EXHIBIT 3
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY ITS ACCEPTANCE
HEREOF, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS WARRANT MAY BE
OFFERED, SOLD OR OTHERWISE DISPOSED OF ONLY (1) TO THE COMPANY, (2) SO LONG
AS THIS WARRANT IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A,
THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE SALE OR OTHER
DISPOSITION IS BEING MADE IN RELIANCE ON RULE 144A, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (4) TO AN "ACCREDITED INVESTOR" AS DEFINED
IN RULE 501 UNDER THE SECURITIES ACT ("ACCREDITED INVESTOR"), THAT IS
ACQUIRING THIS WARRANT FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER
ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, IF A SIGNED CERTIFICATION LETTER (A FORM
OF WHICH MAY BE OBTAINED FROM THE COMPANY) IS DELIVERED BY THE TRANSFEREE
TO THE COMPANY, (5) AS OTHERWISE PROVIDED IN THE UNIT PURCHASE AGREEMENT
(AS DEFINED BELOW) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. BY
PURCHASING THIS WARRANT, THE HOLDER HEREOF AGREES AND REPRESENTS FOR THE
BENEFIT OF THE COMPANY THAT (A) IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A OR (2) AN ACCREDITED INVESTOR ACQUIRING
THIS WARRANT FOR INVESTMENT PURPOSES FOR ITS OWN ACCOUNT OR THE ACCOUNT OF
ANOTHER ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT AND (B) IT WILL NOTIFY ANY
PURCHASER OF THIS WARRANT FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
ABOVE.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN ADDITIONAL
RESTRICTIONS ON TRANSFER CONTAINED IN SECTION 3.2 OF THE UNIT PURCHASE
AGREEMENT DATED AS OF OCTOBER 10, 1995 AMONG THE COMPANY AND THE OTHER
PARTIES NAMED ON THE SIGNATURE PAGES THEREOF, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY. ANY SALE OR TRANSFER NOT IN COMPLIANCE WITH
SUCH UNIT PURCHASE AGREEMENT SHALL BE NULL AND VOID.
VOID AFTER 5:00 P.M., PACIFIC TIME,
ON DECEMBER __, 2005
No. ___
HAWTHORNE FINANCIAL CORPORATION
WARRANT TO PURCHASE _______ SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
THIS CERTIFIES THAT, FOR VALUE RECEIVED, _______ or its registered
assigns (the "Holder"), is entitled to purchase from Hawthorne Financial
Corporation (the "Company"), subject to the terms and conditions set forth
hereinafter, _______ fully paid and nonassessable shares of the Common
Stock, $.01 par value, of the Company (the "Common Stock") at an exercise
price of $2.25 per share upon surrender of this Warrant to the Company at
the Company's principal office in El Segundo, California with the form of
election to purchase attached to this Warrant duly completed and signed,
together with payment of the exercise price by wire transfer or other
payment of immediately available funds. The exercise price and the number
of shares of Common Stock for which this Warrant is exercisable are subject
to change or adjustment upon the occurrence of certain events as set forth
below.
SECTION 1. DURATION AND EXERCISE OF WARRANTS.
1.1 (a) This Warrant may be exercised on or after December __, 1998
and will expire at 5:00 p.m., Pacific Time, on December __, 2005 (the
"Expiration Date"), provided that, notwithstanding anything to the contrary
contained herein, this Warrant may be exercised in whole or in part prior
to December __, 1998 in connection with or following a Change in Control.
On the Expiration Date, all rights evidenced by this Warrant shall cease
and this Warrant shall become void. For purposes of this Warrant, a
"Change in Control" means the occurrence of any of the following events
after the date of issuance of this Warrant: (i) any "person" or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of the aggregate voting
power of all classes of capital stock of the Company entitled to vote
generally in an election of directors; (ii) the Company is merged with or
into another corporation or another corporation is merged with or into the
Company with the effect that immediately after such transaction the
stockholders of the Company immediately prior to such transaction hold less
than a majority in interest of the total voting power entitled to vote in
the election of directors, managers or trustees of the entity surviving the
transaction; (iii) all or substantially all of the assets of the Company or
Hawthorne Savings, F.S.B., or any successor thereto, are sold to any person
or persons (as an entirety in one transaction or a series of related
transactions); or (iv) the voluntary or involuntary dissolution,
liquidation or winding up of the Company.
(b) Subject to the provisions of this Warrant, the registered holder
of this Warrant shall have the right to purchase from the Company (and the
Company shall issue and sell to such registered holder) the number of fully
paid and nonassessable shares of Common Stock set forth on the face of this
Warrant (or such number of shares of Common Stock as may result from
adjustments made from time to time as provided herein), at the price of
$2.25 per share in lawful money of the United States of America (such
exercise price per share, as adjusted from time to time as provided herein,
being referred to herein as the "Exercise Price"), upon (i) surrender of
this Warrant to the Company at the Company's principal office in El
Segundo, California with the exercise form attached hereto duly completed
and signed by the registered holder or holders thereof, and (ii) payment by
wire transfer or other payment of immediately available funds, in lawful
money of the United States of America, of the Exercise Price for the shares
of Common Stock in respect of which this Warrant is then exercised (and any
applicable transfer taxes pursuant to Section 2 hereof). Upon surrender of
this Warrant, and payment of the Exercise Price as provided above, the
Company shall promptly issue and cause to be delivered to or upon the
written order of the registered holder of this Warrant and in such name or
names as such registered holder may designate, a certificate or
certificates for the number of shares of Common Stock so purchased upon the
exercise of this Warrant, together with payment in respect of any fraction
of a share of Common Stock issuable upon such surrender pursuant to Section
11 hereof.
(c) The exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the Business Day (as
defined in Section 17 hereof) on which the holder surrenders this Warrant
to the Company and payment of the Exercise Price (and any applicable
transfer taxes pursuant to Section 2 hereof) is made, and at such time the
person in whose name any certificate for shares of Common Stock shall be
issuable upon such exercise shall be deemed to be the record holder of such
shares of Common Stock for all purposes.
1.2 In the event that less than all of the shares of Common Stock
represented by this Warrant are exercised on or prior to the Expiration
Date, a new Warrant, duly executed by the Company, will be issued for the
remaining number of shares of Common Stock exercisable pursuant to the
Warrant so surrendered, and the Company shall deliver the required new
Warrant pursuant to the provisions of this Section 1.
1.3 The number of shares of Common Stock to be received upon the
exercise of this Warrant and the Exercise Price are subject to adjustment
from time to time as hereinafter set forth.
SECTION 2. PAYMENT OF TAXES.
The Company will pay all stamp transfer and other similar taxes
payable in connection with the original issuance of this Warrant and the
shares of Common Stock issuable upon exercise thereof, provided, however,
that the Company shall not be required to (i) pay any such tax which may be
payable in respect of any transfer involving the transfer and delivery of
this Warrant or the issuance or delivery of certificates for shares of
Common Stock issuable upon exercise thereof in a name other than that of
the registered holder of this Warrant or (ii) issue or deliver any
certificate for shares of Common Stock upon the exercise of this Warrant
until any such tax required to be paid under clause (i) shall have been
paid, all such tax being payable by the holder of this Warrant at the time
of surrender.
SECTION 3. MUTILATED OR MISSING WARRANTS.
In case this Warrant shall be mutilated, lost, stolen or destroyed,
the Company will issue and deliver in exchange and substitution for and
upon cancellation of, the mutilated Warrant, or in substitution for the
lost, stolen or destroyed Warrant, a new Warrant of like tenor evidencing
the number of shares of Common Stock purchasable upon exercise of the
Warrant so mutilated, lost, stolen or destroyed, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of
such Warrant and an indemnity, if requested, reasonably satisfactory to it.
Any such new Warrant shall constitute an original contractual obligation of
the Company, whether or not the allegedly lost, stolen, mutilated or
destroyed Warrant shall be at any time enforceable by anyone.
SECTION 4. RESERVATION OF WARRANT SHARES.
The Company shall at all times reserve for issuance and delivery upon
exercise of this Warrant such number of shares of Common Stock or other
shares of capital stock of the Company as from time to time shall be
issuable upon exercise of this Warrant. All such shares shall be duly
authorized and, when issued upon such exercise, shall be validly issued,
fully paid and nonassessable, free and clear of all liens, security
interests, charges and other encumbrances and free and clear of all
preemptive rights. After 5:00 p.m., Pacific Time, on the Expiration Date,
no shares of Common Stock shall be subject to reservation in respect of
this Warrant.
SECTION 5. RESTRICTIONS ON TRANSFER.
Neither this Warrant nor the shares of Common Stock issuable upon
exercise thereof may be sold, transferred or otherwise disposed of, except
in accordance with and subject to (i) the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder and (ii) the applicable requirements of Section 3.2
of the Unit Purchase Agreement dated as of October 10, 1995 among the
Company and the Purchasers named on the signature pages thereto (as
amended, supplemented or otherwise modified from time to time, the "Unit
Purchase Agreement").
SECTION 6. RIGHTS AND LIABILITY OF WARRANT HOLDER.
The holder of this Warrant shall not, by virtue thereof, be (i)
entitled to any rights of a stockholder of the Company, either at law or in
equity, and the rights of such holder are limited to those expressed
herein, or (ii) subject to any liability as a stockholder of the Company.
SECTION 7. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON
STOCK.
The Exercise Price and the number and kind of shares of Common Stock
issuable upon the exercise of this Warrant will be subject to change or
adjustment from time to time as follows:
(a) Change in Common Stock. In the event the Company shall, at any
time or from time to time after the date hereof, (i) issue any shares of
Common Stock as a stock dividend to the holders of Common Stock (other than
pursuant to Section 2(b) of the Certificate of Designations and Preferences
relating to the Company's Cumulative Preferred Stock, Series A), (ii)
subdivide or combine the outstanding shares of Common Stock into a greater
or lesser number of shares or (iii) issue any shares of its capital stock
in a reclassification or reorganization of the Common Stock (any such
issuance, subdivision, combination, reclassification or reorganization
being herein called a "Change of Shares"), then (A) in the case of (i) or
(ii) above, the number of shares of Common Stock that may be purchased upon
the exercise of this Warrant shall be adjusted to the number of shares of
Common Stock that the Holder of such Warrant would have owned or have been
entitled to receive after the happening of such event had such Warrant been
exercised immediately prior to the record date (or, if there is no record
date, the effective date) for such event, and the Exercise Price shall be
adjusted to the price (calculated to the nearest 1,000th of one cent)
determined by multiplying the Exercise Price immediately prior to such
event by a fraction, the numerator of which shall be the number of shares
of Common Stock purchasable with this Warrant immediately prior to such
event and the denominator of which shall be the number of shares of Common
Stock purchasable with this Warrant after the adjustment referred to above
and (B) in the case of clause (iii) above, paragraph (l) below shall apply.
An adjustment made pursuant to clause (A) of this paragraph (a) shall
become effective retroactively immediately after the record date in the
case of such dividend and shall become effective immediately after the
effective date in other cases, but any shares of Common Stock issuable
solely as a result of such adjustment shall not be issued prior to the
effective date of such event.
(b) Common Stock Distribution. In the event the Company shall, at
any time or from time to time after the date hereof, issue, sell or
otherwise distribute (including by way of deemed distributions pursuant to
paragraphs (c) and (d) below) any shares of Common Stock (other than
pursuant to (A) a Change of Shares, (B) the exercise or conversion, as the
case may be, of any Option, Convertible Security (each as defined in
paragraph (c) below) or Warrant) or (C) Section 6(b) of the Company's
Senior Notes due 2002 (any such event, including any deemed distributions
described in paragraphs (c) and (d), being herein called a "Common Stock
Distribution"), for a consideration per share less than the current market
price per share of Common Stock (as defined in paragraph (f) below), on the
date of such Common Stock Distribution, then, effective upon such Common
Stock Distribution, the Exercise Price shall be reduced to the price
(calculated to the nearest 1,000th of one cent) determined by multiplying
the Exercise Price in effect immediately prior to such Common Stock
Distribution by a fraction, the numerator of which shall be the sum of (i)
the number of shares of Common Stock outstanding (exclusive of any treasury
shares) immediately prior to such Common Stock Distribution multiplied by
the current market price per share of Common Stock on the date of such
Common Stock Distribution, plus (ii) the consideration, if any, received by
the Company upon such Common Stock Distribution, and the denominator of
which shall be the product of (A) the total number of shares of Common
Stock issued and outstanding immediately after such Common Stock
Distribution multiplied by (B) the current market price per share of Common
Stock on the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment to the
Exercise Price pursuant to the foregoing provisions of this paragraph (b),
including by operation of paragraph (c) or (d) below, then, effective at
the time such adjustment is made, the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall be increased to a
number determined by multiplying the number of shares so purchasable
immediately prior to such Common Stock Distribution by a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior
to such adjustment and the denominator of which shall be the Exercise Price
in effect immediately after such adjustment. In computing adjustments
under this paragraph, fractional interests in Common Stock shall be taken
into account to the nearest 1,000th of a share.
The provisions of this paragraph (b), including by operation of
paragraph (c) or (d) below, shall not operate to increase the Exercise
Price or reduce the number of shares of Common Stock purchasable upon the
exercise of this Warrant, except by operation of paragraph (j) or (k)
below.
(c) Issuance of Options. In the event the Company shall, at any
time or from time to time after the date hereof, issue, sell, distribute or
otherwise grant in any manner (including by assumption) any rights to
subscribe for or to purchase, or any warrants or options for the purchase
of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (any such rights, warrants or options being
herein called "Options" and any such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether or not
such Options or the rights to convert or exchange such Convertible
Securities are immediately exercisable, and the price per share at which
Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the
Company as consideration for the issuance, sale, distribution or granting
of such Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all such
Options, plus, in the case of Options to acquire Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable
upon the conversion or exchange of all such Convertible Securities, by (ii)
the total maximum number of shares of Common Stock issuable upon the
exercise of all such Options) shall be less than the current market price
per share of Common Stock on the date of the issuance, sale, distribution
or granting of such Options, then, for the purposes of paragraph (b) above,
the total maximum number of shares of Common Stock issuable upon the
exercise of all such Options or upon the conversion or exchange of the
total maximum amount of the Convertible Securities issuable upon the
exercise of all such Options shall be deemed to have been issued as of the
date of the issuance, sale, distribution or granting of such Options and
thereafter shall be deemed to be outstanding and the Company shall be
deemed to have received as consideration such price per share, determined
as provided above, therefor. Except as otherwise provided in paragraphs
(j) and (k) below, no additional adjustment of the Exercise Price shall be
made upon the actual exercise of such Options or upon conversion or
exchange of the Convertible Securities issuable upon the exercise of such
Options. If the minimum and maximum numbers or amounts referred to in this
paragraph (c) or in paragraph (d) below cannot be calculated with certainty
as of the date of the required adjustment, such numbers and amounts shall
be determined in good faith by the Board of Directors of the Company.
(d) Issuance of Convertible Securities. In the event the Company
shall, at any time or from time to time after the date hereof, issue, sell
or otherwise distribute (including by assumption) any Convertible
Securities (other than upon the exercise of any Option), whether or not the
rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the
Company as consideration for the issuance, sale or distribution of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or
exchange of all such Convertible Securities, by (ii) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities) shall be less than the current market
price per share of Common Stock on the date of such issuance, sale or
distribution, then, for the purposes of paragraph (b) above, the total
number of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued as
of the date of the issuance, sale or distribution of such Convertible
Securities and thereafter shall be deemed to be outstanding and the Company
shall be deemed to have received as consideration such price per share,
determined as provided above, therefor. Except as otherwise provided in
paragraphs (j) and (k) below, no additional adjustment of the Exercise
Price shall be made upon the actual conversion or exchange of such
Convertible Securities.
(e) Dividends and Distributions. In the event the Company shall, at
any time or from time to time after the date hereof, distribute to the
holders of Common Stock any dividend or other distribution of cash,
evidences of its indebtedness, other securities or other properties or
assets (in each case other than (i) dividends payable in Common Stock,
Options or Convertible Securities and (ii) any cash dividend declared and
paid pursuant to a regular quarterly dividend policy of the Company), or
any options, warrants or other rights to subscribe for or purchase any of
the foregoing, then (A) the Exercise Price shall be decreased to a price
determined by multiplying the Exercise Price then in effect by a fraction,
the numerator of which shall be the current market price per share of
Common Stock on the record date for such distribution less the sum of (X)
the cash portion, if any, of such distribution per share of Common Stock
outstanding (exclusive of any treasury shares) plus (Y) the then fair
market value (as determined in good faith by the Board of Directors of the
Company) per share of Common Stock issued and outstanding on the record
date for such distribution of that portion, if any, of such distribution
consisting of evidences of indebtedness, other securities, properties,
assets, options, warrants or subscription or purchase rights, and the
denominator of which shall be such current market price per share of Common
Stock and (B) the number of shares of Common Stock purchasable upon the
exercise of this Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock so purchasable immediately
prior to the record date for such distribution by a fraction, the numerator
of which shall be the Exercise Price in effect immediately prior to the
adjustment required by clause (A) of this sentence and the denominator of
which shall be the Exercise Price in effect immediately after such
adjustment. The adjustments required by this paragraph (e) shall be made
whenever any such distribution is made and shall be retroactive to the
record date for the determination of stockholders entitled to receive such
distribution.
(f) Current Market Price. For the purpose of any computation under
paragraphs (b), (c), (d) and (e) of this Section 7, the current market
price per share of Common Stock at any date shall be the average of the
daily closing prices for the shorter of (i) the 20 consecutive trading days
ending on the last full trading day on the exchange or market specified in
the second succeeding sentence, prior to the Time of Determination and (ii)
the period commencing on the date next succeeding the first public
announcement of the issuance, sale, distribution or granting in question
through such last full trading day prior to the Time of Determination. The
term "Time of Determination" as used herein shall be the time and date of
the earlier to occur of (A) the date as of which the current market price
is to be computed and (B) the last full trading day on such exchange or
market before the commencement of "ex-dividend" trading in the Common Stock
relating to the event giving rise to the adjustment required by paragraph
(b), (c), (d) or (e). The closing price for any day shall be the last
reported sale price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked prices regular
way for such day, in each case (1) on the principal national securities
exchange on which the shares of Common Stock are listed or to which such
shares are admitted to trading or (2) if the Common Stock is not listed or
admitted to trading on a national securities exchange, in the over-the-
counter market as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or any comparable
system or (3) if the Common Stock is not listed on NASDAQ or a comparable
system, as furnished by two members of the National Association of
Securities Dealers, Inc. ("NASD") selected from time to time in good faith
by the Board of Directors of the Company for that purpose. In the absence
of all of the foregoing, or if for any other reason the current market
price per share cannot be determined pursuant to the foregoing provisions
of this paragraph (f), the current market price per share shall be the fair
market value thereof as determined in good faith by the Board of Directors
of the Company.
(g) Certain Distributions. If the Company shall pay a dividend or
make any other distribution payable in Options or Convertible Securities,
then, for purposes of paragraph (b) above (including dividends or
distributions by operation of paragraph (c) or (d) above, as the case may
be), such Options or Convertible Securities shall be deemed to have been
issued or sold without consideration except for such amounts of
consideration as shall have been deemed to have been received by the
Company pursuant to paragraphs (c) or (d) above, as, appropriate.
(h) Consideration Received. If any shares of Common Stock shall be
issued and sold in an underwritten public offering, the consideration
received by the Company for such shares of Common Stock shall be deemed to
include the underwriting discounts and commissions realized by the
underwriters of such public offering. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold or distributed for
a consideration other than cash, the amount of the consideration other than
cash received by the Company in respect thereof shall be deemed to be the
then fair market value of such consideration (as determined in good faith
by the Board of Directors of the Company). If any Options shall be issued
in connection with the issuance and sale of other securities of the
Company, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued, sold or distributed for such
amount of consideration as shall be allocated to such Options in good faith
by the Board of Directors of the Company.
(i) Deferral of Certain Adjustments. No adjustments to the Exercise
Price (including the related adjustment to the number of shares of Common
Stock purchasable upon the exercise of this Warrant) shall be required
hereunder unless such adjustment, together with other adjustments carried
forward as provided below, would result in an increase or decrease of at
least one percent of the Exercise Price; provided, however, that any
adjustment which by reason of this paragraph (i) is not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(j) Changes in Options and Convertible Securities. If the exercise
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (c) or (d) above, or
the rate at which any Convertible Securities referred to in paragraph (c)
or (d) above are convertible into or exchangeable for Common Stock shall
change at any time (other than under or by reason of provisions designed to
protect against dilution upon an event which results in a related
adjustment pursuant to this Section 7), the Exercise Price then in effect
and the number of shares of Common Stock purchasable upon the exercise of
this Warrant shall forthwith be readjusted (effective only with respect to
any exercise of this Warrant after such readjustment) to the Exercise Price
and number of shares of Common Stock so purchasable that would then be in
effect had the adjustment made upon the issuance, sale, distribution or
granting of such Options or Convertible Securities been made based upon
such changed purchase price, additional consideration or conversion rate,
as the case may be, but only with respect to such Options and Convertible
Securities as then remain outstanding.
(k) Expiration of Options and Convertible Securities. If, at any
time after any adjustment to the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall have been made pursuant
to paragraph (c), (d) or (j) above or this paragraph (k), any Options or
Convertible Securities shall have expired unexercised or, solely with
respect to Options that are rights ("Rights"), are redeemed, the number of
such shares so purchasable shall, upon such expiration or such redemption,
be readjusted and shall thereafter be such as they would have been had they
been originally adjusted (or had the original adjustment not been required,
as the case may be) as if (i) the only shares of Common Stock deemed to
have been issued in connection with such Options or Convertible Securities
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Options or Convertible Securities and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for the issuance,
sale, distribution or granting of all such Options or Convertible
Securities, whether or not exercised; provided, however, that (x) no such
readjustment shall have the effect of decreasing the number of shares so
purchasable by an amount (calculated by adjusting such decrease to account
for all other adjustments made pursuant to this Section 7 following the
date of the original adjustment referred to above) in excess of the amount
of the adjustment initially made in respect of the issuance, sale,
distribution or granting of such Options or Convertible Securities and (y)
in the case of the redemption of any Rights, there shall be deemed (for the
purposes of paragraph (c) above) to have been issued as of the date of such
redemption for no consideration a number of shares of Common Stock equal to
the aggregate consideration paid to effect such redemption divided by the
current market price of the Common Stock on the date of such redemption.
(l) Other Adjustments. In the event that at any time the Holder
shall become entitled to receive any securities of the Company other than
shares of Common Stock as constituted on the date of issuance of his
Warrant the number of such other securities so receivable upon exercise of
this Warrant and the Exercise Price applicable to such exercise shall be
adjusted at such time, and shall be subject to further adjustment from time
to time thereafter, in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Common Stock
contained in this Section 7.
(m) Excluded Transactions. Notwithstanding any provision in this
Section 7 to the contrary, no adjustment shall be made pursuant to this
Section 7 in respect of (i) any change in the par value of the Common
Stock, (ii) the granting of any Options or the issuance of any shares of
Common Stock, in either case, which would otherwise trigger an adjustment
under paragraph (b) above, that may be registered on Form S-8 or any
successor form under the Securities Act, to any directors, officers or
employees of the Company, provided that the granting of Options or the
issuance of shares of Common Stock pursuant to this clause (ii) are in the
ordinary course of business and are usual and customary, or (iii) the
issuance of Common Stock pursuant to any dividend reinvestment plan which
provides that the price of the Common Stock purchased for plan participants
from the Company will be no less than 95% of the average of the high and
low sales prices of the Common Stock on the investment date or, if no
trading in the Common Stock occurs on such date, the next preceding date on
which trading occurred (1) on the principal national securities exchange on
which the shares of Common Stock are listed or to which such shares are
admitted to trading or (2) if the Common Stock is not listed or admitted to
trading on a national securities exchange, in the over-the-counter market
as reported by NASDAQ or any comparable system or (3) if the Common Stock
is not listed on NASDAQ or a comparable system, as furnished by two members
of the NASD selected from time to time in good faith by the Board of
Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any other reason the current market price per share
cannot be determined pursuant to the foregoing provisions of this
paragraph, the current market price per share shall be the fair market
value thereof as determined in good faith by the Board of Directors of the
Company.
SECTION 8. REORGANIZATIONS AND ASSET SALES.
If any capital reorganization or reclassification of the capital stock
of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities or assets with respect
to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the Holder of this Warrant shall
thereafter have the right to purchase and receive, upon the basis and upon
the terms and conditions specified in this Warrant and in lieu of the
shares of Common Stock immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for a number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented
hereby had such reorganization, reclassification, consolidation, merger or
sale not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of the Holder of this Warrant
to the end that the provisions hereof (including without limitation
provisions for adjustments of the Exercise Price and of the number of
shares purchasable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume, by written instrument executed and
mailed by first class mail, postage prepaid, to the Holder hereof at the
last address of such Holder appearing on the register maintained by the
Company, the obligation to deliver to such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase.
SECTION 9. NOTICE OF ADJUSTMENT.
9.1 Whenever the number of shares of Common Stock or other stock or
property issuable upon the exercise of this Warrant is adjusted, as herein
provided, the Company shall promptly mail by first class mail, postage
prepaid, to the Holder at the last address of such Holder appearing on the
register maintained by the Company, notice of such adjustment or
adjustments. In addition, the Company at its sole expense shall within 90
calendar days following the end of each fiscal year of the Company during
which this Warrant remains outstanding and an adjustment has occurred, and
promptly upon the request of the Holder of this Warrant in connection with
the exercise thereof, cause to be delivered to the Holder a certificate of
a firm of independent public accountants selected by the Board of Directors
of the Company (which may be the regular accountants employed by the
Company) setting forth the number of shares of Common Stock or other stock
or property issuable upon the exercise of this Warrant after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was
made.
9.2 If at any time after the date of issuance of this Warrant and
ending on December __, 1998, the Company enters into an agreement providing
for a Change in Control or otherwise becomes aware of the occurrence of a
Change in Control not directly or indirectly resulting from actions taken
by it, then the Company will cause to be mailed by first class mail,
postage prepaid, to the Holder at the last address of such Holder appearing
on the register maintained by the Company, as soon as practicable and in
any event within 20 days thereafter, a notice describing any such agreement
or the occurrence of such a Change in Control, and stating the anticipated
effective date of the Change in Control if it has not yet occurred or, if
it has occurred, the effective date thereof.
SECTION 10. STATEMENT OF WARRANTS.
This Warrant may continue to express the same number and kind of
shares which may be purchased upon exercise hereof as are stated in the
Warrant initially issued pursuant to the Unit Purchase Agreement or any
substitute Warrant issued therefor, notwithstanding any adjustment in the
Exercise Price and/or in the number or kind of shares issuable upon
exercise of this Warrant. In the event of any such adjustment, the Company
will, at its expense, promptly upon the Holder's surrender of this Warrant
to the Company, execute a new Warrant or Warrants stating the Exercise
Price and the number and kind of shares issuable upon exercise of this
Warrant.
SECTION 11. FRACTIONAL INTEREST.
The Company shall not be required to issue fractional shares of Common
Stock on the exercise of this Warrant. If more than one Warrant shall be
presented for exercise at the same time by the Holder, the number of full
shares of Common Stock which shall be issuable upon such exercise shall be
computed on the basis of the aggregate number of shares of Common Stock
acquirable on exercise of the Warrants so presented. If any fraction of a
share of Common Stock would, except for the provisions of this Section 11,
be issuable on the exercise of any Warrant (or specified portion thereof),
the Company shall pay an amount in cash calculated by it to be equal to the
then current market price per share multiplied by such fraction computed to
the nearest whole cent. The Holder by his acceptance of this Warrant
expressly waives any and all rights to receive any fraction of a share of
Common Stock or a stock certificate representing a fraction of a share of
Common Stock.
SECTION 12. ENTIRE AGREEMENT.
This Warrant, the Unit Purchase Agreement and the Related Agreements
(as defined in the Unit Purchase Agreement) constitute the full and entire
understanding and agreement among the parties with regard to the subject
matter hereof and no party shall be liable or bound to any other party in
any manner by any representations, warranties, covenants or agreements
except as specifically set forth herein or therein.
SECTION 13. SUCCESSORS AND ASSIGNS.
13.1 All covenants and provisions of this Warrant by or for the
benefit of the Company or the holder of this Warrant shall bind and inure
to the benefit of their respective successors, assigns, heirs and personal
representatives.
13.2 Subject to the requirements of Section 6 of this Warrant, this
Warrant is assignable, in whole or in part, without charge to the holder
hereof upon surrender of this Warrant with a properly executed assignment
at the principal office of the Company. Upon any partial assignment, the
Company will at its expense issue and deliver to the holder hereof a new
Warrant of like tenor, in the name of the holder hereof, which shall be
exercisable for such number of shares of Common Stock (or any shares of
stock or other securities at the time issuable upon exercise of this
Warrant) which were not so assigned. Except as provided in this Section
13.2, this Warrant may not be assigned or transferred.
SECTION 14. TERMINATION.
This Warrant shall terminate at 5:00 p.m., Pacific Time, on the
Expiration Date or upon such earlier date on which all of this Warrant has
been exercised.
SECTION 15. HEADINGS.
The headings of sections of this Warrant have been inserted for
convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
SECTION 16. AMENDMENTS.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the Company and the
holder of this Warrant.
SECTION 17. NOTICES.
All notices, demands and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
(a) if to the holder of this Warrant, at the address set forth
on the register of the Warrants maintained by the Company, or at such
other address as the holder of this Warrant shall have furnished to
the Company in writing;
(b) if to the Company, initially at 0000 Xxxxxxxxx Xxxxxx, Xx
Xxxxxxx, Xxxxxxxxxx 00000, and thereafter at such other address,
notice of which is given in accordance with the provisions of this
Section 17.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five
Business Days after being sent by certified mail, return receipt requested,
if mailed; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and on the next Business Day if timely delivered to an air
courier guaranteeing overnight delivery. For purposes of this Warrant, a
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the State of California are authorized by law to
close.
SECTION 18. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to give to any person or
corporation, other than the Company and the registered holder of this
Warrant, any legal or equitable right, remedy or claim under this Warrant,
it being intended that this Warrant shall be for the sole and exclusive
benefit of the Company and the registered holder thereof.
SECTION 19. GOVERNING LAW.
This Warrant shall be governed by and construed in accordance with the
laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers.
Dated: December __, 1995 HAWTHORNE FINANCIAL CORPORATION
By:
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief
Executive Officer
Attest:
By:
---------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President and
Corporate Secretary
ELECTION TO PURCHASE
DATED: ________
The undersigned hereby irrevocably exercises this Warrant to purchase
_______ shares of Common Stock and herewith makes payment of $_______ in
payment of the Exercise Price thereof on the terms and conditions specified
in this Warrant, surrenders this Warrant and all right, title and interest
herein to the Company and directs that the shares of Common Stock
deliverable upon the exercise of this Warrant be registered in the name and
at the address specified below and delivered thereto.
Name:
---------------------------------------------------
(Please Print)
Address:
---------------------------------------------------
City, State and Zip Code:
------------------------------------------
If such number of shares of Common Stock is less than the aggregate number
of shares of Common Stock purchasable hereunder, the undersigned requests
that a new Warrant representing the balance of such shares of Common Stock
be registered in the name and at the address specified below and delivered
thereto.
Name:
---------------------------------------------------
(Please Print)
Address:
---------------------------------------------------
City, State and Zip Code:
------------------------------------------
Taxpayer Identification or Social Security Number:
-----------------
Signature:
---------------------------------------------------
Note: The above signature must correspond with the name as written upon
the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.
