EXHIBIT 10.28
WARRANT AGREEMENT
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This WARRANT AGREEMENT (this "Agreement") is made as of November 24,
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1999, by and among GTCR Capital Partners, L.P., a Delaware limited partnership
(the "Purchaser"), and ZEFER Corp., a Delaware corporation (the "Company").
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Capitalized terms used herein and not otherwise defined shall have the meanings
given to such terms in Section 5A hereof.
WHEREAS, the Company and the Purchaser have entered into a Loan
Agreement, dated as of the date hereof (as the same shall be modified, amended
and supplemented from time to time, the "Loan Agreement");
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WHEREAS, pursuant to the Loan Agreement, the Purchaser will make a
loan to the Company on the date hereof in the principal amount of $12,789,175
(the "Initial Loan") and, subject to the terms and conditions of the Loan
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Agreement, will make loans to the Company from time to time after the date
hereof (each a "Subsequent Loan", and together with the Initial Loan, the
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"Loans") up to an aggregate principal amount (excluding the Initial Loan) of
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$19,407,121 (the "Aggregate Subsequent Loan Amount");
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WHEREAS, as an inducement and partial consideration to the Purchaser
to enter into the Loan Agreement and to make the Loans, the Company has agreed
to (i) issue to the Purchaser on the date hereof a warrant (the "Common
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Warrant") representing the right to purchase the Common Warrant Shares from the
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Company, (ii) issue to the Purchaser on the date hereof a warrant (the "Initial
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Preferred Warrant") representing the right to purchase the Initial Preferred
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Warrant Shares from the Company, and (iii) issue to the Purchaser on the date of
each Subsequent Loan a warrant (each a "Subsequent Preferred Warrant", and
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together with the Common Warrant and the Initial Preferred Warrant, the
"Warrants") representing the right to purchase Subsequent Preferred Warrant
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Shares from the Company, in each case pursuant to the terms and conditions of
this Agreement and in the form of Exhibit A attached hereto; and
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WHEREAS, the Company has authorized the issuance of the Warrants to
the Purchaser pursuant to the terms and conditions of this Agreement and each
such Warrant.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Issuance of Warrants; Closings.
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1A. Initial Closing. The issuance of the Common Warrant and the
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Initial Preferred Warrant (collectively, the "Initial Warrants") to the
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Purchaser (the "Initial Closing") shall take place simultaneously with the
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closing of the Initial Loan pursuant to the Loan Agreement. The date of the
Initial Closing is hereinafter referred to as the "Initial Closing Date."
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1B. Issuance of Initial Warrants. At the Initial Closing, the
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Company shall issue to the Purchaser the Initial Warrants representing the right
to purchase the Common Warrant Shares and the Initial Preferred Warrant Shares.
The Initial Warrants shall be exercisable immediately upon
issuance thereof, and the Purchaser may exercise all or any portion of the
Initial Warrants at any time and from to time thereafter.
1C. Subsequent Closings. The issuance of each Subsequent Preferred
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Warrant to the Purchaser (each a "Subsequent Closing") shall take place
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simultaneously with the closing of each Subsequent Loan. The date of each
Subsequent Closing is hereinafter referred to as a "Subsequent Closing Date").
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1D. Issuances of Subsequent Preferred Warrants. At each Subsequent
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Closing, the Company shall issue to the Purchaser a Subsequent Preferred Warrant
representing the right to purchase a number of Subsequent Preferred Warrant
Shares equal to the product of (i) the total number of Subsequent Preferred
Warrant Shares, multiplied by (ii) a fraction, (A) the numerator of which is an
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amount equal to the principal amount of the Subsequent Loan made by the
Purchaser at such Subsequent Closing and (B) the denominator of which is an
amount equal to the Aggregate Subsequent Loan Amount.
SECTION 2. Representations and Warranties of the Company. As of the
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Initial Closing, and as of each Subsequent Closing, the Company represents and
warrants to the Purchaser as follows:
2A. Good Standing. The Company is a corporation duly organized,
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validly existing and in good standing under the laws of the State of Delaware.
2B. Authority Relative to this Agreement. The Company has all
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requisite corporate power and authority to enter into and perform this Agreement
and to issue and deliver the Warrants to the Purchaser. The execution, delivery
and performance by the Company of this Agreement, including the issuance and
delivery of the Warrants to the Purchaser, have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement has been
duly executed and delivered by the Company and is a legal, valid and binding
obligation of the Company and is enforceable against the Company in accordance
with its terms.
2C. No Conflict or Violation. The execution and delivery of this
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Agreement by the Company, the performance by the Company of its obligations
hereunder and the issuance and delivery of the Warrants to the Purchaser does
not and will not conflict with or result in a violation of (i) the charter or
bylaws of the Company or (ii) any agreement, instrument, law, rule, regulation,
order, writ, judgment or decree to which the Company is a party or is subject,
except for such conflicts and violations which will not, individually or in the
aggregate, have a material adverse effect on the business, operations, assets,
condition (financial or otherwise) or business prospects of the Company and will
not deprive the Purchaser of any material benefit under this Agreement.
2D. Validity of Issuance. The Warrants to be issued to the Purchaser
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pursuant to this Agreement and the Warrant Shares issued upon exercise of the
Warrants will, when issued, be duly and validly issued, fully paid and non-
assessable.
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2E. Capital Structure (Initial Closing). The authorized and issued
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capital stock of the Company as of the Initial Closing and immediately
thereafter is as set forth on the Capitalization Schedule dated as of the
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Initial Closing Date and attached hereto.
2F. Capital Structure (Subsequent Closings). The authorized and
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issued capital stock of the Company as of any Subsequent Closing and immediately
thereafter will be as set forth on the Capitalization Schedule dated as of such
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Subsequent Closing Date and provided to the Purchaser prior to such Subsequent
Closing.
SECTION 3. Investment Representations; Legends.
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3A. Investment Representations. The Purchaser hereby represents and
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warrants to the Company that the Purchaser is acquiring the Warrants, and to the
extent any such Warrant has been exercised, the Warrant Shares, for its own
account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof. The Purchaser agrees and
acknowledges that it will not, directly or indirectly, offer, transfer or sell
any Warrant or any Warrant Shares, or solicit any offers to purchase or acquire
any Warrant or any Warrant Shares, unless the transfer or sale is (i) pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act") and has
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been registered under any applicable state securities or "blue sky" laws or (ii)
pursuant to an exemption from registration under the Securities Act and all
applicable state securities or "blue sky" laws.
3B. Additional Investment Representations. The Purchaser hereby
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represents and warrants to the Company that (i) it has such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment hereunder, (ii) it is able to incur a
complete loss of such investment, (iii) it is able to bear the economic risk of
such investment for an indefinite period of time and (iv) it is an "accredited
investor" as that term is defined in Regulation D under the Securities Act.
3C. Legends. The Purchaser hereby acknowledges that the Company will
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stamp or otherwise imprint each Warrant with a legend in substantially the
following form:
THIS WARRANT AND ANY SHARES OF STOCK OBTAINABLE UPON
ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE'S SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE
SECURITIES ACT OR PURSUANT TO AN EXEMPTION THEREFROM.
In connection with the transfer of any Warrant or any Warrant Shares
(other than a transfer pursuant to a public offering registered under the
Securities Act, pursuant to Rule 144 or Rule 144A promulgated under the
Securities Act (or any similar rules then in effect) or to an affiliate
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of the Purchaser), the Purchaser shall deliver, upon the reasonable request of
the Company, an opinion of counsel, which counsel shall be knowledgeable in
securities laws and which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer may be effected without registration
under the Securities Act. Upon receipt of an opinion of counsel reasonably
satisfactory to the Company to the effect that such legend no longer applies to
any particular Warrant and/or Warrant Shares, the Company shall promptly issue a
replacement Warrant and/or replacement certificate evidencing such Warrant
Shares (as applicable), which does not contain such legend.
In addition, the Purchaser hereby acknowledges that, so long as any
particular Warrant Shares remain Stockholder Shares (as defined in the
Stockholders Agreement), the Company will stamp or otherwise imprint each
Warrant and/or certificate evidencing such Warrant Shares with a legend in
substantially the following form:
THIS WARRANT AND ANY SHARES OF STOCK OBTAINABLE UPON ITS EXERCISE
ARE SUBJECT TO CERTAIN TRANSFER AND VOTING RESTRICTIONS PURSUANT
TO A STOCKHOLDERS AGREEMENT, DATED AS OF MARCH 23, 1999 (AS
AMENDED AND MODIFIED FROM TIME TO TIME), AMONG THE ISSUER OF SUCH
SECURITIES (THE "COMPANY") AND CERTAIN OF THE COMPANY'S
STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST.
Upon any Warrant Shares ceasing to be Stockholder Shares (as defined
in the Stockholders Agreement) in accordance with the terms of the Stockholders
Agreement, the Company shall promptly remove the legend set forth immediately
above from any Warrant and/or certificate evidencing such Warrant Shares.
SECTION 4. Inspection Rights. The Company shall permit any representatives
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designated by the Purchaser (so long as the Purchaser or any affiliate of the
Purchaser holds any Warrant Shares), any holder of at least 50% of the Warrant
Shares that are Common Stock or any holder of at least 50% of the Warrant Shares
that are Class A Preferred, upon reasonable notice and during normal business
hours and at such other times as any such holder may reasonably request, to (i)
visit and inspect any of the properties of the Company and its subsidiaries,
(ii) examine the corporate and financial records of the Company and its
subsidiaries and make copies thereof or extracts therefrom and (iii) discuss the
affairs, finances and accounts of the Company and/or any of its subsidiaries
with their respective directors, officers, key employees and independent
accountants (it being understood that such representatives will keep all non-
public information confidential to the full extent permitted by applicable law).
SECTION 5. Miscellaneous
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5A. Definitions. For the purposes of this Agreement, the following
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terms shall have the following meanings:
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"Class A Preferred" means the Company's Class A Preferred Stock, par
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value $.01 per share.
"Common Stock" means the Company's Common Stock, par value $.01 per
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share.
"Common Warrant Shares" means 1,237,804 shares of Common Stock
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obtained or obtainable upon exercise of the Common Warrant, as such number of
shares shall be adjusted from time to time in accordance with Section 2 of the
Common Warrant.
"Initial Preferred Warrant Shares" means 1,499 shares of Class A
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Preferred obtained or obtainable upon exercise of the Initial Preferred Warrant,
as such number of shares shall be adjusted from time to time in accordance with
Section 2 of the Initial Preferred Warrant.
"Stockholders Agreement" shall mean that certain Stockholders
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Agreement dated as of March 23, 1999 (as amended and modified from time to
time), by and among the Company and certain of its stockholders.
"Subsequent Preferred Warrant Shares" means 4720 shares of Class A
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Preferred obtained or obtainable upon exercise of the Subsequent Preferred
Warrants, as such number of shares shall be adjusted from time to time in
accordance with Section 2 of the Subsequent Preferred Warrants.
"Warrant Shares" means, collectively, the Common Warrant Shares, the
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Initial Preferred Warrant Shares and any Subsequent Preferred Warrant Shares
then outstanding.
5B. Notices. All notices and other communications provided for
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herein shall be dated and in writing and shall be deemed to have been duly given
(i) when delivered, if delivered personally, sent by registered or certified
mail, return receipt requested and postage prepaid, or sent via nationally
recognized overnight courier or via facsimile with confirmation of receipt and
(ii) when received if delivered otherwise, to the party to whom it is directed:
If to the Company:
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ZEFER Corp.
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▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
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GTCR Fund VI, L.P.
c/o GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser:
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GTCR Capital Partners, L.P.
c/o GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party hereto shall have provided in a written
notice to the others.
5C. Assignment. This Agreement and all the provisions hereof shall
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be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any rights or obligations hereunder shall be assigned by the Company without
the prior written consent of the Purchaser.
5D. Amendment. This Agreement may be amended only by a written
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instrument signed by the Company, the holders of a majority of the Warrant
Shares that are Common Stock and the holders of a majority of the Warrant Shares
that are Class A Preferred.
5E. Waiver. Any party hereto may (a) extend the time for the
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performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the
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representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions herein. Any agreement on the part of a party hereto to any such
extension or waiver shall only be valid as to such party if set forth in an
instrument in writing signed by such party.
5F. Severability. In the event that any one or more of the
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provisions hereof, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired; it being
intended that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
5G. Governing Law. All questions concerning the construction,
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validity and interpretation of this Agreement shall be governed by and construed
in accordance with the internal laws of the State of Illinois, without giving
effect to any choice of law or other conflict of law provision or rule (whether
of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
5H. Counterparts. This Agreement may be executed in two or more
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counterparts (including by means of facsimile), each of which when so executed
and delivered shall be deemed to be an original and all of which together shall
be deemed to be one and the same agreement.
5I. Descriptive Headings. The headings in this Agreement are for
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convenience of reference only and shall not limit or otherwise affect the
meaning of the terms contained herein.
5J. Survival of Representations and Warranties. All representations
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and warranties made in writing by any party in connection herewith shall survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby (including each Subsequent Closing), regardless
of any investigation made by the Purchaser or on its behalf.
5K. Purchase Prices for Initial Warrants. The Company and the
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Purchaser hereby agree that for purposes of Sections 1271 through 1275 of the
Internal Revenue Code of 1986, as amended (or any successor statute), the
aggregate original purchase price of the Common Warrant is $6,189,020.00 and the
aggregate original purchase price of the Initial Preferred Warrant is
$1,499,000.00, which purchase prices will be used by the Company and the
Purchaser, as appropriate, for financial reporting and income tax purposes.
5L. Entire Agreement. Except as otherwise expressly set forth
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herein, this Agreement, the Loan Agreement and the Warrants embody the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be signed by its duly authorized officers as of the date first
written above.
ZEFER CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Its: Vice President
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GTCR CAPITAL PARTNERS, L.P.
By: GTCR Mezzanine Partners, L.P.
Its: General Partner
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Its: Principal