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EXHIBIT 4.10
REALTRUST ASSET CORPORATION
WARRANT AGREEMENT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS AN EXEMPTION THEREFROM IS AVAILABLE.
This Warrant Agreement (this "Agreement") is entered into as of April 1,
1998 by and between RealTrust Asset Corporation, a Maryland corporation (the
"Company"), and Capstone Investments, Inc., a Nevada corporation (the "Holder").
RECITALS
WHEREAS, the Company has agreed to grant to Holder warrants to purchase
50,000 shares of Company Common Stock in exchange and in consideration of making
that certain loan in the principal amount of $850,000 to CMG Funding Corp., a
subsidiary of the Company evidenced by that certain Convertible Secured
Promissory Note of even date herewith.
NOW, THEREFORE, BE IT RESOLVED, the parties agree hereto as follows:
1. DESCRIPTION; EXECUTION.
(a) The Company agrees to issue to the Holder and the Holder agrees to
accept the Warrant Certificate evidencing the right to purchase 50,000 shares of
Company Common Stock at the Exercise Price (as defined below). The Warrant
Certificate shall be substantially in the form annexed hereto as Exhibit A.
(b) This Agreement shall be executed on behalf of the Company by its
President. Upon delivery of this Warrant to the Holder, this Agreement shall be
binding upon the Company, and the Holder shall be entitled to all the benefits
set forth herein.
2. TERM OF WARRANT.
The Warrant shall become exercisable at any time after the date hereof,
and remain exercisable, subject to the conditions set forth in Section 3 until
the close of business on April 1, 2001 (the "Expiration Date").
3. EXERCISE OF WARRANT.
(a) Subject to (b) below, at any time until the Expiration Date, the
Holder shall have the right to purchase from the Company (and the Company shall
promptly issue to the Holder) one fully-paid and nonassessable share of Common
Stock at the Exercise Price (as defined below) for each Warrant, by surrendering
the appropriate Warrant Certificate and the Subscription Form attached hereto to
the Company at its executive offices and paying the aggregate Exercise Price for
the shares to be purchased, in cash or by check or shares of Company Common
Stock.
(b) The Warrant may be exercised in whole and in part but not in
increments of less than 100 shares. In case of a partial exercise, the Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same tenor
and for the purchase of the number of shares not purchased upon such partial
exercise shall be issued by the Company to the Holder hereof. The Warrants shall
be deemed to have been exercised immediately prior to the close of business on
the date of their surrender for exercise as provided above, and the person or
entity entitled to receive the shares of Common Stock issuable upon the exercise
shall be treated for all purposes as the holder of such shares of record as of
the close of business on such date. Prior to any such exercise, neither the
Holder nor any person entitled to receive shares issuable upon exercise shall be
or have any of the rights of a shareholder of the Company. No adjustment shall
be made for dividends or other stockholder rights for which the record date is
prior to the date of exercise. As soon as practicable on or after such date, the
Company shall issue in the name of, and deliver to the person or persons
entitled to receive, a certificate or certificates for the full number of shares
of Common Stock issuable upon such exercise.
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4. EXERCISE PRICE. The exercise price (the "Exercise Price") for each share of
Common Stock issuable pursuant to the Warrant shall be equal to the Price to
Public of the securities sold by the Company in its initial public offering,
adjusted as provided below. The Exercise Price may be paid, at the election of
the Holder, by certified or cashier's check.
5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON STOCK.
The number and kind of securities purchasable upon the exercise of the
Warrants and the Exercise Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
5.1 Adjustments. The Exercise Price of the Warrant shall be subject to
adjustment as follows:
(a) In case the Company shall issue rights, options, warrants or
convertible securities to all or substantially all holders of its Common Stock,
without any charge to such holders, entitling the holder thereof to subscribe
for or purchase Stock at a price per share which is lower at the date of
issuance of such rights, options, warrants or securities than the then Current
Fair Market Value (as defined in Section 7 hereof), the price of shares of Stock
thereafter purchasable upon the exercise of the Warrant shall be reduced to a
price equal to an amount which would entitle the Holder to receive the same
number of shares of Common Stock and other securities that he would have
received had he exercised the Warrants immediately prior to such issuance.
(b) For the purpose of this Section 5, the term "Common Stock"
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Agreement, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par value
to par value.
5.2 No Adjustment for Dividends. Except as provided in Section 5.1
hereof, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of a Warrant or upon the exercise of a
Warrant.
5.3 No Adjustment in Certain Cases. No adjustments shall be made
pursuant to Section 5 hereof in connection with the grant or exercise of
presently authorized or outstanding options to purchase Common Stock under the
Company's existing stock option plan or the exercise of presently outstanding
warrants to purchase Common Stock.
5.4 Preservation of Purchase Rights upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Holder an
agreement that the Holder shall have the right thereafter, upon payment of the
Exercise Price in effect immediately prior to such action, to purchase, upon
exercise of each Warrant, the kind and amount of shares and other securities and
property which it would have owned or have been entitled to receive after the
occurrence of such consolidation, merger, sale or conveyance had each Warrant
been exercised immediately prior to such action. In the event of a merger
described in Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as
amended, in which the Company is the surviving corporation, the right to
purchase shares of Common Stock under the Warrant shall terminate on the date of
such merger and thereupon the Warrant shall become null and void, but only if
the controlling corporation shall agree to substitute for the Warrant its
warrant which entitle the holders thereof to purchase upon their exercise the
kind and amount of shares and other securities and property which they would
have owned or been entitled to receive had the Warrant been exercised
immediately prior to such merger. Any such agreements referred to in this
Subsection 5.4 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section 5
hereof. The provisions of this Subsection 5.4 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
6. FRACTIONAL SHARES; ISSUANCE OF SHARES; LEGENDS.
6.1 Fractional Shares. The Company shall not be required to issue
fractional shares of Company Common Stock on the exercise of a Warrant. If any
fraction of a share of Stock would, except for the provisions of this Section 6,
be issuable on the exercise of a Warrant (or specified portion thereof), the
Company shall in lieu thereof pay an
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amount in cash equal to the then Current Fair Market Value, multiplied by such
fraction. For purposes of this Agreement, the term "Current Fair Market Value"
shall mean (i) if the Common Stock is traded in the over-the-counter market and
not in the NASDAQ Small Cap Market or the National Market nor on any national
securities exchange, the average of the per share closing bid prices of the
Common Stock on the 10 consecutive trading days immediately preceding the date
in question, as reported by NASDAQ or an equivalent generally accepted reporting
service, or (ii) if the Common Stock is traded in the NASDAQ Small Cap Market or
the National Market or on a national securities exchange, the average for the 10
consecutive trading days immediately preceding the date in question of the daily
per share closing prices of the Common Stock in the NASDAQ Small Cap Market or
the National Market or on the principal stock exchange on which it is listed, as
the case may be. or (iii) if the class of Stock is not publicly traded or
quoted, the fair market value as determined by the Board of Directors of the
Company based on (with appropriate adjustments) the most recent purchases of the
Company's Stock and/or other relevant factors including the Company's income and
assets or evaluation reports received by the Company.
6.2 Issuance of Shares. All shares of Stock issued upon exercise of a
Warrant will be duly authorized, validly issued, fully paid and nonassessable.
6.3 Legends. If the Stock to be issued upon exercise of this Warrant has
not been registered under the Securities Act of 1933, as amended, then the stock
certificates representing such shares of Common Stock shall bear a legend
substantially in the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE
STATE SECURITIES LAWS AND ARE RESTRICTED SECURITIES. SUCH SECURITIES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE ACT AND STATE SECURITIES LAWS.
7. TRANSFERABILITY.
The Warrant or the Shares of Company Common Stock underlying the Warrant
may not be transferred without the prior consent of the Company. The Company
shall not be required to register any transfer on the books of the Company. The
Company may require, as a condition to any transfer an opinion of counsel
satisfactory to it prior to such transfer that registration under the Securities
Act and applicable state securities laws is not required in connection with the
transaction resulting in such transfer. Each new Warrant or Company Common Stock
certificate issued upon any transfer as above provided shall bear an appropriate
investment legend, except that such Warrant or Company Common Stock certificate
shall not bear such restrictive legend if the opinion of counsel referred to
above is to further effect that such legend is not required in order to
establish compliance with the provisions of the Securities Act or if such
transfer is made in accordance with the provisions of Rule 144(k) promulgated
under the Securities Act. The Warrant may also be transferred by will or devise
and by the laws of descent.
8. MISCELLANEOUS.
8.1 Notices.
All notices, requests, demands and other communications required
or permitted to be given hereunder shall be deemed to have been duly given if in
writing and delivered personally, given by prepaid telegram, or mailed first
class, postage prepaid, registered or certified mail, return receipt requested,
to the following addresses:
If to the Company: Real Trust Asset Corporation
CMG Funding Corp.,
0000 Xxxx Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxx X. Xxx
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With a copy to: Jeffers, Wilson, Xxxxx & Xxxx, LLP
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
If to the Holder: Capstone Investments, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Any party may change the address to which such communications are
to be directed to it by giving written notice to the other party. Except as
otherwise provided in this Warrant, all notices shall be deemed to be given when
delivered in person, or if placed in the mail as aforesaid, then two (2) days
thereafter.
8.2 Modifications.
The parties may, by mutual consent, amend, modify, supplement and
waive any right under this Warrant in any manner agreed by them in writing at
any time.
8.3 Entire Agreement.
This Agreement, and any documents, instruments or agreements
specifically referred to herein, set forth the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereby and supersede all prior agreements, arrangements and understandings
relating to the subject matter hereof.
8.4 Headings.
The section and paragraph headings contained in this Agreement
are for convenient reference only, and shall not in any way affect the meaning
or interpretation hereof.
8.5 Governing Law; Arbitration.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Maryland, without any regard to the choice of law
provisions thereof. Any dispute arising under this Agreement shall be resolved
by binding arbitration under the rules of commercial arbitration of the American
Arbitration Association in Salt Lake City, Utah.
8.6 Severability.
If any provision of this Agreement shall be held to be invalid,
illegal or unenforceable, it shall be deemed severable from the remaining
provisions of this Agreement which shall remain in full force and effect.
8.7 Waiver.
No waiver of any provision of this Agreement or any breach
thereof shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar) or any other breach hereunder nor shall such
waiver constitute a continuing waiver. Either party may waive performance of any
provision of this Agreement, the non-performance of which would otherwise
constitute a breach of this Agreement, including but not limited to the
non-performance of any condition precedent to such party's performance, without
affecting the enforceability of this Agreement or the provisions contained
herein.
8.8 Heirs; Successors and Assigns.
The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective heirs, successors and assigns of
the parties hereto. Holders may transfer and assign the Warrants only as
provided in Section 7 and any assignment in violation of the foregoing shall be
void.
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8.9 Attorneys' Fees.
If any legal action is instituted to enforce or interpret the
terms of this Agreement, the prevailing party in such action shall be entitled
to actual attorneys' fees in addition to any other relief to which the party is
entitled.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
date first written above.
REALTRUST ASSET CORPORATION,
A MARYLAND CORPORATION
By: ______________________________
Xxxx X. Xxx,
Chief Executive Officer
"HOLDER"
CAPSTONE INVESTMENTS, INC.,
A NEVADA CORPORATION
By: ______________________________
Xxxxx Xxxxxxxxx,
Authorized Signatory
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