurrence of such other event, and at the
same aggregate Exercise Price. The term "Person" shall mean an
individual, a corporation, an association, a joint-stock company, a
business trust or other similar organization, a partnership, a
limited liability company, a joint venture, a trust, an
unincorporated organization or a government or any agency,
instrumentality or political subdivision thereof.
Prior
to the consummation of any transaction or event described in the
preceding sentence, the Company shall make equitable, written
adjustments in the application of the provisions set forth herein
for the benefit of the Holder, in a manner reasonably satisfactory
to the Required Holders so that all such provisions shall
thereafter be applicable, as nearly as possible, in relation to any
Shares or other securities or other property thereafter deliverable
upon exercise of the Warrants and so that the holders of the
Warrants will (after exercise) enjoy all of the rights and benefits
enjoyed by any holder of Common Stock in connection with any such
transaction or event, including, without limitation, any subsequent
tender offer or redemption of any such Shares or other securities.
Any such adjustment shall be made by and set forth in a
supplemental agreement of the Company and/or the successor entity,
as applicable, for the benefit of the Holder, and in form and
substance reasonably acceptable to the Required Holders, which
agreement shall bind the Company and/or the successor entity, as
applicable, and all holders of any portion of the Warrant then
outstanding and shall be accompanied by a favorable opinion of the
regular outside counsel to the Company or the successor entity, as
applicable (or such other firm as is reasonably acceptable to the
Required Holders), as to the enforceability of such agreement (with
standard exceptions).
(f)
Determination of Consideration . For the purposes of this
Section 3 , the consideration received or receivable by
the Company for the issuance, sale or grant of shares of Common
Stock, options, warrants, rights or convertible securities,
irrespective of the accounting treatment of such consideration,
shall be valued and determined as follows:
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(i)
Cash Payment . In the case of cash, the gross amount paid by
the purchasers without deduction of any accrued interest or
dividends, any reasonable expenses paid or incurred and any
reasonable underwriting commissions or concessions paid or allowed
by the Company in connection with such issue or sale.
(ii)
Non-Cash Payment . In the case of consideration other than
cash, the Fair Value thereof (in any case as of the date
immediately preceding the issuance, sale or grant in question).
(iii)
Certain Allocations . If shares of Additional Stock are
issued or sold together with other securities or other assets of
the Company for a consideration which covers more than one of the
foregoing categories of securities and assets, the consideration
received or receivable (computed as provided in
Sections 3(f)(i) and 3(f)(ii) ) shall be allocable to
such shares of Additional Stock as reasonably determined in good
faith by the board of directors of the Company (provided such
allocation is set forth in a written resolution and a certified
copy thereof is furnished to the Holder of this Warrant promptly
(but in any event within thirty (30) days following its
adoption).
(iv)
Dividends in Securities . If the Company shall declare a
dividend or make any other distribution upon the Common Stock of
the Company payable in shares of Additional Stock, such shares of
Additional Stock, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued or
sold without consideration.
(v)
Rights and Convertible Securities . The consideration for
which each share of Additional Stock shall be deemed to be issued
upon the execution of the binding written agreement providing for
the issuance or sale of any Additional Stock shall be determined by
dividing (A) the total consideration, if any, received by the
Company as consideration for the Additional Stock, as the case may
be, plus the minimum aggregate amount of additional consideration,
if any, ever payable to the Company upon the exercise of such
Additional Stock, as the case may be, but without deduction of any
accrued interest or dividends, any reasonable expenses paid or
incurred and any reasonable underwriting commissions or concessions
paid or allowed by the Company in connection with such issue or
sale; by (B) the maximum number of shares of Common Stock
issuable upon the exercise of such Additional Stock or attributable
to such Additional Stock.
(vi)
Merger, Consolidation or Sale of Assets . If any shares of
Additional Stock are issued in connection with any merger or
consolidation of which the Company is the surviving corporation,
the amount of consideration therefor shall be deemed to be the Fair
Value of such portion of the assets and business of the
non-surviving corporation as shall be attributable to such
Additional Stock, as the case may be.
(vii)
Consideration for Underlying Shares .
1. The
shares of Common Stock deliverable upon exercise of options or
warrants to purchase or rights to subscribe for Common Stock shall
be deemed to have been issued for a consideration equal to the
consideration (determined in the manner provided in
Section 3(f)(i) and/or Section 3(f)(ii) )
if any, received by the Company upon the issuance of such
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options, warrants or rights plus the minimum exercise price
provided in such options, warrants or rights (without taking into
account potential antidilution adjustments) for the shares of
Common Stock covered thereby.
2. The
shares of Common Stock deliverable upon conversion of, or in
exchange for, any convertible or exchangeable securities or upon
the exercise of options or warrants to purchase or rights to
subscribe for such convertible or exchangeable securities and
subsequent conversion or exchange thereof shall be deemed to have
been issued for a consideration equal to the consideration, if any,
received by the Company for any such securities and related
options, warrants or rights, plus the minimum additional
consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of any
related options, warrants or rights (the consideration in each case
to be determined in the manner provided in
Section 3(f)(i) or Section 3(f)(ii) ).
(g)
Shares Outstanding . The number of shares of Common Stock
deemed to be outstanding at any given time shall not include shares
of Common Stock held by the Company or any Subsidiary of the
Company, but shall include shares of Common Stock held by or in the
name of the ESOP or any trust associated with the ESOP.
(h)
Maximum Exercise Price . At no time shall the Exercise Price
exceed the amount set forth in Section 1 of this
Warrant except as a result of an adjustment thereto pursuant to
this Section 3 .
(i)
Application . All subdivisions of this Section 3
are intended to operate independently of one another. If a
transaction or an event occurs that requires the application of
more than one subdivision, all applicable subdivisions shall be
given independent effect (but without duplication of adjustment).
(j)
Certificates and Notices .
(i)
Adjustments to Exercise Price . As promptly as practicable
(but in any event not later than thirty (30) days) after the
occurrence of any event requiring any adjustment under this
Section 3 to the Exercise Price (or to the number or
kind of securities or other property deliverable upon the exercise
of this Warrant), the Company shall, at its expense, deliver to the
Holder either (i) an officers’ certificate or
(ii) a certificate signed by a firm of independent certified
public accountants of recognized national standing (which may be
the regular auditors of the Company), setting forth in reasonable
detail the events requiring the adjustment and the method by which
such adjustment was calculated and specifying the adjusted Exercise
Price and the number of shares of Common Stock (or other
securities) purchasable upon exercise of this Warrant after giving
effect to such adjustment. The certificate of any such firm of
accountants shall be conclusive and binding evidence for all
purposes, absent manifest error, of the correctness of any
computation made under this Section 3 .
(ii)
Extraordinary Corporate Events . If and whenever the Company
subsequent to the date hereof shall propose to (i) pay any
dividend to the holders of shares of Common Stock or to make any
other distribution to the holders of shares of Common Stock (other
than as a regularly scheduled cash dividend), (ii) offer to
the holders of shares of Common
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Stock rights to subscribe for or purchase any additional shares
of any class of stock or any other rights or options,
(iii) effect any reclassification of the Common Stock or other
shares of the Company (other than a reclassification involving
merely the subdivision or combination of outstanding shares of
Common Stock as provided in Section 3(a) ),
(iv) engage in any reorganization or recapitalization or any
consolidation or merger, (v) consummate any sale, transfer or
other disposition of its property, assets and business as an
entirety or substantially as an entirety, (vi) effect any
other transaction which requires an adjustment to the Exercise
Price (or to the number or kind of securities or other property
deliverable upon the exercise of this Warrant), or
(vii) commence or effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company
shall deliver to the Holder an officers’ certificate giving
notice of such proposed action, specifying (A) the date on
which the stock transfer books of the Company shall close, or a
record shall be taken, for determining the holders of Common Stock
entitled to receive such dividend or other distribution or such
rights or options, or the date on which such reclassification,
reorganization, recapitalization, consolidation, merger, sale,
transfer, other disposition, transaction, liquidation, dissolution
or winding up shall take place or commence, as the case may be, and
(B) the date as of which it is expected that holders of Common
Stock of record shall be entitled to receive securities or other
property deliverable upon such action, if any such date is to be
fixed. Such officers’ certificate shall be delivered in the
case of any action covered by clause (i) or (ii) above,
at least 15 business days prior to the record date for determining
holders of Common Stock for purposes of receiving such payment or
offer, and, in any other case, at least 15 business days prior to
the date upon which such action takes place and 15 business days
prior to any record date to determine holders of Common Stock
entitled to receive such securities or other property.
(k)
Effect of Failure . Failure to give any certificate or
notice, or any defect in any certificate or notice required under
this Section 3 shall not affect the legality or
validity of the adjustment of the Exercise Price or the number of
Shares purchasable upon exercise of this Warrant.
(l)
"Additional Stock" shall mean any shares of Common Stock, warrants
or rights (including, without limitation, SARs) to purchase Common
Stock, or securities convertible into Common Stock, issued or
deemed to have been issued by the Company, other than:
(i) SARs
issued to employees, consultants, officers or directors of the
Company or any of its Subsidiaries with an exercise price no less
than Fair Value, except for such amount of SARs that, at the time
of issuance, would cause the aggregate number of SARs then
outstanding (excluding any SARs that have (x) been exercised,
(y) expired, terminated unexercised, or become unexercisable
or (z) been forfeited or otherwise terminated, surrendered or
canceled) to be in excess of:
two
percent (2%) of the number of then outstanding shares of Common
Stock on a fully diluted basis (assuming the exercise of all
outstanding options, warrants and rights and the conversion into
Common Stock of all convertible securities) at the first
anniversary of the Effective Date;
four
percent (4%) of the number of then outstanding shares of Common
Stock on a fully diluted basis (assuming the exercise of all
outstanding options, warrants and
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rights and the conversion into Common Stock of all convertible
securities) at the second anniversary of the Effective Date;
the
sum of (a) thirty-three thousand (33,000), plus (b) the
amount equal to six percent (6%) of the number of then outstanding
shares of Common Stock on a fully diluted basis (assuming the
exercise of all outstanding options, warrants and rights and the
conversion into Common Stock of all convertible securities), at the
third anniversary of the Effective Date;
the
sum of (a) thirty-three thousand (33,000), plus (b) the
amount equal to nine percent (9%) of the number of then outstanding
shares of Common Stock on a fully diluted basis (assuming the
exercise of all outstanding options, warrants and rights and the
conversion into Common Stock of all convertible securities), at the
fourth anniversary of the Effective Date; and
the
sum of (a) thirty-three thousand (33,000), plus (b) the
amount equal to twelve percent (12%) of the number of then
outstanding shares of Common Stock on a fully diluted basis
(assuming the exercise of all outstanding options, warrants and
rights and the conversion into Common Stock of all convertible
securities), at the fifth anniversary of the Effective Date.
(ii) shares
of Common Stock contributed by the Company to any Company benefit
plan, including, but not limited to, the ESOP ("Company
Contributions"), except for such amount of shares that, at the time
of issuance, would cause the aggregate value of all Company
Contributions (in each case the total value of a Company
Contribution is calculated by multiplying the number of shares of
Common Stock contributed by the Fair Value at the time of such
contribution) to exceed five percent (5%) of the Company’s
aggregate consolidated payroll expenses (i.e., the aggregate
payroll expenses of the Company and any of the Company’s
Subsidiaries substantially all of whose employees are eligible to
participate in such Company benefit plans) from the Effective Date
to the date of such contributions, measured at the end of each plan
year for such Company benefit plans;
(iii) shares
of Common Stock issued to the ESOP in connection with
employees’ purchase of ESOP interests after the Effective
Date via payroll deductions, at a purchase price which is the
lesser of (x) the Fair Value as of the date of issuance of
such Common Stock as determined by an independent appraiser in
connection with the ESOP ("Full Price Employee Contributions"), or
(y) the Fair Value resulting from the immediately preceding
appraisal of the Common Stock performed by an independent appraiser
in connection with the ESOP ("Price Protected Employee
Contributions"), except for such amount of shares that, at the time
of issuance, would cause the aggregate value of all Price Protected
Employee Contributions (in each case the total value of a Price
Protected Employee Contribution shall be the dollar value of the
payroll deduction made in connection with such Price Protected
Employee Contribution) to exceed five percent (5%) of the
Company’s aggregate consolidated payroll expenses (i.e., the
aggregate payroll expenses of the Company and any of the
Company’s Subsidiaries substantially all of whose employees
are eligible to participate in the ESOP) from the Effective Date to
the date of such contributions, measured at the end of each plan
year for the ESOP;
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(iv) shares
of Common Stock, warrants for the purchase of shares of Common
Stock, including but not limited to that certain Amended and
Restated Seller Warrant Agreement, effective as of
December 20, 2002, representing warrant number 4, or any other
securities or property of the Company, issued to the Holder
pursuant to any of its rights or privileges under this Agreement,
the Amended Seller Securities Purchase Agreement, the Junior
Subordinated Second Amended and Restated Seller Note or otherwise;
and
(v) interests
or rights designated as phantom stock issued or granted by the
Company to employees, consultants, officers or directors of the
Company or any of its Subsidiaries in accordance with a phantom
stock plan to be adopted by the Company’s board of directors
after the Effective Date, except for such amount of phantom stock
that, at the time of issuance or grant, would cause the aggregate
number of shares of phantom stock then outstanding (excluding any
shares of phantom stock that have (x) expired, terminated
unexercised or become unexercisable, or (y) been forfeited or
otherwise terminated, surrendered or cancelled) to be in excess of
3,500,000 shares of phantom stock; provided, however, that nothing
in this section 2(l)(v) is intended to authorize, and shall not be
construed as authorizing, any action that would limit or otherwise
contravene the prohibitions and limitations set forth in
Section 11 of the Seller Note Securities Purchase Agreement
Third Amendment that is being executed contemporaneously herewith.
(m) In
the case of the Company’s contribution, after the Effective
Date, of any shares of Common Stock to any Company benefit plan,
including but not limited to the ESOP, the consideration for such
shares shall be deemed to be equal to the Fair Value of such shares
on the date of contribution.
(n)
"Subsidiary" means, with respect to any Person, (i) any
corporation more than fifty percent (50%) of the outstanding
securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or
by one or more of its Subsidiaries or by such Person and one or
more of its Subsidiaries, or (ii) any partnership, limited
liability company, association, joint venture or similar business
organization more than fifty percent (50%) of the ownership
interests having ordinary voting power of which shall at the time
be so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" means a Subsidiary of the
Company.
Section 4.
Call Rights .
(a) Subject
to the terms and conditions of this Section 4 , at any
time on and after August 6, 2013 until and including
September 5, 2013, the Company shall have the right to call
all or any part of the Warrant, and if the Company exercises such
right, the Holder shall be required to sell the amount called to
the Company at a purchase price (the "Call Price") determined in
accordance with Section 4(b) . The Company may exercise
this right multiple times until no portion of the Warrant remains
outstanding.
(b) The
"Call Price" is equal to the product of (i) the number of
shares of Common Stock underlying the Warrant or the portion
thereof being purchased pursuant to this Section 4 ,
and (ii) the difference between the Call Fair Value (as
defined below) on the date of the Call Notice (as defined below)
and the current Exercise Price on the date of the Call Notice;
provided
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that notwithstanding the foregoing, in no event shall the Call
Price be less than zero (0). So long as the ESOP is still in
existence, the "Call Fair Value" shall equal the per share value of
the Common Stock as set forth in the then most recent appraisal
performed by an independent appraiser at the Company’s
request in connection with the ESOP. As of any such date on which
the call right is exercised by the Company that the ESOP is no
longer in existence, the "Call Fair Value" shall equal the Fair
Value of the Common Stock. Notwithstanding the foregoing, whether
or not the ESOP is in existence, if clauses (a), (b) or
(c) of the definition of Current Market Price are applicable
to the Common Stock but no Qualified Public Offering (as defined
below) has occurred, then the Call Fair Value shall be the Current
Market Price of the Common Stock on the date of the Call Notice.
(c) Prior
to exercising its call rights under this Section 4, the
Company must deliver written notice to the Holder (the "Call
Notice"), in accordance with Section 15 , of its intent
to purchase the Warrant or the portion thereof being purchased, as
the case may be. The Call Notice shall be deemed to be given and
served on the date that the Company sends the Call Notice to the
Holder (the "Call Election Date") and shall be irrevocable.
(d) Payment
of the Call Price shall be made in cash in immediately available
funds within thirty (30) days after the date of the Call
Election Date, but not later than the Exercise Date.
(e) If
the Company has received an Exercise Notice from the Holder prior
to the Company’s delivery of a Call Notice to the Holder,
then such Call Notice shall take priority over such Exercise Notice
until the expiration of the dates set forth in
Section 4(d) . If the Company does not purchase the
portion of the Warrant subject to the Call Notice on or prior to
the appropriate date set forth in Sec
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