EXHIBIT 10.4
FORM OF WARRANT PURCHASE AGREEMENT,
DATED AS OF _______________, 1998,
BETWEEN THE REGISTRANT AND
SIGMA FINANCIAL CORPORATION
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT MADE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT. THIS WARRANT MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNTIL
_______________, 199__ [FIRST ANNIVERSARY OF THE EFFECTIVE DATE OF THE
OFFERING], EXCEPT AS PROVIDED IN SECTION (D) HEREOF.
Void after 5:30 P.M., New York Time, on _________, 200_
FORM OF WARRANT TO PURCHASE SHARES OF BENEFICIAL INTEREST
This Is to Certify That, FOR VALUE RECEIVED, SIGMA FINANCIAL CORPORATION
("Sigma") or registered assigns (the "Holder"), is entitled to purchase, subject
to the provisions of this Warrant, from Baron Capital Trust, a Delaware business
trust (the "Company"), at any time on or after ________________, 199__ [first
anniversary of the execution date] and not later than 5:30 P.M., New York time
on ____________, 200__ [fifth anniversary of the execution date], a number of
Common Shares of beneficial interest in the Company, having no par value (such
shares being of the same class as shares of beneficial interest to be offered
for sale in the Company's initial public offering referred to below)("Shares"),
in an amount equal to 8.5% of the number of Shares that may be sold in the
Company's public offering of up to 2,500,000 Shares (the "Offering"), on a best
efforts basis, by Sigma and participating broker-dealers to be selected by Sigma
and the Company, at a purchase price per Share underlying this Warrant of
$13.00; provided, however, this Warrant shall not become effective unless and
until the terms and conditions of any escrow arrangements in connection with the
Offering have been fully satisfied. The number of Shares to be received upon the
exercise of this Warrant and the price to be paid for a Share may be adjusted
from time to time as hereinafter set forth. The Shares deliverable upon such
exercise, and as adjusted from time to time, are hereinafter referred to as
"Warrant Shares" and the exercise price of a Share in effect at any time and as
adjusted from time to time is hereinafter referred to as the "Exercise Price."
(a) Exercise of Warrant. Subject to the provisions of Section (k) hereof,
this Warrant may be exercised in whole or in part at any time or from time to
time on or after _____________, 199__ [first anniversary of the execution date],
but not later than 5:30 P.M., New York Time, on _______________, 200__ [fifth
anniversary of the execution date], or if __________, 200_, is a day on which
banking institutions are authorized by law to close, then on the next succeeding
day which shall not be such a day, by presentation and surrender hereof to the
Company or at the office of its stock transfer agent, if any, with the Purchase
Form annexed hereto duly executed and accompanied by payment of the Exercise
Price for the number of Shares specified in such form, together with all federal
and state taxes applicable upon such exercise. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to purchase the balance
of the Shares purchasable hereunder. Upon receipt by the Company of this Warrant
at the office of the Company or the stock transfer agent, in proper form for
exercise, the Holder shall be deemed to be the holder of record of the Shares
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such Shares
shall not then be actually delivered to the Holder.
(b) Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of Shares as shall be required for issuance or delivery upon
exercise of this Warrant.
(c) Fractional Shares. No fractional Shares or scrip representing
fractional Shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a Share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional Share, determined as
follows:
(1) If Shares are listed on a national securities exchange or admitted to
unlisted trading privileges on such exchange, the current value shall be the
last reported sale price of such Shares on such exchange on the last business
day prior to the date of exercise of this Warrant or if no such sale is made on
such day, the average closing bid and asked prices for such day on such
exchange; or
(2) If Shares are not so listed or admitted to unlisted trading privileges,
the current value shall be the mean of the last reported bid and asked prices
reported by the National Association of Securities Dealers Quotation System
("NASDAQ") (or, if not so quoted on NASDAQ, by the National Quotation Bureau,
Inc.) on the last business day prior to the date of the exercise of this
Warrant; or
(3) If Shares are not so listed or admitted to unlisted trading privileges
and bid and asked prices are not so reported, the current market value shall be
an amount, not less than book value, determined in such reasonable manner as may
be prescribed by the Board of the Company, such determination to be final and
binding on the Holder.
(d) Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if any, for
other Warrants of different denominations entitling the holder thereof to
purchase in the aggregate the same number of Share purchasable hereunder. This
Warrant may not be sold, transferred, assigned, pledged or hypothecated until
_______________, 199__ [first anniversary of the effective date of the
Offering], except that after the completion of the Offering it may be (i)
assigned in whole or in part to or among the officers or partners of Sigma, any
broker-dealer which sells Shares in the Offering, or any of such broker-dealer's
officers or partners; (ii) transferred by operation of law as a result of the
death of any assignee or transferee of this
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Warrant; and (iii) transferred to any successor to the business of Sigma or of
any such broker-dealer. Any assignment of the Warrant in whole or in part shall
be made by surrender of this Warrant to the Company or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax; whereupon the Company
shall, without charge, execute and deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall promptly
be canceled. This Warrant may be divided or combined with other Warrants, if
any, which carry the same rights upon presentation hereof at the office of the
Company or at the office of its stock transfer agent, if any, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants issued in substitution for or replacement of this Warrant,
or into which this Warrant may be divided or exchanged. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
(e) Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
(f) Anti-Dilution Provisions.
(1) Adjustment of Exercise Price. If the Company at any time issues
Shares or any shares or other securities convertible into or exchangeable
for Shares ("Convertible Securities") by way of dividend or other
distribution on any securities of the Company (including without limitation
Shares and Convertible Securities) or subdivides or combines the
outstanding Shares, the Exercise Price shall be proportionately decreased
in the case of such issuance (on the day following the date fixed for
determining Shareholders entitled to receive such dividend or other
distribution), proportionately decreased in the case of such subdivision,
and proportionately increased in the case of such combination (on the date
that such subdivision or combination shall become effective.)
(2) No Adjustment for Small Amounts. Anything in this Section (f) to
the contrary notwithstanding, the Company shall not be required to give
effect to any adjustment in the Exercise Price unless and until the net
effect of one or more adjustments, determined as above provided, shall have
required a change of the Exercise Price by at least one percent, but when
the cumulative net effect of more than one adjustment so determined shall
be to change the actual Exercise Price by at least one percent, such change
in the Exercise Price shall thereupon be given effect.
(3) Number of Shares Adjusted. Upon any adjustment of the Exercise
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Price hereunder, the holder of this Warrant shall thereafter (until another
such adjustment) be entitled to purchase, at the new Exercise Price, the
number of Shares, calculated to the nearest full Share, obtained by
multiplying the number of Shares initially issuable upon exercise of this
Warrant by the Exercise Price in effect on the date hereof and dividing the
product so obtained by the new Exercise Price.
(4) Shares Defined. Whenever reference is made in this Section (f) to
the issue or sale of Shares, the term "Shares" shall mean the shares of
beneficial interest in the Company authorized as of the date hereof which
are of the same class as shares issued in connection with the Offering and
any other class of securities of the Company ranking on a parity with such
Shares. However, subject to the provisions of Section (i) hereof, Shares
issuable upon exercise of this Warant shall include only shares of the
class designated as shares of beneficial interest in the Company as of the
date hereof.
(g) Officer=s Certificate. Whenever the Exercise Price shall be adjusted as
required by the provisions of Section (f) hereof, the Company shall promptly
file in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer=s certificate
showing the adjusted Exercise Price and adjusted number of Shares issuable under
this Warrant determined as herein provided and setting forth in reasonable
detail the facts requiring such adjustments. Each such officer=s certificate
shall be made available at all reasonable times for inspection by the Holder,
and the Company shall, promptly after each such adjustment, deliver a copy of
such certificate to the Holder. Such certificate shall be conclusive as to the
correctness of such adjustment.
(h) Notices to Warrant Holders. So long as this Warrant shall be
outstanding and unexercised, (i) if the Company shall pay any dividend or make
any distribution upon the Shares, (ii) if the Company shall offer to the holders
of Shares for subscription or purchase by them any shares of securities of any
class or any other rights or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least 10 days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any is
to be fixed, as of which the holders of Shares of record shall be entitled to
exchange their Shares or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(i) Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding Shares
(other than a change in par
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value, or from par value to no par value, or from no par value to par value, or
as a result of an issuance of Shares by way of dividend or other distribution or
of a subdivision or combination), in case of any consolidation or merger of the
Company with or into a third party (other than a merger with a subsidiary of the
Company in which merger the Company is the continuing entity and which does not
result in any reclassification, capital reorganization or other change of
outstanding Shares) or in case of any sale or conveyance to a third party of the
property of the Company as an entirety or substantially as an entirety, the
Company shall cause effective provision to be made so that the Holder shall have
the right thereafter, by exercising this Warrant, to purchase the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, capital reorganization or other change, consolidation, merger,
sale or conveyance. Any such provision shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section (i) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of Shares and to successive consolidations, mergers, sales or
conveyances.
(j) Spin-Offs. In the event the Company spins-off a subsidiary by
distributing to the shareholders of the Company as a dividend or otherwise the
stock of the subsidiary, the Company shall reserve for the life of the Warrant
shares of the subsidiary to be delivered to the Holders of the Warrants upon
exercise to the same extent as if they were owners of record of the Warrant
Shares on the record date for payment of the shares of the subsidiary.
(k) Registration under the Securities Act of 1933.
(1) Subject to the terms and conditions of this Agreement, in the
event that, subsequent to the completion of the Offering and prior to the
expiration of the entire unexercised portion of this Warrant, the Company
files a registration statement (defined herein to include a Form 1-A
Offering Statement under Regulation A under the Act (defined below) and the
Offering Circular included therein) under the Securities Act of 1933, as
amended (the "Act"), which relates to a current offering of securities of
the Company (except in connection with an offering solely to employees),
such registration statement and the prospectus included therein shall also,
at the written request to the Company by the registered owners of any
outstanding portion of this Warrant or Warrant Shares acquired upon
exercise of any portion of this Warrant, include and relate to, and meet
the requirements of the Act with respect to, the public offering of any
outstanding portion of this Warrant, any outstanding Warrant Shares and
Warrant Shares issuable upon exercise of the outstanding Warrants
(collectively, "Registrable Shares") so as to permit the public sale
thereof in compliance with the Act. The Company shall give written notice
to the Holders of its intention to file a registration statement under the
Act relating to a current offering of the aforesaid securities of the
Company, 30 or more days prior to the filing of such registration
statement, and the written request provided for in the first sentence of
this subsection shall be made by the owners of Registrable Securities 15 or
more days prior to the date specified in the notice as the date on which it
is intended to file
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such registration statement. Neither the delivery of such notice by the
Company nor of such request by such owners shall in any way obligate the
Company to file such registration statement and notwithstanding the filing
of such registration statement, the Company may, at any time prior to the
effective date thereof, determine not to offer the securities to which such
registration statement relates, without liability to such owners, except
that the Company shall pay such expenses as are contemplated to be paid by
it under subsection (3) of this Section. The registration rights set forth
in this Section (k) shall expire upon the sixth anniversary of the
execution date of this Warrant and (ii) continue during such period
regardless of the exercise or surrender of this Warrant.
(2) In each instance in which pursuant to subsection (1) of this
Section the Company shall take any action to permit a public offering or
sale or other distribution of the Warrant or Warrant Shares, the Company
shall:
(A) Supply to Sigma as representative of the Holders intending to
make a public distribution of their Warrant or Warrant Shares (the
Holder by his receipt of this Warrant hereby acknowledging his
appointment of Sigma as his representative for purposes of this
Warrant), two executed copies of each registration statement and a
reasonable number of copies of the preliminary, final and other
prospectus or offering circular in conformity with requirements of the
Act and the rules and regulations promulgated thereunder and such
other documents as Sigma shall reasonably request;
(B) Cooperate in taking such action as may be necessary to
register or qualify the Registrable Securities under such other
securities acts or blue sky laws of such states as Sigma shall
reasonably request and to do any and all other acts and things which
may be necessary or advisable to enable the holders of such
Registrable Securities to consummate such proposed sale or other
disposition of such Registrable Securities in any such state;
provided, however, that in no event shall the Company be obligated, in
connection therewith, to qualify to do business or to file a general
consent to service of process in any state where it shall not then be
qualified;
(C) Keep effective for a period of not less than 90 days after
the initial effectiveness thereof all such registrations under the Act
and cooperate in taking such action as may be necessary to keep
effective such other state registrations and qualifications, and do
any and all other acts and things for such period, not to exceed 12
months, as may be necessary to permit the public sale or other
disposition of such Registrable Securities by such Holders.
(D) Indemnify and hold harmless each such Holder and each
underwriter, within the meaning of the Act, who may purchase from or
sell for any such Holder, any Registrable Securities, from and against
any and all losses, claims, damages, and liabilities (including, but
not limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing, defending or settling any claim) arising
from (i) any untrue statement of a material fact contained in any
registration statement or any
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amendment to any registration statement or in any prospectus or
offering circular included therein furnished pursuant to clause (A) of
this subsection or (ii) any omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading (unless such untrue statement or omission was
based upon information furnished or required to be furnished in
writing to the Company by such Holder or underwriter expressly for use
therein), which indemnification shall include each person, if any, who
controls any such Holder or underwriter within the meaning of the Act;
provided, however, that the Company shall not be so obligated to
indemnify any such Holder or underwriter or controlling person unless
such Holder, underwriter or controlling person, as the case may be,
shall at the same time indemnify the Company, Baron Advisors, Inc.
(the managing shareholder of the Company), members of the Board and
officers of the Company and each person, if any, who controls the
Company within the meaning of the Act, from and against any and all
losses, claims, damages and liabilities (including, but not limited
to, any and all expenses whatsoever reasonably incurred in
investigating, preparing, defending or settling any claim) arising
from (x) any untrue statement of a material fact contained in any
registration statement or any amendment to any registration statement
or prospectus or offering circular furnished pursuant to Clause (A) of
this subsection, or (y) any omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, but the indemnity of such holder, underwriter
or controlling person shall be limited to liability based upon
information furnished, or required to be furnished, in writing to the
Company by such holder, underwriter or controlling person expressly
for use therein. The indemnity agreement of the Company herein shall
not inure to the benefit of any such underwriter (or to the benefit of
any person who controls such underwriter) on account of any losses,
claims, damages, liabilities (or actions or proceedings in respect
thereof) arising from the sale of any of such Registrable Securities
by such underwriter to any person if such underwriter failed to send
or give a copy of the prospectus or offering circular furnished
pursuant to Clause (A) of this subsection, as the same may then be
supplemented or amended (if such supplement or amendment shall have
been furnished to Sigma pursuant to said Clause (A)), to such person
with or prior to the written confirmation of the sale involved.
(3) The Company shall comply with the requirements of subsection (1)
and (2) at its own expense, provided, however, it shall not be obligated to
pay underwriting commissions, transfer taxes, fees and expenses of Holders=
counsel or any underwriter=s expense allowance in respect of the
Registrable Securities to be registered at the request of Holders.
(4) The Company=s obligation under said subsection (1) shall be
conditioned as to each such public offering, upon a timely receipt by the
Company in writing of such information as the Company may reasonably
require from such Holders, or any underwriter for any of them, for
inclusion in such registration statement or post-effective amendment.
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(5) Any notices or certificates by the Company to the Holder and by
the Holder to the Company shall be deemed delivered hereunder if in writing
and delivered personally or sent by certified mail, to the Holder,
addressed to him in care of Sigma Financial Corporation, 0000 Xxxx Xxxx,
Xxx Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx or, if the Holder
has designated, by notice in writing to the Company, any other address, to
such other address, and, if to the Company, addressed to Baron Capital
Trust, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000. The Company may change its
address by written notice to Sigma (and any such designees) and Sigma may
change its address by written notice to the Company.
(l) Transfers to Comply with the Securities Act of 1933.
(1) This Warrant or the Warrant Shares or any other security issued or
issuable upon exercise of this Warrant may not be offered or sold except in
conformity with the Act, and then only against receipt of an agreement of
such person to whom such offer or sale is made to comply with the
provisions of this Section (1) with respect to any resale or other
disposition of such securities.
(2) The Company may cause the following legend to be set forth on each
Warrant and certificate representing Warrant Shares or any other security
issued or issuable upon exercise of this Warrant not theretofore
distributed to the public or sold to underwriters for distribution to the
public pursuant to Section (k) hereof, unless counsel for the Company is of
the opinion as to any such certificate that such legend is unnecessary:
The securities represented by this certificate may not be offered for sale,
sold or otherwise transferred except pursuant to an effective registration
statement made under the Securities Act of 1933 (the "Act"), or pursuant to
an exemption from registration under the Act.
(m) Applicable Law. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to
Delaware laws governing conflicts of law.
(n) Notice of Non-liability. Under the Delaware Business Trust Act and
Sections 3.3 and 3.4 of the Declaration of Trust for the Company made as of
August 31, 1997, neither the Shareholders of the Company, Baron Advisors, Inc.
(the Managing Shareholder of the Company), the Trustees of the Company, nor any
other members of the Board of the Company shall be personally liable hereunder,
and the Holder shall look solely to the Company property for the satisfaction of
any claim hereunder against the Company.
BARON CAPITAL TRUST
By ______________________________
Xxxxxxx X. XxXxxxx, President
Date: ______________, 199_
Attest:
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