EXHIBIT 10.1
WARRANT ISSUANCE AGREEMENT
This WARRANT ISSUANCE AGREEMENT is among WHITE RIVER CAPITAL, INC. ("WHITE
RIVER"), CASTLE CREEK CAPITAL, LLC ("CASTLE CREEK"), CASTLE CREEK CAPITAL
PARTNERS FUND IIa, LP ("FUND IIa"), CASTLE CREEK CAPITAL PARTNERS FUND IIb, LP
("FUND IIb" and, together with Fund IIa, the "Funds"), and UNION ACCEPTANCE
CORPORATION ("UAC").
RECITALS:
Whereas, the parties have worked extensively toward development of a
proposed series of transactions under which White River and UAC will enter into
a plan of share exchange as a result of which UAC will become a subsidiary of
White River; (ii) White River will conduct a subscription offering to raise new
equity capital primarily from UAC's current shareholders; (iii) White River
would effect a private placement of secured notes for $15 million; (iv) White
River would purchase Coastal Credit, LLC; and (v) White River would purchase all
or substantially all outstanding claims under UAC's bankruptcy Plan of
Reorganization (collectively, the "Transactions").
Whereas, Castle Creek, on behalf of the Funds, has been instrumental in
advancing this proposal through extensive effort in developing, structuring,
negotiating and documenting various aspects of the proposed Transactions and, in
particular, by advancing and agreeing to advance (through Fund IIa and Fund IIb)
expenses related to the Transactions on behalf of UAC and White River;
Whereas, the undertaking of the Funds to bear such expenses is essential to
such Transactions inasmuch as White River and UAC have insufficient resources
from which to pay such expenses and, in particular, the parties have agreed with
the Plan Committee under UAC's Plan of Reorganization that UAC will not bear
such expenses.
Whereas, to date, Castle Creek (through the Funds) has borne or incurred
approximately $700,000 in Transaction expenses and expects such expenses to
amount to approximately $1.3 million in the aggregate, excluding $250,000 in
incremental fees that could become payable in connection with the UAC creditor
buyout, if the Transactions do not timely progress.
Whereas, if the Transactions are not successfully consummated, the Funds
may never recover such costs; and
Whereas, to induce the Funds to bear, and continue to bear, such expenses
and risks and to compensate Castle Creek for the management time and effort
associated with its work in developing the Transactions, White River has agreed
to issue to the Funds a warrant to purchase White River shares of Common Stock,
on the terms and subject to the conditions described herein.
Therefore, the parties agree as follows:
1. Castle Creek Undertakings. The Funds shall, and Castle Creek shall cause
the Funds to, continue to advance on behalf of White River and UAC and to pay
currently, subject to the reimbursement obligation of White River as provided
herein, expenses and fees reasonably related and incurred in connection with the
proposed Transactions ("Transaction Expenses"), including, without limitation:
(a) Legal and accounting fees and expenses;
(b) Fees and expenses of Xxxxx Xxxxxxx for fairness evaluation services;
(c) Fees and expenses of KPMG LLP for tax advisory services and related
opinion;
(d) SEC registration fees, printing expenses, mailing expenses, and the
fees and expenses of the exchange agent, subscription agent,
information agent and similar services;
(e) Costs associated with the exercise and perfection of dissenters'
rights by UAC shareholders exercising such rights in connection with
the Plan of Share Exchange, but only to the extent that UAC becomes
obligated to pay such amounts and White River becomes obligated to
indemnify UAC in respect thereof in accordance with the Plan of Share
Exchange;
(f) The amount required to be paid to shareholders of UAC in connection
with the Plan of Share Exchange upon consummation of the exchange in
lieu of the issuance of fractional shares in the exchange; and
(g) The Abandonment Fee, as defined in, and any similar incremental fees
and costs associated with untimely consummation of, or failure to
timely meet progress milestones established under, the terms of the
Memorandum of Understanding, dated February 15, 2005, among the
parties hereto and the Plan Committee.
2. White River Obligations. In consideration of the foregoing commitments,
services and undertakings, White River agrees promptly upon consummation of the
proposed transactions:
(a) to reimburse the Funds for out of pocket expenses borne by them,
respectively, in connection with the transactions (without interest),
based on submission of supporting documentation in reasonable detail;
(b) Subject to shareholder approval as provided below, to issue a warrant
("Warrant") for White River Common Stock to Castle Creek private
equity funds designated by Castle Creek, in substantially the form of
Exhibit A, hereto and on the following basic terms and conditions:
1. Shares subject warrant: 132,500 shares of Common Stock
2. Term: 3 years and 90 days.
3. Issue date: Closing of the transactions
4. Exercisable: Beginning 3 years after issue date.
5. Exercise price: $10.00/share
6. Exercise price may be paid in cash or in kind by withholding
shares otherwise issuable upon exercise, based on the fair value
of such shares at the time of exercise.
The number of shares subject to, and the exercise price of, the Warrant shall be
adjusted ratably in the event of changes in the proposed exchange ratio in the
share exchange or the offering price
in the subscription offering, such that the Warrant shall represent the right to
acquire, at a price equal to the final subscription price, the number of shares
that could be purchased in the subscription offering for $1,325,000. The Warrant
and the underlying shares will be restricted securities under SEC Rule 144.
White River will also undertake, upon request of Castle Creek, to the extent
legally permitted, to file a registration statement on Form S-3 (or similar
successor form) covering resale of shares issuable under the Warrant by Castle
Creek funds, at White River's expense, and to use its reasonable efforts to
cause such registration statement to be declared effective before the date on
which the Warrants first become exercisable. Castle Creek and the Funds shall
cooperate in all reasonable and customary respects in connection with such
registration.
3. Shareholder Approval. White River's obligation to issue the Warrant
shall be subject to the condition precedent that the shareholders of UAC, at the
special meeting called to approve the Plan of Share Exchange and the acquisition
of Coastal Credit, shall have approved the issuance of the Warrant as described
herein.
4. No Recourse To UAC. UAC shall have no obligation to reimburse Castle
Creek or the Funds for Transaction Expenses.
EXECUTED, this 9th day of March, 2005.
CASTLE CREEK CAPITAL LLC
By: /s/ Xxxxxxx X. Xxx
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Xxxxxxx X. Xxx
Its: Executive Vice President
CASTLE CREEK CAPITAL PARTNERS FUND IIa, LP
CASTLE CREEK CAPITAL PARTNERS FUND IIb, LP
By: CASTLE CREEK CAPITAL LLC
Its: General Partner
By: /s/ Xxxxxxx X. Xxx
----------------------
Xxxxxxx X. Xxx
Its: Executive Vice President
WHITE RIVER CAPITAL, INC.
By: /s/ Xxxx X. Xxx
----------------------
Xxxx X. Xxx
Its: President and CFO
UNION ACCEPTANCE CORPORATION
By: /s/ Xxxx X. Xxx
----------------------
Xxxx X. Xxx
Its: President and CFO
Exhibit A
No. of Shares: ________ Warrant No. W-___
Dated: _______________, 2005
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
WHITE RIVER CAPITAL, INC.
THIS IS TO CERTIFY that, for value received and subject to the provisions
hereinafter set forth,
[Castle Creek Capital Fund __]
or assigns
is entitled upon the due exercise hereof at any time during the Exercise Period
(as hereinafter defined) to purchase from White River Capital, Inc., an Indiana
corporation (the "Company"), up to __________ shares of Common Stock (as
hereinafter defined and subject to adjustment as provided herein) of the Company
at the Exercise Price (as hereinafter defined and subject to adjustment as
provided herein) for each share of Common Stock so purchased and to exercise the
other rights, powers and privileges hereinafter provided, all on the terms and
conditions and pursuant to the provisions hereinafter set forth.
WHITE RIVER CAPITAL, INC.
By:
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President
Additional provisions follow on the next
6 pages and are incorporated in this
Warrant as if set forth on this page.
THIS WARRANT AND THE UNDERLYING SHARES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THIS WARRANT AND UNDERLYING
SHARES ARE RESTRICTED SECURITIES AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
SECTION 1. DEFINITIONS.
In addition to the terms defined elsewhere in this Warrant, the following
terms have the following respective meanings:
"Business Day" shall mean any day except Saturday, Sunday and any day which
shall be a Federal legal holiday or a day on which banking institutions in the
State of Indiana are authorized or required by law or other government actions
to close.
"Common Stock" shall mean the Company's Common Stock, without par value.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Company" shall mean White River Capital, Inc., an Indiana corporation, and
any successor to all or substantially all of the assets and business of such
corporation.
"Exercise Period" shall mean the period commencing on the date that is
three years and one day from the date hereof (or __________, 2008) and
terminating on the Expiration Date.
"Exercise Price" shall mean $10.00 per share, adjustable as set forth in
ss. 3.
"Expiration Date" shall mean __________________, 2008.
"Holder" shall mean the registered holder of this Warrant, and, if the
context so indicates, the holder of Warrant Shares.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization or any other entity, and a government or agency or
political subdivision thereof.
"Underlying Shares" shall mean the shares of Common Stock of the Company
issuable upon exercise of this Warrant.
"Warrant" or "this Warrant" as used herein shall mean this Warrant and any
Warrant hereafter issued in exchange or substitution for this Warrant.
"Warrant Issuance Agreement" shall mean the Warrant Issuance Agreement
dated March 9, 2005, among the Company, Castle Creek Capital, LLC and Union
Acceptance Corporation.
"Warrant Shares" shall mean the shares of Common Stock of the Company
issued upon the exercise of this Warrant.
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SECTION 2. EXERCISE OF WARRANT.
2.1. Exercise Generally. The rights represented by this Warrant are issued
pursuant to and for the reasons set forth in the Warrant Issuance Agreement
dated March 9, 2005, among the Company, Castle Creek Capital, LLC and Union
Acceptance Corporation.
Subject to the conditions hereinafter set forth, this Warrant may be
exercised in whole or in part (but not as to any fractional share of Common
Stock), during the Exercise Period, but in no event subsequent to the end of the
Exercise Period, by the surrender of this Warrant (with the exercise notice at
the end hereof duly completed and executed) at the principal office of the
Company in Indianapolis, Indiana, and upon payment to the Company, or for the
account of the Company, of the Exercise Price. Payment of the Exercise Price may
be made (i) by cash in immediately available funds or by certified check or bank
draft or (ii) in kind, by electing in writing that the Company shall withhold
the number Underlying Shares otherwise issuable upon exercise of the Warrant,
the fair value of which Underlying Shares at the time of such exercise and
election is equal to the Exercise Price. This Warrant and all rights and options
hereunder shall expire at the Expiration Date, and shall be wholly null and void
to the extent this Warrant is not exercised before that time. The Company agrees
that the Warrant Shares shall be and shall be deemed to be issued to the Holder
hereof as the record owner of such Warrant Shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for
such shares as aforesaid. Certificates for the Warrant Shares shall be delivered
to the Holder hereof within a reasonable time, not exceeding 30 Business Days,
after the Warrant shall have been so exercised, and, unless this Warrant has
expired, a new Warrant representing the number of Underlying Shares, if any,
with respect to which this Warrant shall not then have been exercised shall also
be issued to the Holder hereof within such time.
2.2. Expenses of Exercise. The Company shall pay all expenses, taxes and
other charges payable in connection with the preparation, execution and delivery
of stock certificates under this ss. 2, regardless of the name or names in which
such stock certificates shall be registered.
SECTION 3. ANTI-DILUTION.
Common Stock Dividends, Subdivisions, Combinations. If the Company shall
(i) pay or make a dividend or other distribution to all holders of its Common
Stock in shares of Common Stock, (ii) subdivide, split or reclassify the
outstanding shares of its Common Stock into a larger number of shares, or (iii)
combine or reclassify the outstanding shares of its Common Stock into a smaller
number of shares, then in each such case the Underlying Shares shall be adjusted
to equal the number of such shares to which the Holder of this Warrant would
have been entitled upon the occurrence of such event had this Warrant been
exercised immediately prior to the happening of such event or, in the case of a
stock dividend or other distribution, prior to the record date for determination
of such Shareholder entitled thereto, and the Exercise Price per share shall be
appropriately and ratably adjusted. An adjustment made pursuant to this Section
3 shall become effective immediately after such record date, in the case of a
dividend
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or distribution, and immediately after the effective date, in the case of a
subdivision, split, combination or reclassification.
SECTION 4. CERTIFICATE OF ADJUSTMENT.
Upon the occurrence of each adjustment or readjustment or modification
pursuant to Section 3 or in connection with a Reorganization under Section 5,
the Company (in the exercise of its reasonable discretion), shall as promptly as
practicable compute such adjustment, readjustment or modification in accordance
with the provisions of this agreement, and prepare and furnish to the Holder a
certificate setting forth such adjustment, readjustment or modification and
showing in reasonable detail the facts upon which such adjustment, readjustment
or modification in based.
SECTION 5. REORGANIZATIONS.
If, in connection with any capital reorganization or reclassification of
the capital stock of the Company, or any merger or consolidation of the Company
with or into another Person as a result of which all the outstanding Common
Stock of the Company is exchanged or converted to or for other securities or the
right to receive securities or property of the Company or another person, the
Company shall cause effective provision to be made whereby the Holder shall
thereafter have the right to receive, upon the basis and upon the terms and
conditions specified in this Warrant, and in lieu of the Common Stock
immediately theretofore receivable upon the exercise of this Warrant, such
shares of stock, securities or assets as would have been (by virtue of such
Reorganization) issued or payable with respect to or in exchange for a number of
outstanding shares of Common Stock equal to the number of shares of Common Stock
immediately theretofore receivable upon the exercise of this Warrant, assuming
such exercise had taken place immediately prior to such Reorganization. In any
such case, appropriate provision shall be made with respect to the rights and
interests of the Holder to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the number of shares of Common
Stock receivable upon exercise of this Warrant) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities or assets
thereafter receivable upon the exercise of this Warrant.
SECTION 6. DISSOLUTION OR LIQUIDATION.
Upon any proposed distribution of the assets of the Company in dissolution
or liquidation (except under circumstances when Section 5 shall be applicable),
the Company shall mail notice thereof to the Holder and shall make no
distribution to its shareholders until the expiration of 30 days from the date
of mailing of such notice and, in any such event, the Holder of this Warrant may
exercise the purchase rights with respect to this Warrant within 30 days from
the date of mailing such notice. All rights herein granted not so exercised
within such 30-day period shall thereafter become null and void.
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SECTION 7. FRACTIONAL SHARES.
The Company shall not be required to issue or cause to be issued fractional
shares on the exercise of this Warrant and any such fractional share otherwise
issuable shall be rounded down to the nearest whole share.
SECTION 8. FULLY PAID STOCK; VOTING RIGHTS UPON EXERCISE; TAXES.
(a) The Company covenants and agrees that the shares of its Common Stock
represented by each certificate to be delivered on the exercise of this Warrant
shall, at the time of such delivery, be validly issued and outstanding, and be
fully paid and non-assessable. The Company covenants and agrees that, upon
issuance of the Underlying Shares, the Underlying Shares shall have voting
rights equivalent to those of other shares of Common Stock.
(b) The Company covenants and agrees that it shall pay, when due and
payable, any and all federal and state issuance or transfer taxes that may be
payable in respect of this Warrant or any Common Stock or certificates issued
hereunder. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the transfer and delivery of
stock certificates in the name other than that of the Holder, and any such tax
shall be paid by the Holder at the time of presentation.
SECTION 9. LOST, STOLEN WARRANTS, ETC.
If this Warrant shall be mutilated, lost, stolen or destroyed, the Company
shall issue a new Warrant of like date, tenor and denomination and deliver the
same in exchange and substitution for and upon surrender and cancellation of the
mutilated Warrant, or in lieu of the Warrant lost, stolen or destroyed, upon
receipt of evidence satisfactory to the Company of the loss, theft or
destruction of such Warrant, and upon receipt of indemnity satisfactory to the
Company.
SECTION 10. SEVERABILITY.
Should any part of this Warrant for any reason be declared invalid, such
decision shall not affect the validity of any remaining portion, which shall
remain in force and effect as if this Warrant had been executed with the invalid
portion thereof eliminated. It is hereby declared the intention of the parties
hereto that they would have executed and accepted the remaining portion of this
Warrant without including therein any such part, parts or portion which may, for
any reason, be hereafter declared invalid.
SECTION 11. MISCELLANEOUS.
11.1. Notices. Any notice, demand or delivery to be made pursuant to the
provisions of this Warrant shall be in writing and (a) shall be deemed to have
been given or made one day after the date sent (i) if by the Company, by prepaid
overnight delivery, addressed to the Holder at his
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last known address appearing on the books of the Company maintained for such
purpose or (ii) if by the Holder, by prepaid overnight delivery, addressed to
the Company at 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000; and (b)
if given by courier or confirmed facsimile transmission shall be deemed to have
been made or given when received. The Holder and the Company may each designate
a different address by notice to the other in the manner provided in this
Section 11.1.
11.2. Assignment and Securities Law Matters. Holder acknowledges this
Warrant and the Warrant Shares are restricted securities within the meaning of
Rule 144 under the Securities Act of 1933, as amended. Subject to compliance
with applicable Federal and state securities registration requirements, or the
availability of an exemption therefrom, this Warrant may be assigned by holder
to one or more persons by completing the form of assignment annexed hereto and
delivering this Warrant with such assignment to the Company. The Company may
require an opinion of counsel or other evidence of compliance or exemption from
applicable securities registration requirements before giving effect to such
assignment. Unless issued under an applicable registration statement, Warrant
Shares will be issued bearing a customary restrictive legend. The Company
acknowledges that, pursuant to the Warrant Issuance Agreement, Castle Creek
Capital, LLC is entitled to request that the Company seek to register the
Warrant Shares issuable pursuant to this Warrant with the Commission for re-sale
on Form S-3 (or similar form). Holder shall cooperate in all reasonable and
customary respects in connection with such registration.
11.3. Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the Company and the Holder. The provisions of this Warrant are
intended to be for the benefit of the Holder of this Warrant or the Warrant
Shares and shall be enforceable by the Holder.
11.4. Amendments. This Warrant may not be modified, supplemented, varied or
amended except by an instrument in writing signed by the Company and the Holder.
11.5. Headings. The descriptive headings of sections of this Warrant are
provided solely for convenience of reference and shall not, for any purpose, be
deemed a part of this Warrant.
11.6. Governing Law. THIS WARRANT AND ALL MATTERS CONCERNING THIS WARRANT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF INDIANA FOR CONTRACTS ENTERED INTO
AND TO BE PERFORMED IN SUCH STATE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
* * * * * *
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EXERCISE NOTICE
TO WHITE RIVER CAPITAL, INC.:
The undersigned registered holder of the within Warrant hereby irrevocably
exercises the Warrant, purchases thereunder ______________________ shares of the
Common Stock of the Company, herewith makes payment of $____________________
therefore, and requests that the certificate(s) for such shares be issued in the
name of the undersigned Holder or its nominee and delivered to it at Holder's
address on the books of the Company.
Signature:
--------------------------------
Printed Name:
-----------------------------
Dated:
------------------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered Holder of the within Warrant
hereby sells, assigns and transfers unto ___________________________________ the
Warrant and all rights evidenced thereby and does irrevocably constitute and
appoint ___________________________ attorney to transfer the Warrant on the
books of the Company.
Signature:
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Printed Name:
---------------------------
Dated:
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