ARBOR REALTY TRUST, INC. COMMON STOCK PURCHASE WARRANT
Exhibit 4.2
THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT MAY BE PURCHASED HEREUNDER
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES
LAWS OF ANY STATE. THIS COMMON STOCK PURCHASE WARRANT HAS BEEN ACQUIRED FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION, AND THIS COMMON STOCK
PURCHASE WARRANT AND THE SHARES THAT MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AND REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL THAT THE PROPOSED TRANSACTION DOES NOT
VIOLATE THE SECURITIES ACT OF 1933, AND APPLICABLE STATE SECURITIES LAWS.
ARBOR REALTY TRUST, INC.
| Date of Issuance: July 23, 2009 | Certificate No. W-1 |
THIS IS TO CERTIFY that WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association (together with its transferees, successors and assigns, the
“Holder”), for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, is entitled to purchase from ARBOR REALTY TRUST,
INC., a Maryland corporation (the “Company”), at the price of $3.50 per
share (the “Exercise Price”), at any time after the date hereof (the
“Commencement Date”) and expiring on July 23, 2015 (the “Expiration
Date”), 500,000 shares of fully paid and nonassessable common stock, par value
$0.01 per share (“Common Stock”) of the Company (as such number may be
adjusted as provided herein). The 500,000 shares of Common Stock which may be
purchased pursuant to this Warrant are referred to herein as the “Aggregate
Number”. This common stock purchase warrant (this “Warrant”) is issued
under and in connection with that certain First Amended and Restated Credit
Agreement, dated as of July 23, 2009 (as the same may be amended, modified,
restated, replaced, waived, substituted, supplemented or extended from time to
time, the “Credit Agreement”), among Arbor Realty Funding, LLC, a Delaware
limited liability company, as a borrower, ARSR Tahoe, LLC, a Delaware limited
liability company, as a borrower, Arbor ESH II LLC, a Delaware limited liability
company, as a borrower, Arbor Realty Limited Partnership, a Delaware limited
partnership, as a borrower and a guarantor, ART 450 LLC, a Delaware limited
liability company, as a borrower, the Company, as a guarantor, Arbor Realty SR,
Inc., a Maryland corporation, as a borrower and a guarantor, the several banks and
other financial institutions as are, or may from time to time become parties
thereto, and Wachovia Bank, National Association, a national banking association,
as administrative agent for the lenders thereunder.
The Aggregate Number and Exercise Price set forth above shall also be adjusted under certain
conditions specified in Section 5 of this Warrant, including, but not limited to, a Stock
Dividend, Stock
Subdivision or Stock Combination. Capitalized terms used herein shall have the meanings
ascribed to such terms in Section 11 hereof unless otherwise defined herein.
SECTION 1. The Warrant; Transfer and Exchange.
(a) The Warrant. This Warrant and the rights and privileges of the Holder hereunder
may be exercised by the Holder in whole or in part as provided herein, shall survive any
termination of the Credit Agreement and, as more fully set forth in Sections 1(b) and
7 hereof, subject to the terms of this Warrant, may be transferred by the Holder to any
other Person or Persons who meet the requirements set forth herein at any time or from time to
time, in whole or in part, regardless of whether the Holder retains any or all rights under the
Credit Agreement.
(b) Transfer and Exchanges. The Company shall initially record this Warrant on a
register to be maintained by the Company and, subject to Section 7 hereof, from time to
time thereafter shall reflect the transfer of this Warrant on such register when surrendered for
transfer in accordance with the terms hereof and properly endorsed, accompanied by appropriate
instructions, and further accompanied by payment in cash or by check, bank draft or money order
payable to the order of the Company, in United States currency, of an amount equal to any stamp or
other tax or governmental charge or fee required to be paid in connection with the transfer
thereof. Upon any such transfer, a new warrant or warrants shall be issued to the transferee and
the Holder (in the event this Warrant is only partially transferred) and the surrendered warrant
shall be canceled. This Warrant may be exchanged at the option of the Holder, when surrendered at
the Principal Office of the Company, for another warrant or other warrants of like tenor and
representing in the aggregate the right to purchase a like number of shares of Common Stock.
SECTION 2. Exercise.
(a) Right to Exercise. At any time after the Commencement Date and on or before the
Expiration Date, the Holder, in accordance with the terms hereof, may exercise this Warrant, in
whole at any time or in part from time to time, by delivering this Warrant to the Company during
normal business hours on any Business Day at the Company’s Principal Office, together with the
Notice of Exercise, in the form attached hereto as Exhibit A and made a part hereof (the
“Notice of Exercise”), duly executed, and payment of the Exercise Price per share for each
share purchased, as specified in the Notice of Exercise. The aggregate Exercise Price (the
“Aggregate Exercise Price”) to be paid for the shares to be purchased (the “Exercise
Amount”) shall equal the product of (i) the Exercise Amount multiplied by (ii) the Exercise
Price. If the Expiration Date is not a Business Day, then this Warrant may be exercised on the
next succeeding Business Day.
(b) Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price
shall be made to the Company in cash or other immediately available funds or as provided in
Section 2(c), or a combination thereof. In the case of payment of all or a portion of the
Aggregate Exercise Price pursuant to Section 2(c), the direction by the Holder to make a
“Cashless Exercise” shall serve as accompanying payment for that portion of the Exercise Price.
(c) Cashless Exercise. The Holder shall have the right to pay all or a portion of the
Aggregate Exercise Price by making a “Cashless Exercise”, in which case the portion of the
Aggregate Exercise Price to be so paid shall be paid by reducing the number of shares of Common
Stock otherwise issuable pursuant to the Notice of Exercise by an amount equal to (i) the Aggregate
Exercise Price to be so paid divided by (ii) the Fair Market Value Per Share.
(d) Issuance of Shares of Common Stock. Upon receipt by the Company of this Warrant
at its Principal Office in proper form for exercise, and accompanied by the Notice of Exercise and
payment
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of the Aggregate Exercise Price as aforesaid, the Holder shall be deemed to be the holder of
record of the shares of Common Stock issuable upon such exercise, notwithstanding that certificates
representing such shares of Common Stock may not then be actually delivered. Within five (5)
Business Days after such surrender of this Warrant, delivery of the Notice of Exercise and payment
of the Aggregate Exercise Price as aforesaid, the Company shall issue and cause to be delivered to,
or upon the written order of, the Holder (and in such name or names as the Holder may designate) a
certificate or certificates for the Exercise Amount, subject to any reduction as provided in
Section 2(c) for a Cashless Exercise.
(e) Fractional Shares. The Company may, but shall not be required to, deliver
fractions of shares of Common Stock upon exercise of this Warrant. If any fraction of a share of
Common Stock would be deliverable upon an exercise of this Warrant, the Company may, in lieu of
delivering such fraction of a share of Common Stock, make a cash payment to the Holder in an amount
equal to the same fraction of the Fair Market Value Per Share determined as of the Business Day
immediately preceding the date of exercise of this Warrant.
(f) Partial Exercise. In the event of a partial exercise of this Warrant, the Company
shall issue to the Holder a Warrant in like form for the unexercised portion thereof which has not
expired.
SECTION 3. Payment of Taxes. The Company shall pay all stamp taxes attributable to
the initial issuance of shares or other securities issuable upon the exercise of this Warrant or
issuable pursuant to Section 5 hereof, excluding any tax or taxes which may be payable
because of the transfer involved in the issuance or delivery of any certificates for shares or
other securities in a name other than that of the Holder in respect of which such shares or
securities are issued.
SECTION 4. Replacement Warrant. In case this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant, or in lieu of and in substitution for this Warrant lost,
stolen or destroyed, a new Warrant of like tenor and representing an equivalent right or interest,
but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant and upon receipt of indemnity reasonably satisfactory to the Company
and the Holder; provided, that if the Holder is a financial institution, business
development company or other institutional or fund investor, its own indemnity agreement shall be
satisfactory and no third party indemnity shall be required.
SECTION 5. Adjustments to the Aggregate Number and the Exercise Price.
Under certain conditions, the Aggregate Number and the Exercise Price are subject to
adjustment as set forth in this Section 5.
(a) Adjustments. The Aggregate Number, after taking into consideration any prior
adjustments pursuant to this Section 5, shall be subject to adjustment from time to time as
follows and, thereafter, as adjusted, shall be deemed to be the Aggregate Number hereunder.
(i) Stock Dividends; Subdivisions and Combinations. In case at any time or
from time to time the Company shall:
(A) issue to the holders of its shares of Common Stock a dividend payable in,
or other distribution of, shares of Common Stock (a “Stock Dividend”);
(B) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, including, without limitation, by means of a stock split (a
“Stock Subdivision”); or
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(C) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock (a “Stock Combination”);
then the Aggregate Number in effect immediately prior thereto shall be (1) proportionately
increased in the case of a Stock Dividend or a Stock Subdivision and (2) proportionately decreased
in the case of a Stock Combination, and the Exercise Price shall be proportionately adjusted. In
the event the Company shall declare or pay, without consideration, any dividend on the shares of
Common Stock payable in any right to acquire shares of Common Stock for no consideration, then the
Company shall be deemed to have made a Stock Dividend in an amount of shares equal to the maximum
number of shares issuable upon exercise of such rights to acquire shares of Common Stock.
(b) Notices.
(i) Notice of Proposed Actions. In case the Company shall propose (A) to pay
any dividend payable in stock of any class to the holders of its Common Stock or to make any
other distribution to the holders of its Common Stock, (B) to offer to the holders of its
Common Stock rights to subscribe for or to purchase any Convertible Securities, rights to
acquire Convertible Securities or capital stock or additional shares of Common Stock or shares of stock of any class or any other securities, warrants, rights or options, (C) to
effect any reclassification of its Common Stock, (D) to effect any recapitalization, stock
subdivision, stock combination or other capital reorganization, (E) to effect any
consolidation or merger, share exchange, or sale, lease or other disposition of all or
substantially all of its property, assets or business, (F) to effect the liquidation,
dissolution or winding up of the Company, (G) to initiate any transaction or be a party to
any transaction (including, without limitation, a merger, consolidation, share exchange,
sale, lease or other disposition of all or substantially all of the Company’s assets,
liquidation, recapitalization or reclassification of the Common Stock) in connection with
which the previous Outstanding Common Stock shall be changed into or exchanged for different
securities of the Company or capital 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 or (H) to effect any other action which would require an adjustment under this
Section 5, then in each such case the Company shall give to the Holder written
notice of such proposed action, which shall specify the proposed date on which a record is
to be taken for the purposes of such stock dividend, distribution or rights, or the proposed
date on which such reclassification, reorganization, consolidation, merger, share exchange,
sale, transfer, disposition, liquidation, dissolution, winding up or other transaction is to
take place and the date of participation therein by the holders of Common Stock, if any such
date is to be fixed, or the proposed date on which the transfer of Common Stock is to occur,
and shall also set forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the Common Stock and on the Aggregate Number after
giving effect to any adjustment which will be required as a result of such action. Such
notice shall be so given in the case of any action covered by clause (A) or (B) above at
least twenty (20) calendar days prior to the record date for determining holders of the
Common Stock for purposes of such action and, in the case of any other such action, at least
twenty (20) calendar days prior to the earlier of the date of the taking of such proposed
action or the date of participation therein by the holders of Common Stock.
(ii) Adjustment Notice. Whenever the Aggregate Number is to be adjusted
pursuant to this Section 5, unless otherwise agreed by the Holder, the Company shall
promptly (and in any event within ten (10) Business Days after the event requiring the
adjustment) prepare and deliver to the Holder a certificate signed by the chief financial
officer of the Company, setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment is
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to be calculated. The certificate shall set forth, if applicable, a description of the
basis on which the board of directors in good faith determined, as applicable, the Fair
Market Value Per Share, the fair market value of any evidences of indebtedness, shares of
stock, other securities, warrants, other subscription or purchase rights, or other property
or the equitable nature of any adjustment under Section 5(b) or (c) hereof,
the new Aggregate Number and, if applicable, any new securities or property to which the
Holder is entitled. Any other determination of fair market value shall first be determined
in good faith by the board of directors and be based upon an arm’s length sale of such
indebtedness, shares of stock, other securities, warrants, other subscription or purchase
rights or other property, such sale being between a willing buyer and a willing seller. In
the case of any such determination of fair market value, the Holder may object to the
determination in such certificate by giving written notice within ten (10) Business Days of
the receipt of such certificate and, if the Holder and the Company cannot agree to the fair
market value within ten (10) Business Days of the date of the Holder’s objection, the fair
market value shall be determined by a disinterested appraiser (which may be national or
regional investment bank or a national accounting firm) mutually selected by the Holder and
the Company, the fees and expenses of which shall be paid by the Company.
SECTION 6. No Dilution or Impairment. The Company will not, by amendment of its
Articles of Incorporation or through any reorganization, recapitalization, transfer of assets,
consolidation, merger, share exchange, dissolution or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, including, without
limitation, the adjustments required under Section 5 hereof, and will at all times in good
faith assist in the carrying out of all such terms and in taking of all such action as may be
necessary or appropriate to protect the rights of the Holder against dilution or other impairment.
Without limiting the generality of the foregoing and notwithstanding any other provision of this
Warrant to the contrary (including by way of implication), the Company (a) will not increase the
par value of any shares of Common Stock receivable on the exercise of this Warrant above the amount
payable therefor on such exercise and (b) will take all such action as may be necessary or
appropriate so that the Company may validly and legally issue fully paid and nonassessable shares
of Common Stock upon the exercise of this Warrant.
SECTION
7. Transfers of this Warrant. (a) Generally. Subject to the restrictions set forth in this Section 7, the
Holder may at any time and from time to time freely transfer this Warrant and the Warrant Shares in
whole or in part to any Person. This Warrant has not been, and the Warrant Shares at the time of
their issuance may not be, registered under the Securities Act and, except as provided in the
Registration Rights Agreement, nothing herein contained shall be deemed to require the Company to
so register this Warrant and the Warrant Shares. This Warrant and the Warrant Shares are issued or
issuable subject to the provisions and conditions contained herein and to the provisions and
conditions contained in the Registration Rights Agreement, and every Holder hereof by accepting the
same agrees with the Company to such provisions and conditions, and represents to the Company that
this Warrant has been acquired and the Warrant Shares will be acquired for the account of the
Holder for investment and not with a view to or for sale in connection with any distribution
thereof.
(b) Compliance with Securities Laws. The Holder agrees that this Warrant and the
Warrant Shares may not be sold or otherwise disposed of except pursuant to an effective
registration statement under the Securities Act and other applicable Securities Laws or pursuant to
an applicable exemption from the registration requirements of the Securities Act and such other
applicable Securities Laws. In the event that the Holder transfers this Warrant or the Warrant
Shares pursuant to an applicable exemption from registration, the Company may request, at its
expense, that the Holder deliver an opinion of counsel
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reasonably acceptable to the Company that the proposed transfer does not violate the
Securities Act or other applicable Securities Laws.
(c) Restrictive Securities Legend. (i) The certificate representing the Warrant
Shares shall bear the restrictive legends set forth below:
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER, SALE OR OTHER DISPOSITION
OF THIS WARRANT MAY BE MADE UNLESS A REGISTRATION STATEMENT WITH RESPECT TO THIS
WARRANT HAS BECOME EFFECTIVE UNDER SAID ACT, AND SUCH REGISTRATION OR QUALIFICATION
AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE HAS BECOME EFFECTIVE, OR
BORROWER HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL SATISFACTORY TO BORROWER
THAT SUCH REGISTRATION IS NOT REQUIRED.
(ii) Certificates evidencing the Warrant Shares shall not contain any legend: (1) while
a registration statement (including the Registration Statement) covering the resale of the
Warrant Shares is effective under the Securities Act, or (2) following any sale of the
Shares pursuant to Rule 144 (other than sales to an Affiliate of Holder), or (3) if such
Warrant Shares are eligible for sale under Rule 144(b), or (4) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). If a legend is
not otherwise required under applicable requirements of the Securities Act (including
judicial interpretations thereof) then any certificates representing the Warrant Shares
shall be issued free of all legends. The Company agrees that following the effective date
of the Registration Statement or at such time as such legend is no longer required under
this Section 7, it will, no later than five (5) Business Days following the delivery
by the Holder to the Company’s transfer agent of a certificate representing the Warrant
Shares issued with a restrictive legend, deliver or cause to be delivered to the Holder a
certificate representing such Warrant Shares that is free from all restrictive and other
legends. Unless required by law, the Company may not make any notation on its records or
give instructions to any transfer agent of the Company that enlarge the restrictions on
transfer set forth in this Section 7.
(d) Right of First Refusal.
(i) Holder may not Transfer this Warrant or any portion hereof unless it has complied
with this Section 7(d). If Xxxxxx proposes to Transfer this Warrant (or portion
hereof), then Holder shall promptly give written notice (the “Sale Notice”) to the
Company at least twenty (20) days prior to the closing of such Transfer. The Notice shall
describe in reasonable detail the proposed Transfer including, without limitation, the
portion of this Warrant to be Transferred (the “Transfer Amount”), the nature of
such Transfer, the consideration to be paid, and the name and address of each prospective
purchaser or transferee.
(ii) For a period of ten (10) days following receipt of any Sale Notice, the Company
shall have the right to purchase all, but not less than all, of the Transfer Amount subject
to such Sale Notice on the same terms and conditions as set forth therein. The Company’s
purchase right shall be exercised by written notice signed by an officer of the Company (the
“Company Notice”) and delivered to the Holder within such ten (10) day period. The
Company shall effect the purchase of the Transfer Amount, including payment of the purchase
price, not more than five (5)
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business days after delivery of the Company’s Notice, and at such time the Holder shall
deliver to the Company this Warrant, properly endorsed for transfer. To the extent that the
Company does not elect to exercise its purchase right pursuant to this Section 7(d),
the Holder may, not later than thirty (30) days following delivery to the Company of the
Sale Notice, enter into an agreement providing for the closing of the Transfer of the
Transfer Amount covered by the Sale Notice within thirty (30) days of such agreement on the
terms and conditions described in the Sale Notice. Any subsequent proposed Transfer of this
Warrant by the Holder, shall again be subject to the first refusal rights of the Company and
shall require compliance by the Holder with the procedures described in this Section
7(d).
(iii) Notwithstanding the foregoing, the purchase rights of the Company set forth in
this Section 7(d) shall not apply to (i) any Transfer by a Holder to an Eligible
Assignee, (ii) any pledge of this Warrant made pursuant to a bona fide loan transaction that
creates a mere security, (iii) any Transfer by Holder in connection with the sale of all or
a portion of any outstanding indebtedness of the Company held by Holder or its Affiliates
pursuant to the Credit Agreement, or (iv) any Transfer that is a bona fide gift approved by
the Holder’s Board of Directors; provided, in each case, that the pledgee,
transferee or donee shall enter into a written agreement to be bound by and comply with all
provisions of this Warrant as if it were an original Holder hereunder.
(iv) Any purported Transfer by a Holder of this Warrant (or portion thereof) in
violation of this Section 7(d) shall be voidable, and the Company will not effect
such Transfer nor will it treat any alleged transferee as the holder of this Warrant.
(v) By its execution of this Agreement, Wachovia Bank, National Association, as the
Lender under the Credit Agreement, hereby consents to any purchase by the Company of this
Warrant upon the exercise of its rights under this Section 7(d), and acknowledges
and agrees that notwithstanding any provision of the Credit Agreement to the contrary, any
such purchase shall not constitute a breach of any provision of the Credit Agreement.
SECTION 8. Covenants.
The Company hereby covenants to the Holder that so long as Holder holds any Warrant
Securities:
(a) Limitation on Certain Restrictions. Without the prior written consent of the
Required Holders, the Company will not, and will not permit or cause any of its Subsidiaries,
directly or indirectly, to create or otherwise cause or suffer to exist or become effective any
restriction or encumbrance on the ability of the Company and any such Subsidiaries to perform and
comply with their respective obligations under this Warrant.
(b) Regulatory Requirements and Restrictions. In the event of any reasonable
determination by the Holder that, by reason of any existing or future federal or state law,
statute, rule, regulation, guideline, order, court or administrative ruling, request or directive
(whether or not having the force of law and whether or not failure to comply therewith would be
unlawful) (collectively, a “Regulatory Requirement”), the Holder is effectively restricted
or prohibited from holding this Warrant or the Warrant Shares (including any shares of capital
stock or other securities distributable to the Holder in any merger, reorganization, readjustment
or other reclassification), or otherwise realizing upon or receiving the benefits intended under
this Warrant, the Company shall take such action as the Holder and the Company shall jointly agree
in good faith to be necessary to permit the Holder to comply with such Regulatory
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Requirement. The reasonable costs of taking such action, whether by the Company, the Holder
or otherwise, shall be borne by the Holder.
(c) Reservation of Shares. The Company shall at all times reserve and keep available
out of the aggregate of its authorized but unissued shares, free of preemptive rights, such number
of its duly authorized shares of Common Stock as shall be sufficient to enable the Company to issue
Common Stock upon exercise of this Warrant.
(d) Affirmative Actions to Permit Exercise and Realization of Benefits. If any shares
of Common Stock reserved or to be reserved for the purpose of the exercise of this Warrant, or any
shares or other securities reserved or to be reserved for the purpose of issuance pursuant to
Section 5 hereof, require registration with or approval of any Governmental Authority under
any federal or state law (other than securities laws) before such shares or other securities may be
validly delivered upon exercise of this Warrant, then the Company covenants that it will, at its
sole expense, secure such registration or approval, as the case may be (including but not limited
to approvals or expirations of waiting periods required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act).
(e) Validly Issued Shares. All shares of Common Stock that may be issued upon
exercise of this Warrant, assuming full payment of the Aggregate Exercise Price (including those
issued pursuant to Section 5 hereof) shall, upon delivery by the Company, be duly
authorized and validly issued, fully paid and nonassessable, free from all stamp taxes, liens and
charges with respect to the issue or delivery thereof and otherwise free of all other security
interests, encumbrances and claims of any nature whatsoever (other than security interests,
encumbrances and claims to which the Holder is subject prior to the issuance of this Warrant and
other transfer restrictions described herein).
(f) Furnishing of Information; Compliance with Rule 144. The Company shall timely
file (or obtain extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. So
long as the Warrant Shares are not registered under an effective registration statement, upon the
request of the Holder, the Company shall deliver to the Holder a written certification of a duly
authorized officer as to whether it has complied with the preceding sentence. As long as the
Holder owns any of the Warrant Shares, if the Company is not required to file reports pursuant to
such laws, it will prepare and furnish to the Holder and make publicly available in accordance with
Rule 144 such information as is required for the Holder to sell the Warrant Shares under Rule 144.
So long as the Warrant Shares are not registered under an effective registration statement, the
Company further covenants that it will take such further action as the Holder may reasonably
request, all to the extent required from time to time to enable the Holder to sell such Warrant
Shares without registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
(g) Integration. The Company shall not, and shall use its commercially reasonable
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of this Warrant in a manner that would require
the registration under the Securities Act of the sale of the Warrant to the Holder, or that would
be integrated with the offer or sale of the Warrant Shares for purposes of the rules and
regulations of any Principal Market.
(h) Listing of the Warrant Shares. The Company shall: (i) take all steps necessary to
cause the Warrant Shares to be approved for listing on the Principal Market as soon as possible
after the Commencement Date, (ii) provide to the Holder evidence of such listing, and (iii) use
reasonable efforts to maintain the listing of the Warrant Shares on such Principal Market or
another Principal Market.
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(i) Securities Laws Disclosure; Publicity. The Company shall issue a press release or
timely file a report on Form 8-K reasonably acceptable to the Holder disclosing all material terms
of the transactions contemplated hereby. The Company and the Holder shall consult with each other
in issuing any press releases with respect to the transactions contemplated hereby.
Notwithstanding the foregoing, other than in the Registration Statement, the Company shall not
publicly disclose the name of the Holder or the terms hereof, or include the name of the Holder or
the terms hereof in any filing with the Commission or any regulatory agency or Principal Market,
without the prior written consent of such Holder, except to the extent such disclosure is required
by law or Principal Market regulations. The Holder acknowledges that such disclosure may be
required by law in the Company’s proxy statement, annual report on Form 10-K, quarterly report on
Form 10-Q, and filings related thereto and will be incorporated by reference to such filings in
currently effective registration statements filed by the Company and will be included in
registration statements that may be filed by the Company in the future.
SECTION 9. No Effect Upon Lending Relationship. Notwithstanding anything herein to
the contrary, nothing contained in this Warrant shall affect, limit or impair the rights and
remedies of the Holder or any of its Affiliates in its capacity as a lender to the Company pursuant
to any agreement under which the Company has borrowed money from the Holder. Without limiting the
generality of the foregoing, the Holder, in exercising its rights as a lender, including making its
decision on whether to foreclose on any collateral security, will have no duty to consider (i) its
status or the status of any of its Affiliates as a direct or indirect equity holder of the Company,
(ii) the equity of the Company or (iii) any duty it may have to any other direct or indirect equity
holder of the Company, except as may be required under the applicable loan documents or by
commercial law applicable to creditors generally.
SECTION 10. Events of Non-Compliance and Remedies.
(a) Events of Non-Compliance. If the Company fails to keep and fully and promptly
perform and observe in all material respects any of the terms, covenants or representations
contained or referenced herein within twenty (20) calendar days from the earlier to occur of (i)
written notice from the Holder specifying what failure has occurred, or requesting that a specified
failure be remedied or (ii) the Company becoming aware of such failure (an “Event of
Non-Compliance”), the Holder shall be entitled to the remedies set forth in subsection (b)
hereof.
(b) Remedies. On the occurrence of an Event of Non-Compliance, in addition to any
remedies the Holder may have under any Requirement of Law, the Holder may bring any action for
injunctive relief or specific performance of any term or covenant contained herein, the Company
hereby acknowledging that an action for money damages may not be adequate to protect the interests
of the Holder hereunder.
SECTION 11. Definitions.
As used herein, in addition to the terms defined elsewhere herein, the following terms shall
have the following meanings. Capitalized terms not appearing below and not otherwise defined
herein shall have the meaning ascribed to them in the Credit Agreement.
“Affiliate” has the meaning set forth in the Credit Agreement.
“Aggregate Exercise Price” has the meaning set forth in Section 2(a).
“Aggregate Number” has the meaning set forth in the Preamble.
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“Approved Fund” shall mean any Fund that is administered, managed or underwritten by
(a) Holder, (b) an Affiliate of Holder or (c) an entity or an Affiliate of an entity that
administers or manages Holder.
“Articles of Incorporation” means the Articles of Incorporation of the Company, as in
effect on the date hereof.
“Business Day” has the meaning set forth in the Credit Agreement.
“Commencement Date” has the meaning set forth in the Preamble.
“Commission” means the Securities and Exchange Commission or any similar agency then
having jurisdiction to enforce the Securities Act or the Exchange Act.
“Common Stock” includes (a) the Common Stock of the Company, par value $0.01 per
share, as described in the Articles of Incorporation, (b) any other class of capital stock
hereafter authorized having the right to share in distributions either of earnings or assets
without limit as to amount or percentage or (c) any other capital stock into which such Common
Stock is reclassified or reconstituted.
“Company” has the meaning set forth in the Preamble.
“Company Notice” has the meaning set forth in Section 7(d)(ii).
“Convertible Securities” means evidences of indebtedness, shares of stock or other
securities (including, but not limited to options and warrants) which are directly or indirectly
convertible, exercisable or exchangeable, with or without payment of additional consideration in
cash or property, for shares of Common Stock, either immediately or upon the onset of a specified
date or the happening of a specified event.
“Credit Agreement” has the meaning set forth in the Preamble.
“Eligible Assignee” shall mean (a) an Affiliate of Holder, and (b) an Approved Fund.
“Event of Non-Compliance” has the meaning set forth in Section 10(a).
“Exchange Act” has the meaning set forth in the Credit Agreement.
“Exercise Amount” has the meaning set forth in Section 2(a).
“Exercise Price” has the meaning set forth in the Preamble.
“Expiration Date” has the meaning set forth in the Preamble.
“Fair Market Value Per Share” means the value, on a particular date, of a share of
Common Stock determined as follows:
(i) If the Common Stock is listed or admitted to trading on such date on the Principal Market,
the mean of the high and low sales prices of a share of Common Stock on the date immediately prior
to such date of determination as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on such Principal Market (if there
were no sales on such date
10
reported as provided above, the respective prices on the most recent prior day on which a sale
of a share of Common Stock took place); or
(ii) If the Common Stock is not publicly traded, (a) the fair market value of the Outstanding
Common Stock based upon an arm’s length sale of the Company on such date (including its ownership
interest in all Persons) as an entirety, such sale being between a willing buyer and a willing
seller and determined without reference to any discount for minority interest, restrictions on
transfer, disparate voting rights among classes of capital stock or lack of marketability with
respect to capital stock divided by (b) the aggregate number of shares of
Outstanding Common Stock. The Fair Market Value Per Share shall be determined by the disinterested
members of the Board of Directors of the Company in good faith within ten (10) Business Days of any
event for which such determination is required and such determination (including the basis
therefor) shall be promptly provided to the Holder. Such determination shall be binding on the
Holder unless the Holder objects thereto in writing within ten (10) Business Days of receipt. In
the event the Holder objects to the determination of “Fair Market Value Per Share” by the board of
directors of the Company (such objection to be made within ten (10) Business Days of the Holder’s
receipt of written notice of such determination), then the Fair Market Value Per Share shall be
determined by a disinterested appraiser (which may be a national or regional investment bank or
national accounting firm) mutually selected by the Company and the Holder, the fees and expenses of
which shall be paid by the Company. Any selection of a disinterested appraiser shall be made in
good faith within five (5) Business Days after the Holder provides written notice to the Company of
its objection to the determination of Fair Market Value Per Share and any determination of Fair
Market Value Per Share by a disinterested appraiser shall be made within ten (10) Business Days of
the date of selection.
“Fund” has the meaning set forth in the Credit Agreement.
“Governmental Authority” has the meaning set forth in the Credit Agreement.
“Holder” has the meaning set forth in the Preamble.
“Lenders” has the meaning set forth in the Credit Agreement.
“Notice of Exercise” has the meaning set forth in Section 2(a).
“Outstanding Common Stock” of the Company means, as of the date of determination, the
sum (without duplication) of the following: (a) the number of shares of Common Stock then
outstanding at the date of determination, (b) the number of shares of Common Stock then issuable
upon the exercise of this Warrant (as such number of shares may be adjusted pursuant to the terms
hereof) and (c) the number of shares of Common Stock then issuable upon the exercise or conversion
of Convertible Securities and any warrants, options or other rights to subscribe for or purchase
Common Stock or Convertible Securities (but excluding any unvested options and securities not then
exercisable for or convertible into Common Stock).
“Person” has the meaning set forth in the Credit Agreement.
“Principal Market” initially means the New York Stock Exchange and any successor
exchange thereto and shall also include the NASDAQ Global Select Market, the NASDAQ Global Market,
NASDAQ Capital Market, the American Stock Exchange or the OTC Bulletin Board, whichever is at the
time the principal trading exchange or market for the Common Stock, based upon share volume.
11
“Principal Office” means the Company’s principal office as set forth in Section
16 hereof or such other principal office of the Company in the United States of America the
address of which first shall have been set forth in a notice to the Holder.
“Registration Statement” means the registration statements required to be filed under
the Registration Rights Agreement.
“Registration Rights Agreement” has the meaning set forth in the Credit Agreement.
“Regulatory Requirement” has the meaning set forth in Section 8(c).
“Required Holders” means the holders of at least 51.0% of the Warrant Shares then
outstanding.
“Requirement of Law” has the meaning set forth in the Credit Agreement.
“Sale Notice” has the meaning set forth in Section 7(d)(i).
“Securities Act” has the meaning set forth in the Credit Agreement.
“Securities Laws” has the meaning set forth in the Credit Agreement.
“Stock Combination” has the meaning set forth in Section 5(a)(i)(C).
“Stock Dividend” has the meaning set forth in Section 5(a)(i)(A).
“Stock Subdivision” has the meaning set forth in Section 5(a)(i)(B).
“Subsidiary” has the meaning set forth in the Credit Agreement.
“Transfer” means and includes any sale, assignment, encumbrance, hypothecation,
pledge, conveyance in trust, gift, transfer by request, devise or descent, or other transfer or
disposition of any kind, including, but not limited to, transfers to receivers, levying creditors,
trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors,
whether voluntary or by operation of law, directly or indirectly, of this Warrant.
“Transfer Amount” has the meaning set forth in Section 7(d)(i).
“Warrant” has the meaning set forth in the Preamble.
“Warrant Securities” means this Warrant and the Warrant Shares, collectively.
“Warrant Shares” means (a) the shares of Common Stock issued or issuable upon exercise
of this Warrant in accordance with its terms and (b) all other shares of the Company’s capital
stock issued with respect to such shares by way of stock dividend, stock split or other
reclassification or in connection with any merger, consolidation, recapitalization or other
reorganization affecting the Company’s capital stock.
SECTION 12. Survival of Provisions. Notwithstanding the full exercise by the Holder
of its rights to purchase Common Stock hereunder, the provisions of Sections 8(f) and
(h) of this Warrant shall survive such exercise and the Expiration Date until such time as
the Holder no longer holds any Warrant Shares.
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SECTION 13. Delays, Omissions and Indulgences. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to the Holder upon any breach or default
of the Company under this Warrant shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It
is further agreed that any waiver, permit, consent or approval of any kind or character on the
Holder’s part of any breach or default under this Warrant, or any waiver on the Holder’s part of
any provisions or conditions of this Warrant must be in writing and that all remedies, either under
this Warrant, or by Requirement of Law or otherwise afforded to the Holder, shall be cumulative and
not alternative.
SECTION 14. Rights of Transferees. Subject to Section 7, the rights granted
to the Holder hereunder of this Warrant shall pass to and inure to the benefit of all subsequent
transferees of all or any portion of this Warrant (provided that the Holder and any transferee
shall hold such rights in proportion to their respective ownership of this Warrant and Warrant
Shares) until extinguished pursuant to the terms hereof.
SECTION 15. Section Headings. The titles and captions of the Sections and other
provisions of this Warrant are for convenience of reference only and are not to be considered in
construing this Warrant.
SECTION 16. Notices.
(a) Except in the case of notices and other communications expressly permitted to be given by
telephone (and except as provided in paragraph (b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopier as follows:
| if to the Company: | ||
| Arbor Realty Trust, Inc. | ||
| c/o Arbor Commercial Mortgage LLC | ||
| 000 Xxxxx Xxxxxxxx Xxxxxxxxx | ||
| Uniondale, New York 11553 | ||
| Attention: Xxx Xxxxxx, Esq. | ||
| Facsimile No.: (516) 832–6431 | ||
| with a copy to: | ||
| Arbor Commercial Mortgage LLC | ||
| 000 Xxxxx Xxxxxxxx Xxxxxxxxx | ||
| Uniondale, New York 11553 | ||
| Attention: Xxxx Xxxxxxxx | ||
| Phone No.: (516) 832–7409 | ||
| Facsimile No.: (000) 000-0000 | ||
| if to the Holder: | ||
| Wachovia Bank, National Association | ||
| One Wachovia Center, NC0166 | ||
| 000 Xxxxx Xxxxxxx Xxxxxx |
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| Charlotte, North Carolina 28288 | ||
| Attention: Xxxx Xxxxxx | ||
| Facsimile No.: (704) 715–0066 | ||
| with a copy to: | ||
| Xxxxx & Xxx Xxxxx PLLC | ||
| 000 Xxxxx Xxxxx Xxxxxx | ||
| Suite 4700 | ||
| Charlotte, NC 28202 | ||
| Attention: Xxxxxxx X. Xxxx, Esq. | ||
| Telecopy No.: (704) 378–2097 |
Notices sent by hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the extent provided in
paragraph (b) below shall be effective as provided in said paragraph (b).
(b) Notices and other communications to the Holder hereunder may be delivered or furnished by
electronic communication (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Holder. The Holder or the Company may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be limited to
particular notices or communications.
Unless the Holder otherwise prescribes, (i) notices and other communications sent to an e-mail
address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is not sent
during the normal business hours of the recipient, such notice or communication shall be deemed to
have been sent at the opening of business on the next Business Day for the recipient, and
(ii) notices or communications posted to an internet or intranet website shall be deemed received
upon the deemed receipt by the intended recipient at its e-mail address as described in the
foregoing clause (i) of notification that such notice or communication is available and identifying
the website address therefor.
(c) Any party hereto may change its address or telecopier number for notices and other
communications hereunder by notice to the other parties hereto.
SECTION 17. Successors and Assigns. This Warrant shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns, provided that the
Company shall have no right to assign its rights, or to delegate its obligations, hereunder without
the prior written consent of the Holder.
SECTION 18. Amendments. Neither this Warrant nor any term hereof may be amended,
changed, waived, discharged or terminated without the prior written consent of the Holder and the
Company.
SECTION 19. Severability. Any provision of this Warrant which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such
14
prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 20. Governing Law. This Warrant shall be governed by, and construed in
accordance with, the law of the State of New York.
SECTION 21. Entire Agreement. This Warrant and the Registration Rights Agreement are
intended by the parties as a final expression of their agreement and are intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein.
SECTION 22. Rules of Construction. Unless the context otherwise requires “or” is not
exclusive, and references to sections or subsections refer to sections or subsections of this
Warrant. All pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.
[Remainder of Page Intentionally Omitted.]
15
IN WITNESS WHEREOF, the Company has caused this Warrant to be issued and executed in its
corporate name by a duly authorized officer or director as of the date first written above.
| ARBOR REALTY TRUST, INC., a Maryland corporation |
||||
| By: | /s/ Xxxx Xxxxxxxx | |||
| Name: | Xxxx Xxxxxxxx | |||
| Title: | Executive Vice President | |||
S-1
EXHIBIT A
NOTICE OF EXERCISE
To: |
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|
|
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|
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|
|
1. The undersigned, pursuant to the provisions of the attached Warrant, hereby elects to
exercise this Warrant with respect to shares of Common Stock (the “Exercise Amount”).
Capitalized terms used but not otherwise defined herein have the meanings ascribed thereto in the
attached Warrant.
2. The undersigned herewith tenders payment for such shares in the following manner (please
check type, or types, of payment and indicate the portion of the Exercise Price to be paid by each
type of payment):
Exercise for Cash
Cashless Exercise
3. Please issue a certificate or certificates representing the shares issuable in respect
hereof under the terms of the attached Warrant, as follows:
| (Name of Record Holder/Transferee) |
and deliver such certificate or certificates to the following address:
| (Address of Record Holder/Transferee) |
4. The undersigned represents that the aforesaid shares are being acquired for the
account of the undersigned for investment and not with a view to, or for resale in connection with,
the distribution thereof and that the undersigned has no present intention of distributing or
reselling such shares.
5. If the Exercise Amount is less than all of the shares of Common Stock purchasable
hereunder, please issue a new warrant representing the remaining balance of such shares, as
follows:
| (Name of Record Holder/Transferee) |
and deliver such warrant to the following address:
| (Address of Record Holder/Transferee) |
| (Signature) | ||
