Execution
Copy


 


Exhibit
4(c)(vii)


 


WARRANT AGREEMENT


 


Dated as of March
26, 2003


 


by and among


 


BROADWING INC.,


 


GS MEZZANINE
PARTNERS II, L.P.,


 


GS MEZZANINE
PARTNERS II OFFSHORE, L.P., and


 


OTHER PURCHASERS
NAMED HEREIN


 

















 


WARRANT
AGREEMENT


 


TABLE
OF CONTENTS*


 


	
  SECTION
  1.

  	
  DEFINITIONS

  
	
   

  	
   

  
	
  SECTION
  2.

  	
  WARRANT
  CERTIFICATES

  
	
   

  	
   

  
	
  SECTION
  3.

  	
  ISSUANCE
  OF WARRANTS

  
	
   

  	
   

  
	
  SECTION
  4.

  	
  EXECUTION
  OF WARRANT CERTIFICATES

  
	
   

  	
   

  
	
  SECTION
  5.

  	
  REGISTRATION

  
	
   

  	
   

  
	
  SECTION
  6.

  	
  REGISTRATION
  OF TRANSFERS AND EXCHANGES

  
	
   

  	
   

  
	
  SECTION
  7.

  	
  TERMS
  OF WARRANTS; EXERCISE OF WARRANTS

  
	
   

  	
   

  
	
  SECTION
  8.

  	
  PAYMENT
  OF TAXES

  
	
   

  	
   

  
	
  SECTION
  9.

  	
  MUTILATED
  OR MISSING WARRANT CERTIFICATES

  
	
   

  	
   

  
	
  SECTION
  10.

  	
  RESERVATION
  OF WARRANT SHARES

  
	
   

  	
   

  
	
  SECTION
  11.

  	
  ADJUSTMENT
  OF NUMBER OF WARRANT SHARES

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Adjustments for Change in Common Stock

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Adjustment for Rights Issue

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Adjustments for Issuances

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Superseding Adjustment

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Adjustment for Other Distributions

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Current Market Price

  
	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  No Amendments

  
	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Voluntary Increases

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  When De Minimis Adjustment May Be Deferred

  
	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Consolidation, Merger, Reorganization or Recapitalization
  of the Company

  
	
   

  	
   

  	
   

  
	
   

  	
  (k)

  	
  Consideration Received

  
	
   

  	
   

  	
   

  
	
   

  	
  (l)

  	
  When Issuance or Payment May Be Deferred

  
				



 












*                                       This
Table of Contents does not constitute a part of this Agreement or have any
bearing upon the interpretation of any of its terms or provisions.


 


i

















 


	
   

  	
  (m)

  	
  Form of Warrants

  
	
   

  	
   

  	
   

  
	
   

  	
  (n)

  	
  Adjustment in Exercise Price

  
	
   

  	
   

  	
   

  
	
   

  	
  (o)

  	
  No Dilution or Impairment.

  
	
   

  	
   

  
	
  SECTION
  12.

  	
  VALUATION
  BY INDEPENDENT FINANCIAL EXPERT

  
	
   

  	
   

  
	
  SECTION
  13.

  	
  FRACTIONAL
  INTERESTS

  
	
   

  	
   

  
	
  SECTION
  14.

  	
  NOTICES
  TO WARRANT HOLDERS; RIGHTS OF WARRANT 
  HOLDERS.

  
	
   

  	
   

  
	
  SECTION
  15.

  	
  NOTICES

  
	
   

  	
   

  
	
  SECTION
  16.

  	
  SUPPLEMENTS
  AND AMENDMENTS

  
	
   

  	
   

  
	
  SECTION
  17.

  	
  SUCCESSORS

  
	
   

  	
   

  
	
  SECTION
  18.

  	
  TERMINATION

  
	
   

  	
   

  
	
  SECTION
  19.

  	
  GOVERNING
  LAW

  
	
   

  	
   

  
	
  SECTION
  20.

  	
  BENEFITS
  OF THIS AGREEMENT

  
	
   

  	
   

  
	
  SECTION
  21.

  	
  HEADINGS

  
	
   

  	
   

  
	
  SECTION
  22.

  	
  SUBMISSION
  TO JURISDICTION

  
	
   

  	
   

  
	
  SECTION
  23.

  	
  WAIVER
  OF JURY TRIAL

  
	
   

  	
   

  
	
  SECTION
  24.

  	
  SERVICE
  OF PROCESS

  
	
   

  	
   

  
	
  SECTION
  25.

  	
  COUNTERPARTS

  
	
   

  	
   

  
	
  EXHIBIT A.

  	
  FORM OF WARRANT CERTIFICATE

  
	
   

  	
   

  
	
  EXHIBIT B.

  	
  FORM OF TRANSFER

  
	
   

  	
   

  
	
  SCHEDULE A

  	
  ISSUANCE OF WARRANTS

  
				



 


ii

















 


WARRANT AGREEMENT, dated
as of March 26, 2003, by and between Broadwing Inc., an Ohio corporation (the “Company”),
GS Mezzanine Partners II, L.P., a Delaware limited partnership (“GS
Mezzanine”), GS Mezzanine Partners II Offshore, L.P. (“GS Offshore”),
an exempted limited partnership organized under the laws of the Cayman Islands,
and any other affiliate of GS Mezzanine who purchases the Offered Securities
(as defined in the Purchase Agreement) being issued under the Purchase Agreement
at the Closing (as defined in the Purchase Agreement) (together with GS
Mezzanine, GS Offshore and one or more partnerships, corporations, trusts or
other organizations specified as a Purchaser in Schedule 1 to the Purchase
Agreement which controls, is controlled by, or is under common control with, GS
Mezzanine or GS Offshore, the “GS Purchasers”), and any other person
specified as a Purchaser in Schedule 1 to the Purchase Agreement (together with
the GS Purchasers, the “Purchasers”).


 


RECITALS


 


WHEREAS, the Company and the parties listed on the
signature pages thereof have entered into a Purchase Agreement, dated as of
December 9, 2002 (as amended, supplemented or modified from time to time, the “Purchase
Agreement”), with the Purchasers, pursuant to which the Company has agreed
to issue and sell to the Purchasers (i) $441,628,051.27 principal amount at
maturity of the Company’s Senior Subordinated Discount Notes due 2009 (the “Notes”),
to be issued pursuant to an Indenture, dated the date hereof, by and between
the Company and a trustee reasonably satisfactory to the Company and the
Purchasers (as amended, supplemented or modified from time to time, the “Indenture”)
and (ii) 17,500,000 warrants (such warrants and all warrants issued in
exchange, substitution or replacement therefor, the “Warrants”) to
purchase shares of common stock, par value $.01 per share, of the Company (the
“Common Stock”) at an exercise price of $3.00 per share (each Warrant
representing on the Closing Date the right to purchase one share of Common
Stock); and


 


WHEREAS, the parties hereto desire to enter into this
Agreement in order to set forth the terms and conditions of the Warrants.


 


NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereto agree as follows:


 


SECTION 1.                                          DEFINITIONS


 


As used in this Agreement, the following capitalized
terms will have the respective meanings:


 


“Agreement” and all references thereto means
this Agreement as it may from time to time be amended, supplemented or
modified.


 


“Applicable Share” shall have the meaning set
forth in Section 11(f).


 


“Board” means the Board of Directors of the
Company.


 


1

















 


“Capital Stock” of any Person means any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) equity of such
Person, including any Preferred Stock, but excluding any debt securities
convertible into such equity.


 


“Closing” shall have the meaning set forth in
the Purchase Agreement.


 


“Closing Date” shall have the meaning set forth
in the Purchase Agreement.


 


“Commission” means the Securities and Exchange
Commission.


 


“Common Stock” shall have the meaning set forth
in the Recitals.


 


“Conversion Right” shall have the meaning set
forth in Section 7.


 


“Current Market Price” shall have the meaning
set forth in Section 11(f).


 


“Exercise Price” shall have the meaning set
forth in Section 7.


 


“Exercise Rate” shall have the meaning set
forth in Section 11.


 


“GS Mezzanine” shall have the meaning set
forth in the preamble to this Agreement.


 


“Company” shall have the meaning set forth in
the preamble to this Agreement.


 


“Expiration Date” means the tenth anniversary
of the Closing Date or, if such day is not a business day, the next succeeding
business day.


 


“Indenture” shall have the meaning set forth in
the Recitals.


 


“Independent Financial Expert” shall have the
meaning set forth in Section 12.


 


“Independent Expert” shall have the meaning set
forth in Section 12.


 


“Notes” shall have the meaning set forth in the
Recitals.


 


“Person” means any individual, corporation,
partnership, limited liability company, association, joint venture, trust,
unincorporated organization, government or any agency or political subdivision
thereof or other entity.


 


“Purchase Agreement” shall have the meaning set
forth in the Recitals.


 


“Purchasers” shall have the meaning set forth
in the Recitals.


 


“Register Office” shall have the meaning set
forth in Section 6.


 


“Securities Act” means the Securities Act of
1933, as amended.


 


2

















 


“Senior Financial Officer” means the chief
financial officer, principal accounting officer, treasurer or controller of the
Company.


 


“Transaction” shall have the meaning set forth
in Section 11(j).


 


“Transfer Agent” shall have the meaning set
forth in Section 10.


 


“Transfer Notice” shall have the meaning set
forth in Section 6.


 


“Value Report” shall have the meaning set forth
in Section 12.


 


“Warrant holder(s)” or “holders of Warrant
certificates” means, in each case, registered holders of Warrant
certificates.


 


“Warrants” shall have the meaning set forth in
the Recitals.


 


“Warrant Shares” means shares of Common Stock
issuable upon exercise of the Warrants or which have been issued upon the
exercise of the Warrants.


 


SECTION 2.                                          WARRANT
CERTIFICATES


 


The Warrant certificates to be issued and delivered
pursuant to this Agreement shall be in registered form only and shall be
substantially in the form set forth in Exhibit A attached hereto.


 


SECTION 3.                                          ISSUANCE OF
WARRANTS


 


The Company, simultaneously with the Closing, shall
deliver to each Purchaser duly executed Warrant certificates registered in the
name of each Purchaser for the purchase of the number of Warrant Shares set
forth opposite the name of such Purchaser on Schedule A to this
Agreement.


 


SECTION 4.                                          EXECUTION OF
WARRANT CERTIFICATES


 


Warrant certificates evidencing Warrants, each Warrant
to purchase initially one share of Common Stock, shall be duly executed, on the
Closing Date, by the Company and delivered to the registered holders of the
Warrants in accordance with the provisions of Section 3.  Warrant certificates shall be signed on
behalf of the Company by its Chairman of the Board, or its President or a Vice
President and by its Secretary or an Assistant Secretary under its corporate
seal.  Each such signature upon the
Warrant certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
certificates and, for that purpose, the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant certificates shall be delivered or disposed of such
Person shall have ceased to hold such office. 
In case any officer of the Company who shall have signed any of the
Warrant certificates shall cease to be such officer


 


3

















 


before such Warrant certificates shall have been
delivered or disposed of by the Company, such Warrant certificates nevertheless
may be delivered or disposed of as though such Person had not ceased to be such
officer of the Company.  Any Warrant
certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Warrant certificate, shall be a proper
officer of the Company to sign such Warrant certificate, although at the date
of the execution of this Agreement any such Person was not such an officer.


 


SECTION 5.                                          REGISTRATION


 


The Company shall number and register the Warrant
certificates in a register as they are issued by the Company.  The Company may deem and treat the
registered holder(s) of the Warrant certificates as the absolute owner(s)
thereof (notwithstanding any notation of ownership or other writing thereon
made by anyone) for all purposes, and the Company shall not be affected by any
notice to the contrary.


 


SECTION 6.                                          REGISTRATION OF
TRANSFERS AND EXCHANGES


 


The Company shall cause to be kept at its principal
office (the “Register Office”) a register in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Warrant certificates and of transfers or exchanges of Warrant
certificates at the Warrant holder’s option. 
The Company shall promptly register the transfer of any outstanding
Warrant certificates, upon the records to be maintained by it for that purpose,
upon surrender thereof.  Upon any such
registration of transfer, a new Warrant certificate shall be issued to the
transferee(s) and the surrendered Warrant certificate shall be canceled by the
Company.  Canceled Warrant certificates
shall thereafter be disposed of in a manner satisfactory to the Company in
accordance with any applicable laws. 
Whenever any Warrant certificates are surrendered for exchange, the
Company shall execute and deliver the Warrant certificates that the Warrant
holder making the exchange is entitled to receive.  All Warrant certificates issued upon any registration of transfer
or exchange of Warrant certificates in accordance with the provisions of this Section
6 shall be the valid obligations of the Company, evidencing the same
obligations and entitled to the same benefits under this Agreement, as the
Warrant certificates surrendered for such registration of transfer or
exchange.  Every Warrant certificate
surrendered for registration of transfer or exchange shall (if so required by
the Company) be duly endorsed, or be accompanied by a written instrument of
transfer in the form of Exhibit B attached hereto, duly executed by the
Warrant holder or its attorney duly authorized in writing.  No service charge will be made for any
registration of transfer or exchange upon surrender of Warrant certificates or
any issuance of Warrant certificates pursuant to Section 3 or this Section 6,
but the Company may require payment of a sum sufficient to cover any stamp or
other governmental charge or tax which may be imposed in connection with any
such transfer or exchange.  Any Warrant
certificate when duly endorsed in blank (with signature guaranteed) shall be
deemed negotiable.  The holder of any
Warrant certificate duly endorsed in blank may be treated by the Company and
all other Persons dealing therewith as the absolute owner thereof for any
purpose and as the Person entitled to exercise the rights represented thereby,
or to the transfer thereof on the register of Warrants maintained by the
Company, any notice to the contrary notwithstanding; but until such transfer on
such register, the Company may treat the registered Warrant holder as the owner
for all purposes.  In addition to any
other legend which may be required by applicable law, each


 


4

















 


Warrant certificate representing Warrants and each
certificate representing Warrant Shares issued upon exercise of the Warrant
shall have endorsed, to the extent appropriate, upon its face the following
words:


 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS
OF ANY JURISDICTION.  SUCH SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER
SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM
REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO
THE DISPOSITION OF SECURITIES, INCLUDING RULE 144, SUBJECT TO THE COMPANY’S
RIGHT, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO THIS CLAUSE (II),
TO REQURE THE DELIVERY OF AN OPINION OF COUNSEL.


 


Prior to any transfer or attempted transfer of any
Warrants, the holder of such Warrants shall give 10 days’ prior written notice
(a “Transfer Notice”) to the Company of such holder’s intention to
effect such transfer, describing the manner and circumstances of the proposed
transfer, and, if requested by the Company, obtain from counsel to such holder,
who shall be reasonably satisfactory to the Company, an opinion that the
proposed transfer of such Warrants may be effected without registration under
the Securities Act, unless such requirement is waived by the Company.  After receipt of the Transfer Notice and
opinion (unless waived by the Company), the Company shall, within five days
thereof, so notify the holder of such Warrants and such holder shall thereupon,
subject to compliance with the other restrictions on transfer contained herein,
be entitled to transfer such Warrants, in accordance with the terms of the
Transfer Notice.  Each Warrant issued
upon such transfer shall bear the restrictive legend with respect to the
Securities Act set forth above, unless, in the opinion of counsel to such
holder (which opinion must be reasonably satisfactory to the Company and its
counsel), such legend is not required in order to ensure compliance with the
Securities Act.  The holder of the
Warrants giving the Transfer Notice shall not be entitled to transfer such Warrants
until receipt of notice from the Company under this Section 6.


 


SECTION 7.                                          TERMS OF
WARRANTS; EXERCISE OF WARRANTS


 


Subject to the terms of this Agreement, the Warrants
may be exercised at any time after the date hereof and prior to the close of
business on the Expiration Date; provided, however, that holders
of Warrants will be able to exercise their Warrants only if the exercise of
such Warrants is exempt from the registration requirements of the Securities
Act, and the Warrant Shares are qualified for sale or exempt from qualification
under the applicable securities laws of the states or other jurisdictions in
which such holders reside.  Each
Warrant, when exercised in accordance with the terms hereof and upon payment in
cash (or by tendering the Notes, as


 


5

















 


provided in the next succeeding paragraph) of the
exercise price of $3.00 (as adjusted pursuant to Section 11(n)) per
share for the Common Stock (the “Exercise Price”) will entitle the
holder thereof to acquire from the Company (and the Company shall issue to such
holder of a Warrant) one fully paid and nonassessable share of each of the
Company’s authorized but unissued Common Stock (subject to adjustment as
provided in Section 11).  No cash
dividend shall be paid to a holder of Warrant Shares issuable upon the exercise
of Warrants unless such holder was, as of the record date for the declaration
of such dividend, the record holder of such Warrant Shares.


 


A Warrant may be exercised upon surrender to the
Company at the Register Office of the certificate or certificates evidencing
the Warrants to be exercised with the form of election to purchase on the
reverse thereof duly filled in and signed, together with payment to the Company
of the Exercise Price for each Warrant Share issuable upon the exercise of such
Warrants.  To the extent any holder of a
Warrant surrenders with such Warrant any Note then held by such holder, such
holder shall be deemed to have paid that portion of the aggregate Exercise
Price for all Warrant Shares then exercised equal to 100% of that portion of
the Accreted Value (as defined in the Indenture) of such Note that the holder
thereof directs the Company to accept as payment of such aggregate Exercise
Price, which Note shall be cancelled and not reissued.  To the extent the Accreted Value of such
tendered Note is greater than the aggregate amount of the Exercise Price for
all Warrant Shares then exercised paid by surrender thereof, the Company shall
deliver a new Note to the tendering holder thereof, in accordance with the
provisions of the Indenture, dated the date of the original issuance of the
tendered Note, in the face amount which bears the same proportion to the face
amount of such tendered Note immediately prior to such redemption as the
unredeemed portion of the Accreted Value of such tendered Note bears to the
Accreted Value of such tendered Note immediately prior to such redemption.  At the time of the issuance of the Warrant
Shares pursuant to the exercise of the Warrants by any holder, the Company
shall pay all accrued and unpaid interest on any Note of such holder cancelled
pursuant to this paragraph up to but excluding the date of such issuance.


 


In lieu of payment of the Exercise Price pursuant to
the preceding paragraph, the Warrant holder shall have the right to require the
Company to convert the Warrants, in whole or in part and at any time or times
(the “Conversion Right”), into Warrant Shares by surrendering to the
Company the certificate or certificates evidencing the Warrant to be converted
with the form of notice of conversion on the reverse thereof duly filled in and
signed.  Upon exercise of the Conversion
Right, the Company shall deliver to the Warrant holder (without payment by the
holder of the Warrant of any Exercise Price) that number of Warrant Shares
which is equal to the quotient obtained by dividing (x) the value of the
number of Warrants being exercised at the time the Warrants are exercised
(determined by subtracting the aggregate Exercise Price for all such Warrants
immediately prior to the exercise of the Warrants from the aggregate Current
Market Price (determined pursuant to Section 11(f)) of that number of
Warrant Shares purchasable upon exercise of such Warrants immediately prior to
the exercise of the Warrants (taking into account all applicable adjustments
pursuant to Section 11) by (y) the Current Market Price of one
share of Common Stock immediately prior to the exercise of the Warrants.


 


Subject to the provisions of Section 8,
upon surrender of the Warrant certificate or certificates, the Company shall
issue and deliver with all reasonable dispatch, to or upon the


 


6

















 


written order of the Warrant holder and in such name
or names as the Warrant holder may designate, a certificate or certificates for
the number of Warrant Shares issuable or other securities or property to which
such holder is entitled hereunder upon the exercise of such Warrants,
including, at the Company’s option, any cash payable in lieu of fractional
interests as provided in Section 13.  Such certificate or certificates shall be deemed to have been
issued and any Person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the
surrender of such Warrants and payment of the Exercise Price.  The Company may issue fractional shares of
Common Stock upon exercise of any Warrants in accordance with Section 13.


 


The Warrants shall be exercisable, at the election of
the holders thereof, either in full or from time to time in part and, in the
event that a certificate evidencing Warrants is exercised in respect of fewer
than all of the Warrant Shares issuable on such exercise at any time on or
prior to the Expiration Date, a new certificate evidencing the remaining
Warrant or Warrants will be issued, and the Company will duly execute and
deliver the required new Warrant certificate or certificates pursuant to the
provisions of Section 4 and this Section 7.


 


All Warrant certificates surrendered upon exercise of
Warrants shall be canceled by the Company. 
Such canceled Warrant certificates shall then be disposed of in a manner
satisfactory to the Company and in accordance with any applicable law.  The Company shall account promptly in
writing with respect to Warrants exercised and all monies received for the
purchase of the Warrant Shares through the exercise of such Warrants.  In the event that the Company shall purchase
or otherwise acquire Warrants, the Company may elect to have the Warrants
canceled and retired.  The Company shall
keep copies of this Agreement and any notices given or received hereunder
available for inspection by the registered Warrant holders during normal
business hours and upon reasonable notice at the Register Office.


 


SECTION 8.                                          PAYMENT OF TAXES


 


The Company will pay all taxes and other governmental
charges attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall
not be required to pay any such taxes or charges which may be payable in
respect of any transfer involved in the issue of any Warrant certificates or
any certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant certificate surrendered upon the exercise of a Warrant, and
the Company shall not be required to issue or deliver such Warrant certificates
unless or until the Person or Persons requesting the issuance thereof shall
have paid to the Company the amount of such taxes or charges or shall have
established to the satisfaction of the Company that such taxes or charges have
been paid.


 


SECTION 9.                                          MUTILATED OR
MISSING WARRANT CERTIFICATES


 


In case any of the Warrant certificates shall be
mutilated, lost, stolen or destroyed, the Company may in its discretion issue
in exchange and substitution for and upon cancellation of the mutilated Warrant
certificate, or in lieu of and substitution for the Warrant certificate lost,
stolen or destroyed, a new Warrant certificate of like tenor and representing
an equivalent number of Warrants, but only upon receipt of evidence
satisfactory to the Company of such loss,


 


7

















 


theft or destruction of such Warrant certificate and
indemnity and security therefor, if requested, also satisfactory (provided
that if the Warrant holder is a Purchaser or another Warrant holder with a
minimum net worth of at least $50,000,000, such Person’s own unsecured
agreement of indemnity shall be deemed to be satisfactory) to the Company.  Applicants for such substitute Warrant
certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe.


 


SECTION 10.                                    RESERVATION OF
WARRANT SHARES


 


The Company will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Stock or its authorized Common Stock held in its treasury,
that number of shares of Common Stock sufficient for the purpose of enabling it
to satisfy any obligation to issue Warrant Shares upon the exercise of all
outstanding Warrants.


 


The transfer agent for the Common Stock (which may be
the Company if it is acting as transfer agent) (the “Transfer Agent”)
and every subsequent transfer agent for any shares of the Company’s equity
issuable upon the exercise of any Warrants will be irrevocably authorized and
directed at all times to reserve such number of authorized shares as shall be
required for such purpose.  The Company
will keep a copy of this Agreement on file with the Transfer Agent for any
shares of the Company’s equity issuable upon the exercise of the Warrants.  The Company will supply such Transfer Agent
with duly executed stock certificates for purposes of honoring all outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement
and the Company will provide or otherwise make available any cash which may be
payable as provided in Section 13. 
The Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto which are transmitted to each
Warrant holder pursuant to Section 14.


 


The Company covenants that all Warrant Shares which
may be issued upon exercise of Warrants have been duly authorized and will,
upon payment of the Exercise Price or upon the exercise of the Conversion Right
and issuance, be duly and validly issued, fully paid and nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof.


 


SECTION 11.                                    ADJUSTMENT OF
NUMBER OF WARRANT SHARES


 


Each Warrant will initially be exercisable by the
holder thereof into one share of Common Stock. 
The number of Warrant Shares that may be purchased upon the exercise of
each Warrant (the “Exercise Rate”) will be subject to adjustment from
time to time upon the occurrence of the events enumerated in this Section 11.  For purposes of this Section 11, the Common
Stock shall mean shares now or hereafter authorized of any class of common
stock of the Company, however designated, that has the right (subject to any
prior rights of any class or series of preferred stock) to participate in any
distribution of the assets or earnings of the Company without limit as to per
share amount.


 


(a)                                  Adjustments for Change in Common Stock.  If at any time after the date of 


 


8

















 


this Agreement the Company:


 


(1)                                  pays
a dividend or makes a distribution on its Common Stock exclusively in shares of
its Common Stock;


 


(2)                                  subdivides
its outstanding shares of Common Stock into a greater number of shares;


 


(3)                                  combines
its outstanding shares of Common Stock into a smaller number of shares;


 


(4)                                  issues
by reclassification of its Common Stock any Capital Stock of the Company; or


 


(5)                                  pays
a dividend or makes a distribution on its Common Stock in shares of its Capital
Stock other than Common Stock;


 


then the Exercise Rate in effect immediately prior to
such action shall be proportionately adjusted upon occurrence of such event so
that the holder of any Warrant thereafter exercised may receive the aggregate
number and kind of shares of equity of the Company which such holder would have
owned immediately following such action if such Warrant had been exercised
immediately prior to such action (or, in the case of a dividend or distribution
of Common Stock, immediately prior to the record date therefor).  An adjustment made pursuant to this Section
11(a) shall become effective immediately after the distribution date,
retroactive to the record date therefor in the case of a dividend or
distribution in shares of Common Stock or other shares of its equity, and shall
become effective immediately after the effective date in the case of a
subdivision, combination or reclassification. 
If upon exercise of a Warrant after an adjustment to the Exercise Rate
pursuant to clauses (4) or (5) of this Section 11(a),
the holder of such Warrant may receive shares of two or more classes or series
of equity of the Company, the exercise rights and the Exercise Rate of each
class of equity shall thereafter be subject to further adjustment on terms
comparable to those applicable to the Common Stock in this Section 11.  The adjustment pursuant to this
Section 11(a) shall be made successively each time that any event
listed in this Section 11(a) above shall occur.


 


(b)                                 Adjustment for Rights Issue.  In case the Company shall issue to all
holders of Common Stock (other than a distribution covered by any of paragraphs
(a) or (c) of this Section 11), or shall make a dividend
or other distribution on the Common Stock, consisting exclusively of (i)
rights, options or warrants entitling the holders thereof to subscribe for or
purchase Common Stock (provided, however, that no adjustment
shall be made under Section 11(b) or (c) upon the exercise of such
rights, options or warrants) or (ii) securities convertible into or
exchangeable for Common Stock (including, without limitation, any rights
issuance concurrent with the issuance of Warrants) (provided, however, that no
adjustment shall be made under Section 11(b) or (c) upon the
conversion or exchange of such securities (other than issuances specified in
(i) or (ii) which are made as the result of anti-dilution adjustments in such


 


9

















 


securities)) at a price per share (determined in the
case of such rights, options, warrants or convertible or exchangeable
securities, by dividing (x) the total consideration payable to the Company
upon exercise, conversion or exchange of such rights, options, warrants or convertible
or exchangeable securities, by (y) the total number of shares of such
class or series of Common Stock covered by such rights, options, warrants or
convertible or exchangeable securities) less than the Current Market Price (as
determined in accordance with paragraph (f) of this Section 11)
on the date fixed for the determination of shareholders entitled to receive
such rights, options, or warrants or convertible or exchangeable securities
(other than in connection with the adoption of a shareholders rights plan by
the Company), the number of Warrant Shares for which each Warrant may be
exercised shall be determined (and the Exercise Rate shall be appropriately
adjusted) by multiplying the number of Warrant Shares issuable upon exercise of
such Warrant immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to receive such rights, options or
warrants, or convertible or exchangeable securities, by a fraction (not less
than one) the numerator of which shall be the number of fully diluted shares of
Common Stock outstanding immediately after giving effect to such dividend or
other distribution (and assuming that such rights, options, warrants or
convertible or exchangeable securities had been fully exercised or converted,
as the case may be) and the denominator of which shall be the number of fully
diluted shares of Common Stock outstanding at the close of business on the date
fixed for the determination of shareholders entitled to receive such rights,
options, or warrants or convertible or exchangeable securities plus the number
of shares of Common Stock which the aggregate consideration (as determined in
good faith by the Board) that would be received by the Company for the
additional shares of Common Stock to be issued, purchased or subscribed for
upon exercise of such rights, options or warrants or upon conversion or
exchange of such convertible or exchangeable securities would purchase at the
Current Market Price (as determined in accordance with paragraph (f) of
this Section 11) on the date fixed for the determination of shareholders
entitled to receive such rights, options or warrants, or convertible or
exchangeable securities.  For the
purposes of this paragraph (b), the number of shares of Common Stock at any
time outstanding shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of Common Stock.


 


(c)                                  Adjustments for Issuances.  In case the Company shall issue (and no
prior adjustments for such issuance has been made under Section 11(a) or
Section 11(b)) Common Stock or rights, options or warrants entitling the
holders thereof to subscribe for or purchase Common Stock or securities
convertible into or exchangeable for Common Stock for a consideration per share
of Common Stock (determined in the case of such rights, options, warrants or
convertible or exchangeable securities, by dividing (x) the total amount
receivable by the Company in consideration of the sale and issuance of such
rights, options, warrants or convertible or exchangeable securities, plus the
total consideration payable to the Company upon exercise, conversion or
exchange thereof, by (y) the total number of shares of Common Stock
covered by such rights, options, warrants or convertible or exchangeable securities)
less than the Current Market Price (as determined in accordance with paragraph (f)
of this Section 11), the number of Warrant Shares for which each Warrant
may be exercised shall be determined (and the Exercise Rate shall be
appropriately adjusted) by multiplying the number of Warrant Shares issuable
immediately prior to the close of business on the date on which the Company
fixes the offering price of such additional shares by a fraction (not less than
one) the numerator of which


 


10

















 


shall be the number of fully diluted shares of Common
Stock outstanding immediately after giving effect to such issuance (and
assuming, in the case of rights, options, warrants or convertible or
exchangeable securities that such rights, options, warrants or convertible or
exchangeable securities had been fully exercised or converted, as the case may
be) and the denominator of which shall be the number of fully diluted shares of
Common Stock outstanding at the close of business on the date on which the
Company fixes the offering price of such additional shares plus a number of
shares of Common Stock which the aggregate consideration (as determined in good
faith by the Board) that would be received by or payable to the Company for the
additional shares of Common Stock so issued or sold or to be issued, purchased
or subscribed for upon exercise of such rights, options or warrants or upon
conversion or exchange of such convertible or exchangeable securities would
purchase at the Current Market Price (as determined in accordance with
paragraph (f) of this Section 11) on the date on which the
Company fixes the offering price of such additional shares; provided
that, in the event that the Company issues equity securities as part of a share
with debt securities, the allocation of the purchase price shall be determined
in good faith by the Board.  The
increase in the number of Warrant Shares provided for in the preceding sentence
shall not apply upon (i) the issuance of securities in transactions
described in paragraphs (a),  (b) or (k) of this Section
11 or pursuant to the exercise, exchange or conversion of any such
securities issued under this paragraph (c); (ii) the issuance of Common
Stock or other equity securities of the Company in any merger or other
acquisition of a business approved by the Board; (iii) the issuance of
Common Stock in a bona fide underwritten public offering; (iv) the issuance of
Common Stock upon the exercise of Warrants; (v) the issuance of options or rights
to acquire Common Stock or Common Stock equivalents (including, without
limitation, pursuant to the exercise of such options or rights) pursuant to a
compensatory equity plan adopted by the Board; (vi) the issuance of options or
rights to acquire Common Stock or Common Stock equivalents (including, without
limitation, pursuant to the exercise of such options or rights) to (1) lessors,
financial institutions or similar entities in transactions approved by the
Board, the principal purpose of which is not raising capital through the sale
of equity securities, or (2) other Persons primarily for the purpose of joint
ventures, technology or other licensing or research and development activities,
or other transactions the principal purpose of which is not raising capital
through the sale of equity securities, provided that the number of Common Stock
equivalents exempted pursuant to this clause (vi) shall not exceed 10,000,000
shares of Common Stock (appropriately adjusted for stock splits, combinations
and the like); or (vii) conversion of Convertible Subordinated Notes (as
defined in the Indenture) into Common Stock at a conversion price and a
conversion rate set forth in the Convertible Subordinated Indenture (as defined
in the Indenture) as in effect on the date hereof.


 


(d)                                 Superseding Adjustment.  If, at any time (x) after any
adjustment in the number of shares issuable upon exercise of the Warrants shall
have been made pursuant to Section 11(b) or 11(c) on the
basis of the issuance of rights, options or warrants entitling the holders
thereof to subscribe for or purchase Common Stock or securities convertible
into or exchangeable for Common Stock, or (y) after new adjustments in the
number of shares issuable upon exercise of the Warrants shall have been made
pursuant to this Section 11(d),


 


(i)                                     the
right of conversion, exercise or exchange in such rights, options or warrants,
or convertible or exchangeable securities shall expire, and the right of


 


11

















 


conversion, exercise or exchange in respect of any or
all of such rights, options or warrants, or convertible or exchangeable
securities shall not have been exercised, and/or


 


(ii)                                  the
consideration per share for which shares of Common Stock are issuable pursuant
to the terms of such rights, options or warrants, or convertible or
exchangeable securities shall be increased or decreased by virtue of provisions
therein or by virtue of the conversion rate or exchange rate of such security
being changed contained for an automatic increase or decrease in such
consideration per share upon the arrival of a specified date or the happening
of a specified event or by agreement between the Company and the holders of
such securities,


 


such previous adjustment shall be rescinded and annulled.  Thereupon, a recomputation shall be made of
the effect of such rights, options or warrants, or convertible or exchangeable
securities on the basis of


 


(iii)                               treating the number of
shares of Common Stock, if any, theretofore actually issued or issuable
pursuant to the previous exercise of such right of conversion, exercise or
exchange as having been issued on the date or dates of such exercise and for
the consideration actually received or receivable therefor, and treating the
rights, options or warrants, or convertible or exchangeable securities which
have expired and shall not have been exercised as if such securities had not
been issued, and


 


(iv)                              with
respect to securities as to which the consideration per share of Common Stock
has been changed, treating any such rights, options or warrants or convertible
or exchangeable securities which then remain outstanding as having been granted
or issued immediately after the time of such increase or decrease for the
consideration per share for which shares of Common Stock are issuable under
such rights, options or warrants or convertible or exchangeable securities, and


 


in each such case, a new adjustment in the number of
shares issuable upon exercise of the Warrants shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and
annulled.  No adjustment in the number
of shares issuable upon exercise of the Warrants pursuant to this Section 11(d)
shall change the number of or otherwise affect any shares of Common Stock
issued prior to such adjustment upon exercise of the Warrants.


 


(e)                                  Adjustment for Other Distributions.  In case the Company shall (i) make a
dividend or other distribution on the Common Stock (other than a distribution
covered by any of paragraphs (a), (b), or (c) of this Section 11),
or (ii) purchase or otherwise acquire for value any shares of Common
Stock, then the number of Warrant Shares for which each Warrant may be
exercised shall be determined (and the Exercise Rate shall be appropriately
adjusted) by multiplying the number of Warrant Shares issuable upon exercise of
such Warrant immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to receive such distribution or the
date of such purchase by a fraction (not less than one) of which the numerator
shall be the Current Market Price (determined as provided in paragraph (f)
of this Section 11) on the date fixed for the determination of
shareholders entitled to receive such distribution on the date of such purchase
and the denominator of which shall be such Current


 


12

















 


Market Price minus the result obtained by dividing the
aggregate amount of cash and the fair market value (as determined in good faith
by the Board) of any property distributed or paid to effect such distribution
or repurchase, as the case may be, by the number of shares of Common Stock
outstanding immediately prior to the date fixed for the determination of
shareholders entitled to receive such distribution on the date of such
purchase; provided that, any particular adjustment of the number of
Warrant Shares pursuant to this paragraph (e) shall be of no force and effect
if the Company pays in respect of a distribution or a purchase which gave rise
to such adjustment to each Warrant holder, upon exercise of such Warrant
holder’s Warrant(s), an amount of consideration to which such Warrant holder
would have been entitled in connection with such distribution or purchase had
such Warrant holder exercised its Warrant(s) immediately prior to the close of
business on the date fixed for the determination of shareholders entitled to
receive such distribution or the date of such purchase.


 


(f)                                    Current
Market Price.  For the
purpose of any computation under Section 7 or this Section 11,
the current market price (the “Current Market Price”) per share of
Common Stock of the Company or any other security (the “Applicable Share”)
on any date shall be deemed to be the average of the daily closing prices of
such Applicable Share on the principal national securities exchange on which
the Applicable Shares are listed or admitted to trading or, if the Applicable
Shares are not so listed, the average daily closing bid prices of such
Applicable Shares on the Nasdaq National Market System if the Applicable Shares
are quoted thereon, in any such case, for the twenty (20) consecutive
trading days ending on the day before the date in question.  If, on any date on which computation of the
Current Market Price is to be made hereunder, the Applicable Shares are not so
listed or quoted on a national securities exchange or the Nasdaq National
Market System, the Current Market Price (except as otherwise provided herein)
shall be determined by the Board in good faith; provided, that the Company
shall give written notice of such determination to the Warrant holders and, in
the event a majority in interest of such Warrant holders disagree with such
determination, then they shall have the right to invoke the provisions of
Section 12 hereof by written notice to the Company to that effect given not
later than thirty (30) days following the Company’s notice of the Board’
determination of the Current Market Price.


 


(g)                                 No Amendments.  The Company will not, through any
consolidation, merger, reorganization, transfer of assets, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Agreement, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the Warrant holders thereof against dilution or other
impairment.  Without limiting the generality
of the foregoing, the Company (i) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue Common Stock on the exercise of the Warrants from time to time
outstanding and (ii) will not take any action which results in any adjustment
of the number of Warrant Shares if the total number of shares of Common Stock
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common Stock then authorized by the Company’s
articles of organization and available for the purposes of issue upon such
exercise.


 


(h)                                 Voluntary Increases.  The Company may, but shall not be obligated
to,


 


13

















 


make such increases in the number of Warrant Shares,
in addition to those required by paragraphs (a) through (c)
of this Section 11, as it considers to be advisable in order that any
event treated for United States federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients, or if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event; provided that no such adjustment shall be made without the
consent of the holders of the Warrants if such adjustment would result in the
increase of income tax liabilities of such holders.


 


(i)                                     When De Minimis
Adjustment May Be Deferred. 
No adjustment in the number of Warrant Shares shall be required unless
such adjustment (plus any other adjustments not previously made by reason of
this paragraph (i)) would require an increase or decrease of at least 1.0%
in the number of Warrant Shares; provided, however, that any
adjustments which by reason of this paragraph (i) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.


 


(j)                                     Consolidation,
Merger, Reorganization or Recapitalization of the Company.  (A) 
In case at any time the Company shall be a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all of the Company’s assets, liquidation or recapitalization of
the Common Stock, not subject to adjustment under any of the paragraphs (a)
through (h) of this Section 11) in which the previously
outstanding Common Stock shall be converted or changed into or exchanged for
different securities of the Company or Common Stock or other securities of
another corporation or interests in a non-corporate entity or other property
(including cash) or any combination of the foregoing (each such transaction
being herein called a “Transaction”), then, as a condition of the
consummation of the Transaction, lawful and adequate provision shall be made so
that each holder of a Warrant, upon the exercise thereof at any time on or
after the consummation of the Transaction, shall be entitled to receive, and
such Warrant shall thereafter represent the right to receive, in lieu of the
Common Stock issuable upon such conversion prior to such consummation, the
securities, cash or other property to which such holder would have been
entitled upon consummation of the Transaction if such holder had exercised such
Warrant immediately prior thereto (subject to adjustments from and after the
consummation date as nearly equivalent as possible to the adjustments provided
for in this Section 11). 
Subject to the next succeeding paragraph, the Company will not effect
any Transaction unless prior to the consummation thereof each corporation or
entity (other than the Company) which may be required to deliver any securities
or other property upon the exercise of the Warrants as provided herein shall
assume, by written instrument delivered to each holder of the Warrants, the
obligation to deliver to such holder such securities or other property as in
accordance with the foregoing provisions such holder may be entitled to
receive, and such corporation or entity shall have similarly mailed or
delivered to each holder of the Warrants an opinion of counsel for such
corporation or entity, reasonably satisfactory to the holders of a majority of
the Warrants then outstanding, which opinion shall state that all of the
outstanding Warrants, including, without limitation, the provisions of this Section 11,
shall thereafter continue in full force and effect and shall be enforceable
against the Company and such corporation or entity in accordance with the terms
hereof and thereof, together with such other matters as such holders may
reasonably request.  The foregoing
provisions of this Section 11(j) shall similarly apply to
successive mergers, consolidations, sales of assets, liquidations and
recapitalizations.


 


14

















 


(B)  In the
event of (1) a Transaction where consideration to all holders of the
Capital Stock of the Company in exchange for their shares is payable solely in
cash or (ii) the dissolution, liquidation or winding-up of the Company, the
holders of the Warrants shall only be entitled to receive, upon surrender of
their Warrant certificates, such cash distributions (or, in the case of in-kind
distributions upon dissolution, liquidation or winding-up of the Company, such
other consideration as is being so distributed) on an equal basis with the
holders of Capital Stock, as if the Warrants had been exercised immediately
prior to such event, less the Exercise Price. 
In the event of any such Transaction, the surviving or acquiring Person
and, in the event of any dissolution, liquidation or winding-up of the Company,
the Company, shall, immediately prior to the consummation of such Transaction,
deposit with the Transfer Agent the funds, if any, necessary to pay the holders
of the Warrants the amounts to which they are entitled as described above.  Concurrently with the consummation of such
Transaction, the Transfer Agent shall make payment to the holders of the Warrants
by making a wire transfer of immediately available funds in such amount as is
appropriate (or, in the case of in-kind distributions upon dissolution,
liquidation or winding-up of the Company, by delivering such other
consideration as is appropriate) to such Person or Persons as it may be
directed in writing by the holders surrendering the Warrants.


 


(k)                                  Consideration Received.  For purposes of any computation respecting
consideration received pursuant to this Section 11, the following shall
apply:


 


(1)                                  in
the case of the issuance of shares of Common Stock for cash, the consideration
shall be the amount of such cash, provided that in no case shall any
deduction be made for any commissions, discounts or other expenses incurred by
the Company for any underwriting of the issue or otherwise in connection
therewith;


 


(2)                                  in
the case of the issuance of shares of Common Stock for a consideration in whole
or in part other than cash, the consideration other than cash shall be deemed
to be the fair market value thereof (as determined in good faith by the Board);
and


 


(3)                                  in
the case of the issuance of securities convertible into or exchangeable for
shares, the aggregate consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such securities plus
the additional minimum consideration, if any, to be received by the Company
upon the conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (1) and (2) of this
paragraph (k)).


 


(l)                                     When
Issuance or Payment May Be Deferred.  In any case in which this Section 11 shall require that an
adjustment in the Exercise Rate be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record
date the Warrant Shares and other equity of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other equity of the
Company, if any, issuable upon such exercise on the basis of the Exercise Rate
and (ii) paying to such holder any amount in cash in lieu of a fractional
share pursuant to Section 13; provided, however, that
the Company shall deliver to such holder a due


 


15

















 


bill or other appropriate instrument evidencing such holder’s right to
receive such additional Warrant Shares, other equity and cash upon the
occurrence of the event requiring such adjustment.


 


(m)                               Form of Warrants.  Irrespective of any adjustments in the
Exercise Price or the Exercise Rate or kind of shares or other assets
purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares or other assets as are stated in the Warrants initially issuable
pursuant to this Agreement.  The
Company, however, may at any time in its sole discretion make any change in the
form of Warrant certificate that it may deem appropriate to give effect to such
adjustments and that does not affect the substance of the Warrant certificate,
and any Warrant certificate thereafter issued or countersigned, whether in
exchange or substitution for an outstanding Warrant certificate or otherwise,
may be in the form as so changed.


 


(n)                                 Adjustment in Exercise Price.  Upon each adjustment in the number of
Warrant Shares for which a Warrant is exercisable pursuant to this Section 11,
the Exercise Price for such Warrant shall be adjusted to equal an amount per
share of Common Stock equal to the Exercise Price before such adjustment
multiplied by a fraction, of which the numerator is the number of Warrant
Shares for which a Warrant is exercisable immediately before giving effect to
such adjustment and the denominator of which is the number of Warrant Shares
for which a Warrant is exercisable immediately after giving effect to such
adjustment; provided, however, that in no event shall the
Exercise Price be reduced below the par value (if any) of the Common Stock for
which the Warrant is exercisable.


 


(o)                                 No Dilution or Impairment.  If any event shall occur as to which the
provisions of Section 11 are not strictly applicable but the failure to
make any adjustment would adversely affect the purchase rights represented by
the Warrants in a way that is contrary to the manifest and essential intent and
principles of Section 11, then, in each such case, the Company shall
appoint an Independent Financial Expert (as defined below), which shall give
its opinion upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in Section 11 of this
Agreement to preserve, without dilution, such exercise rights.  Upon receipt of such opinion, the Company
will promptly mail a copy thereof to the holders and shall make the adjustments
described therein.  The Company will at
all times in good faith assist in the carrying out of the terms of this
Agreement.


 


SECTION 12.                                    VALUATION BY
INDEPENDENT FINANCIAL EXPERT


 


If requested by Warrant holders in accordance with the
provisions of Section 11(f), the Current Market Price of Applicable
Shares shall be equal to the Fair Market Value (as defined below) of such
Applicable Shares, and will be determined as follows (subject to the provisions
of Section 11(f)).  At any time
the Current Market Price of Applicable Shares is to be determined under this
Agreement, the Company and the Warrant holders holding Warrants representing a
majority of the Warrant Shares will each, within thirty (30) days of receipt by
the relevant party of such notice or within thirty (30) days after the date
fixed under this Agreement for such determination, (i) appoint a
nationally recognized investment bank with experience in transactions of
comparable size and magnitude (an “Independent Financial Expert”) to
determine


 


16

















 


the Fair Market Value of such Applicable Shares, and (ii) cause
the Independent Financial Expert so appointed by it, as promptly as possible
after such appointment, to prepare and to deliver to the other party or parties
hereto a written report (a “Value Report”) specifying such Fair Market
Value within the time period specified below. 
Should one party (or the Independent Financial Expert selected by such
party) fail to act timely to appoint an Independent Financial Expert or cause
such Independent Financial Expert to deliver its Value Report within the time
period specified below, then the Independent Financial Expert appointed by the
other party shall alone determine the Fair Market Value of such Applicable
Shares, which determination shall be conclusive for all purposes hereof.  If the two Value Reports so delivered by
each Independent Financial Expert provide values such that the higher one is
not more than 20% greater than the lower one, the average of the two values
will be taken as the Fair Market Value of the Applicable Shares, which average
shall be conclusive for all purposes of establishing such Fair Market Value
hereunder.  If the valuations specified
in the two Value Reports differ by more than 20%, the Company and Warrant
holders holding Warrants representing a majority of the Warrant Shares will
jointly appoint an additional Independent Financial Expert (the “Independent
Expert”) to perform a third valuation and prepare a third Value
Report.  If the Company and such Warrant
holders are unable to agree on the selection of the Independent Expert, a body
agreed to by both parties or, on the failure of such agreement, the American
Arbitration Association will be requested by the Company and the Warrant
holders jointly to appoint another Independent Expert to perform a third
valuation.  Such Independent Expert
shall not have performed significant work for either the Company or the Warrant
holders during the immediately preceding one year.  In such circumstance, the Fair Market Value of the Applicable
Shares, will be equal to (i) if the Fair Market Value specified in the
Value Report prepared by the Independent Expert is in between the valuations
specified on the two other Value Reports, an amount equal to the average of the
two valuations that are closest in amount, (ii) if the Fair Market Value
specified in the Value Report prepared by the Independent Expert is equal to or
greater than the highest of the two valuations specified in the two initial
Value Reports, an amount equal to the highest of such two initial valuations
and (iii) if the Fair Market Value specified in the Value Report prepared
by the Independent Expert is equal to or lower than the lowest of the two
valuations specified in the two initial Value Reports, an amount equal to the
lower of such two initial valuations. 
The Company shall provide all Independent Financial Experts with the
same financial and operational information for conducting their valuation.  The Company shall use its best efforts to
ensure that the information shall be complete and accurate in all material
respects and that any forecasts shall be based on unbiased assessments made in
good faith.  The Company shall cooperate
fully with such Independent Financial Experts in the conduct of their
valuation, including making management reasonably available and offering access
to the premises of the Company to the Independent Financial Experts during
regular business hours and on reasonable notice.  The Independent Expert shall not be apprised by either party of
the two initial valuations prior to delivery of its own Value Report.


 


“Fair Market Value” of the Applicable Shares,
as of the date of determination shall mean the price that a willing buyer would
pay to a willing seller for the relevant Applicable Shares, in an arm’s length
transaction, with neither party being under any immediate obligation or need to
consummate the transaction, it being understood that the buyer and seller in
arriving at such price in determining the value of Applicable Shares would each
consider, among other


 


17

















 


factors customarily considered by valuation professionals, the past and
prospective earnings of the Company, comparable stock market valuations, and
the absence or existence of liquidity for the Applicable Shares.


 


The Fair Market Value for the Applicable Shares, shall
be stated in U.S. dollars.  The Company
and the Warrant holders shall each be responsible for all compensation of the
Independent Financial Expert appointed by them and the costs of a third
Independent Financial Expert, if required, shall be borne by a party whose
valuation is not included in computing the final Fair Market Value.  The Independent Financial Experts shall
submit their valuations simultaneously to the Company and the Warrant holders
at 12:00 noon New York time on the thirtieth day after being jointly instructed
by the Company and the Warrant holders to initiate the valuation calculation
or, if such day is not a business day, on the next business day.  If a third valuation is required, the
Independent Expert shall submit its valuation to the parties within sixty (60)
days of its appointment or, if such day is not a business day, on the next
business day.


 


SECTION 13.                                    FRACTIONAL
INTERESTS


 


The Company shall not be required to issue fractional
Warrant Shares on the exercise of Warrants, although it may do so in its sole
discretion.  If more than one Warrant
shall be presented for exercise in full at the same time by the same holder,
the number of full Warrant Shares which shall be issuable upon the exercise
thereof shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of the Warrants so presented.  If any fraction of a Warrant Share would,
except for the provisions of this Section 13, be issuable upon the
exercise of any such Warrants (or specified portion thereof), the Company shall
notify the Warrant holder exercising the Warrants in writing of the amount to
be paid in lieu of the fraction of a Warrant Share and concurrently shall pay
to the Warrant holder an amount in cash equal to the Current Market Value per
Warrant Share, as determined on the day immediately preceding the date the
Warrant is presented for exercise, multiplied by such fraction, computed to the
nearest whole cent.


 


SECTION 14.                                    NOTICES TO
WARRANT HOLDERS; RIGHTS OF WARRANT HOLDERS.


 


Upon any adjustment of the number of Warrant Shares
pursuant to Section 11, the Company shall promptly thereafter
(i) file with the Register Office a certificate of the Senior Financial
Officer of the Company (unless the Purchasers request a certificate of a firm
of independent public accountants of recognized standing selected by the Board
(who may be the regular auditors of the Company)) setting forth the number of
Warrant Shares (or portion thereof) issuable after such adjustment, upon
exercise of a Warrant and (ii) give to each of the registered holders of
the Warrant certificates at his or her address appearing on the Warrant
register written notice of such adjustments by first-class mail, postage
prepaid.  Where appropriate, such notice
may be given in advance and included as a part of the notice required to be
mailed under the other provisions of this Section 14.


 


In case:


 


(a)                                  the
Company shall authorize the issuance of any dividend or other


 


18

















 


distribution on the Common Stock, whether in cash,
equity, or other securities, evidences of indebtedness or other property; or


 


(b)                                 the
Company shall authorize any tender offer or exchange offer by the Company for
Common Stock, or Common Stock open market repurchase program, in either case,
involving more than 3% of the outstanding Common Stock; or


 


(c)                                  of
the voluntary or involuntary dissolution, liquidation or winding up of the
Company;


 


then the Company shall cause to be filed with the
Register Office and shall give to each of the registered holders of the Warrant
certificates at the address appearing on the Warrant register, a written notice
delivered by any method provided in Section 15, at least twenty (20)
business days prior to the applicable record date hereinafter specified, or, in
the case of events for which there is no record date, at least twenty (20)
business days before the effective date of such event or the commencement of
such tender offer, exchange offer, or repurchase program.  Any written notice provided pursuant to this
Section 14 shall state (i) the date as of which the holders of
record of the Common Stock are entitled to receive any such rights, options,
warrants or distribution are to be determined, or (ii) the commencement
date of any tender offer, exchange offer or repurchase program for the Common
Stock, or (iii) the date on which any such consolidation, merger,
conveyance, transfer, reclassification, dissolution, liquidation or winding up
is expected to become effective or consummated, and the date as of which it is
expected that holders of record of Common Stock shall be entitled to exchange
such shares for securities or other property, if any, deliverable upon such
consolidation, merger, conveyance, transfer, reclassification, dissolution,
liquidation or winding up.  The failure
to give the notice required by this Section 14 or any defect therein
shall not affect the legality or validity of any issuance, right, option,
warrant, distribution, tender offer, exchange offer, repurchase program,
consolidation, merger, conveyance, transfer, reclassification, dissolution,
liquidation or winding up, or the vote upon any action.


 


Nothing contained in this Agreement or in any of the
Warrant certificates shall be construed as conferring upon the holders thereof
the right to vote or to consent or to receive notice of meetings of
shareholders or the appointment of managers of the Company or any other matter,
or any other rights of shareholders of the Company, including any right to
receive dividends.  In addition, the
holders of Warrant certificates shall have no preemptive rights and shall not
be entitled to share in the assets of the Company in the event of the
liquidation, dissolution or winding up of the Company’s affairs.


 


SECTION 15.
                       NOTICES


 


Any notice or demand authorized by this Agreement to
be given or made by the Company or by the registered holder of any Warrant
certificate to the Company shall be sufficiently given or made when deposited
in the mail, first class or registered, postage prepaid, addressed, or when
sent via facsimile, as follows:


 


 


19

















 


Broadwing Inc.


 


201 East Fourth Street


Cincinnati, OH 
45202


(facsimile no.: 
(513) 397-4177)   

Attention:  Mark Peterson


 


with copies to:


 


Cravath, Swaine & Moore

825 Eighth Avenue

New York, NY  10019

(facsimile no.:  (212) 474-3700)

Attention:  William V. Fogg, Esq.


 


Any notice pursuant to this Agreement to be given by
the Company to the Purchasers shall be sufficiently given when deposited in the
mail, first-class or registered, postage prepaid, addressed (until another address
is provided in writing by the Purchasers to the Company) to the Purchasers, or
when sent via facsimile, as follows:


 


GS Mezzanine Partners II, L.P.

GS Mezzanine Partners II Offshore, L.P.

c/o Goldman, Sachs & Co.

85 Broad Street

New York, New York  10004

(facsimile no.:  (212) 902-3000)

Attention:  Kaca Enquist


 


with copies to:


 


Fried, Frank, Harris, Shriver & Jacobson

One New York Plaza

New York, New York  10004

(facsimile no.:  (212) 859-4000)

Attention:  F. William Reindel, Esq.


 


SECTION 16.                                    SUPPLEMENTS AND
AMENDMENTS


 


The Company may from time to time supplement or amend
this Agreement without the approval of any holders of Warrant certificates in
order to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company may deem necessary or desirable and which shall not
in any way adversely affect the interests of the holders of Warrant
certificates.  Any amendment or
supplement to this Agreement that has an adverse effect on the interests of
holders of Warrant certificates shall require the written consent of registered
holders of fifty percent in interest of the then outstanding Warrants.  The consent of each holder of a Warrant
affected shall be required for any amendment pursuant to which the Exercise
Price would be increased or the number of


 


20

















 


Warrant Shares for or into which a Warrant may be exercised or
convertible would be decreased (other than in connection with a waiver of any
provisions of Section 10).


 


The Company may amend this Warrant Agreement without
the approval of any holders of Warrant certificates to appoint a warrant agent
(the “Warrant Agent”) to act as an agent for the Company for the
purposes of this Agreement.  In acting
under this Agreement and in connection with the Warrants, such Warrant Agent
will act solely as agent of the Company and does not assume any obligation or
relationship or agency or trust for or with any of the holders of Warrants or
beneficial owners of Warrants.


 


SECTION 17.                                    SUCCESSORS


 


All the covenants and provisions of this Agreement by
or for the benefit of the Company shall bind and inure to the benefit of their
respective successors and assigns hereunder.


 


SECTION 18.                                    TERMINATION


 


This Agreement shall terminate on the date on which
all Warrants have been exercised or lapsed.


 


SECTION 19.                                    GOVERNING LAW


 


THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED
HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.


 


SECTION 20.                                    BENEFITS OF THIS
AGREEMENT


 


Nothing in this Agreement shall be construed to give
to any Person other than the Company and the registered holders of Warrant
certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company and the registered holders of the Warrant certificates.


 


SECTION 21.                                    HEADINGS


 


The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the
meanings or interpretation of this Agreement.


 


SECTION 22.                                    SUBMISSION TO
JURISDICTION


 


If any action, proceeding or litigation shall be
brought by the Purchasers, any holder of Warrants or the Company in order to
enforce any right or remedy under this Agreement, the parties hereto hereby
consent and will submit, and will cause each of its subsidiaries to submit, to
the jurisdiction of any state or federal court of competent jurisdiction


 


21

















 


sitting within the area comprising the Southern District of New York on
the date of this Agreement.  The parties
hereto hereby irrevocably waive any objection, including, but not limited to,
any objection to the laying of venue or based on the grounds of forum  non
conveniens, which they may now or hereafter have to the bringing of any
such action, proceeding or litigation in such jurisdiction.


 


SECTION 23.                                    WAIVER OF JURY
TRIAL


 


THE PARTIES HERETO HEREBY WAIVE ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OF THE WARRANTS.


 


SECTION 24.                                    SERVICE OF
PROCESS


 


Nothing herein shall affect the right of any holder of
a Security to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction.


 


SECTION 25.                                    COUNTERPARTS


 


This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.


 


22

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed, as of the day and year first above written.


 


 


	
   

  	
  BROADWING INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W. Peterson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark W. Peterson

  
	
   

  	
   

  	
  Title:

  	
  Vice President &
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GS MEZZANINE PARTNERS
  II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  GS Mezzanine Advisors
  II, L.L.C.

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GS MEZZANINE PARTNERS
  II OFFSHORE, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  GS Mezzanine Advisors
  II, L.L.C.

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						



 


23

















 


EXHIBIT
A


 


Form of Warrant Certificate


[Face]


 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS
OF ANY JURISDICTION.  SUCH SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER
SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM
REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO
THE DISPOSITION OF SECURITIES, INCLUDING RULE 144, SUBJECT TO THE COMPANY’S
RIGHT, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO THIS CLAUSE (II),
TO REQURE THE DELIVERY OF AN OPINION OF COUNSEL.


 


 


[Date]


 


	
  No.       

  	
   

  	
   

  	
   

  	
                   
  Warrants

  



 


Warrant Certificate


BROADWING INC.


 


This Warrant Certificate certifies that
                        ,
or registered assigns, is the registered holder of                
Warrants (the “Warrants”) to purchase an aggregate of
                     
shares of Common Stock (the “Common Stock”), of BROADWING INC., an Ohio
corporation (the “Company”). 
Each Common Stock Warrant entitles the holder upon exercise to purchase
from the Company at any time after the date hereof and prior to the close of
business on March 26, 2013 (or, if such day is not a business day, the next
succeeding business day) (the “Expiration Date”)
[                     
] fully paid and nonassessable shares of Common Stock (a “Warrant Share”)
upon surrender of this Warrant Certificate and payment in full for such Warrant
Share at the Register Office of the Company, subject to the conditions set
forth herein and in the Warrant Agreement referred to on the reverse
hereof.  The number of Warrant Shares
purchasable upon exercise thereof are subject to adjustment upon the occurrence
of certain events set forth in the Warrant Agreement.


 


Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof, which provisions
shall for all purposes have the same effect as though fully set forth at this place.


 


THIS WARRANT CERTIFICATE SHALL BE GOVERNED AND


 


A-1

















 


CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REQUIRE THE APPLICATION
OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.


 


IN WITNESS WHEREOF, Broadwing Inc., has caused this
Warrant Certificate to be signed by its duly authorized officer as of the date
first above written.


 


	
   

  	
  BROADWING INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A-2

















 


Form of Warrant Certificate


 


[Reverse]


 


The Warrants evidenced by this Warrant are part of a
duly authorized issue of Warrants entitling the holder on exercise to receive
shares of Common Stock of the Company (the “Common Stock”), and are
issued or to be issued pursuant to a Warrant Agreement, dated as of March 26,
2003 (the “Warrant Agreement”), between the Company and the other
parties thereto, which Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to for a description
of the rights, limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words “holders” or “holder”
meaning the registered holders or registered holder) of the Warrants.  All terms not otherwise defined herein shall
have the meanings set forth in the Warrant Agreement.  A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.


 


Warrants may be exercised at any time after the date
hereof and prior to the close of business on the Expiration Date.  The holder of Warrants evidenced by this
Warrant Certificate may exercise such Warrants by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon properly
completed and executed, together with payment to the Company of the Exercise
Price for each Warrant then exercised. 
In lieu of payment of the Exercise Price pursuant to the preceding
sentence, the holder of the Warrants may convert the Warrants, in whole or in
part and at any time or times, into Common Stock by surrendering to the Company
this Warrant Certificate with the form of notice of conversion set forth hereon
properly completed and executed.  In
addition, the holders of the Warrants may pay the Exercise Price by tendering
the Notes with the Accreted Value equal to the aggregate Exercise Price for all
Warrants then exercised.  In the event
that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued prior to the close of business on the Exercise Date to
the holder hereof or his assignee a new Warrant Certificate evidencing the number
of Warrants not exercised.  No
adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.


 


The Warrant Agreement provides that upon the
occurrence of certain events the number of Warrant Shares may, subject to
certain conditions, be adjusted.  The
Company will not be required to issue fractional Warrant Shares on the exchange
of Warrants, although it may do so in its sole discretion.  If fractional shares are not issued, the
Company will pay the cash value of such fractional shares as determined in
accordance with the provisions of the Warrant Agreement.


 


Warrant certificates, when surrendered at the Register
Office of the Company by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant certificate or
Warrant certificates of like tenor evidencing in the aggregate a like number of
Warrants.


 


A-3

















 


Upon due presentation for registration of transfer of
this Warrant certificate at the office of the Company, a new Warrant
certificate or Warrant certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant certificate, subject to the limitations provided in
the Warrant Agreement, without charge except for any tax or other governmental
charge imposed in connection therewith.


 


The Company may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary. 
Neither the Warrants nor this Warrant certificate entitles any holder
hereof to any rights of a stockholder of the Company.


 


A-4

















 


Form of Election
to Purchase


 


(To Be Executed Upon Exercise of Warrant)


 


The undersigned hereby irrevocably elects to exercise
the right, represented by this Warrant certificate, to receive
                       
shares of Common Stock and hereby tenders for payment for such shares to the
order of Broadwing Inc.,


 


 $                       
of Accreted Value of Note (as defined in the Warrant Agreement),


 


cash in the amount of
$                       ,


 


in accordance with the terms hereof.


 


The undersigned requests that a certificate for such
shares be registered in the name of
                                                                     ,
whose address is
                                                                     
and that such shares be delivered to
                                                               
whose address is
                                              .


 


If said number of Warrant Shares is less than all of
the shares of Common Stock purchasable hereunder, the undersigned requests that
a new Warrant certificate representing the remaining balance of such shares be
registered in the name of                                               ,
whose address is
                                              ,
and that such Warrant certificate be delivered to
                                              ,
whose address is                                               .


 


 


	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  	
   

  
				



 


A-5

















 


Form of Notice of Conversion


 


(To Be Executed Upon Conversion of Warrant)


 


The undersigned hereby irrevocably elects to exercise
the right, represented by this Warrant certificate, to convert Warrants
represented hereby into
                   
shares of Common Stock in accordance with the terms hereof.


 


The undersigned requests that a certificate for such
shares be registered in the name of
                                                                     ,
whose address is                                                                      
and that such shares be delivered to
                                                                     
whose address is
                                                            .


 


If said number of Warrant Shares is less than all of
the shares of Common Stock purchasable hereunder, the undersigned requests that
a new Warrant certificate representing the remaining balance of such shares be
registered in the name of
                                              ,
whose address is
                                                                     ,
and that such Warrant certificate be delivered to
                                                           ,
whose address is
                                                                    .


 


 


	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  	
   

  
				



 


A-6

















 


EXHIBIT B


 


Form of Transfer


 


(To Be Executed
Upon Transfer of Warrant)


 


FOR VALUE RECEIVED, the
undersigned registered holder of this Warrant certificate hereby sells, assigns
and transfers unto the Assignee(s) named below (including the undersigned with
respect to any Warrants constituting a part of the Warrants evidenced by this
Warrant certificate not being assigned hereby) all of the rights of the
undersigned under this Warrant certificate, with respect to the number of
Warrants set forth below:


 


	
  Name of Assignee(s)

  	
  Address

  	
  Social Security, EIN 

  or other identifying 

  number of assignee(s)

  	
  Number of Warrants

  



 


and does hereby
irrevocably constitute and appoint the Company as the undersigned’s attorney to
make such transfer on the register maintained by the Company for that purpose,
with full power of substitution in the premises.


 


Date:


 


	
   

  	
   

  
	
  (Signature of
  Owner)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Street Address)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (City)     (State)  (Zip Code)

  	
   

  



 


B-1

















 


SCHEDULE
A


 


Issuance of
Warrant Shares


 


 


	
   

  	
   

  	
  Number of Warrants

  
	
   

  	
   

  	
   

  
	
  GS MEZZANINE PARTNERS
  II, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  3,448,350

  
	
   

  	
   

  	
   

  
	
  GS MEZZANINE PARTNERS
  II OFFSHORE, L.P.

  c/o GS Mezzanine Partners L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  1,051,650

  
	
   

  	
   

  	
   

  
	
  GS CAPITAL PARTNERS
  2000, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  2,612,200

  
	
   

  	
   

  	
   

  
	
  GS CAPITAL PARTNERS
  2000 OFFSHORE, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  949,150

  
	
   

  	
   

  	
   

  
	
  GS CAPITAL PARTNERS
  2000 GMBH & CO. BETEILIGUNGS KG.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  109,200

  



 


1

















 


	
   

  	
   

  	
  Number of Warrants

  
	
   

  	
   

  	
   

  
	
  GS CAPITAL PARTNERS
  2000 EMPLOYEE FUND, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  829,450

  
	
   

  	
   

  	
   

  
	
  GOLDMAN SACHS DIRECT
  INVESTMENT FUND 2000, L.P.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Kaca Enquist

  	
   

  	
  450,000

  
	
   

  	
   

  	
   

  
	
  GOLDMAN, SACHS &
  CO.

  85 Broad Street

  New York, New York 10004

  (facsimile no.:  (212) 902-3000)

  Attention:  Richard Katz

  	
   

  	
  2,700,000

  
	
   

  	
   

  	
   

  
	
  TCW/CRESCENT MEZZANINE
  PARTNERS III, L.P.

  11100 Santa Monica Blvd., Suite 2000

  Los Angeles, CA 90025

  (310)235-5978

  Attention: James Shevlet

  	
   

  	
  2,026,500

  
	
   

  	
   

  	
   

  
	
  TCW/CRESCENT MEZZANINE
  TRUST III, L.P.

  11100 Santa Monica Blvd., Suite 2000

  Los Angeles, CA 90025

  (310)235-5978

  Attention: James Shevlet

  	
   

  	
  315,700

  
	
   

  	
   

  	
   

  
	
  TCW/CRESCENT MEZZANINE
  PARTNERS III NETHERLANDS, L.P.

  11100 Santa Monica Blvd., Suite 2000

  Los Angeles, CA 90025

  (310)235-5978

  Attention: James Shevlet

  	
   

  	
  82,800

  



 


2

















 


	
   

  	
   

  	
  Number of Warrants

  
	
   

  	
   

  	
   

  
	
  C-SQUARED CDO LTD.

  c/o Trust Company of the West

  200 Park Avenue, Suite 2200

  New York, NY  10166

  	
   

  	
  50,000

  
	
   

  	
   

  	
   

  
	
  WESTERN AND SOUTHERN
  LIFE INSURANCE COMPANY

  400 Broadway 

  Cincinnati, OH 45202

  Attention: Marianne Marshall

  	
   

  	
  900,000

  
	
   

  	
   

  	
   

  
	
  DOVER CAPITAL
  MANAGEMENT 2 LLC

  c/o Falcon Investment Group

  1180 Avenue of the Americas, Suite 1400

  New York, NY 10036

  Attention: Jon Ruff

  	
   

  	
  225,000

  
	
   

  	
   

  	
   

  
	
  OAK HILL SECURITIES
  FUND, L.P.

  201 Main Street, Suite 2600

  Fort Worth, Texas  76102

  Attention: Chuck Irwin

  	
   

  	
  125,000

  
	
   

  	
   

  	
   

  
	
  OAK HILL SECURITIES
  FUND II, L.P.

  201 Main Street, Suite 2600

  Fort Worth, Texas  76102

  Attention: Chuck Irwin

  	
   

  	
  250,000

  
	
   

  	
   

  	
   

  
	
  OAK HILL CREDIT
  PARTNERS I, LIMITED

  201 Main Street, Suite 1910

  Fort Worth, TX 76102

  Attention: Ronna Hunt

  	
   

  	
  350,000

  
	
   

  	
   

  	
   

  
	
  OAK HILL CREDIT
  PARTNERS II, LIMITED

  201 Main Street, Suite 1910

  Fort Worth, TX 76102

  Attention: Ronna Hunt

  	
   

  	
  275,000

  



 


3

















 


	
   

  	
   

  	
  Number of Warrants

  
	
   

  	
   

  	
   

  
	
  LERNER ENTERPRISES, L.P.

  c/o Oak Hill Asset Management Inc.

  Park Avenue Tower

  65 East 55th Street, 32nd Floor

  New York, NY 10022

  Attention: Megan McCann

  	
   

  	
  450,000

  
	
   

  	
   

  	
   

  
	
  P&PK FAMILY LIMITED
  PARTNERSHIP

  c/o Oak Hill Asset Management Inc.

  Park Avenue Tower

  65 East 55th Street, 32nd Floor

  New York, NY 10022

  Attention: Megan McCann

  	
   

  	
  50,000

  
	
   

  	
   

  	
   

  
	
  CARDINAL INVESTMENT
  PARTNERS I, L.P.

  c/o Oak Hill Advisors, L.P.

  Park Avenue Tower

  65 East 55th Street, 32nd Floor

  New York, NY 10022

  Attention: Megan McCann

  	
   

  	
  150,000

  
	
   

  	
   

  	
   

  
	
  THE LELAND STANFORD
  JUNIOR UNIVERSITY

  c/o Oak Hill Advisors, L.P.

  Park Avenue Tower

  65 East 55th Street, 32nd Floor

  New York, NY 10022

  Attention: Megan McCann

  	
   

  	
  100,000

  



 


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