1
EXHIBIT 10.2
WARRANT AGREEMENT
BETWEEN
AMRESCO CAPITAL TRUST
AND
PRUDENTIAL SECURITIES INCORPORATED
DATED AS OF MAY 4, 1999
2
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement") dated as of May 4, 1999,
between AMRESCO CAPITAL TRUST (together with its permitted successors and
assigns, the "Company"), a Texas real estate investment trust with its
principal office at 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000,
and PRUDENTIAL SECURITIES INCORPORATED, a Delaware corporation ("PSI") with its
principal office at Xxx Xxx Xxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
R E C I T A L S :
WHEREAS, the Company and Prudential Securities Credit Corp., an
Affiliate of PSI ("PSCC"), are parties to that certain Amended and Restated
Interim Warehouse and Security Agreement dated as of the date hereof (as the
same may be amended, supplemented or otherwise modified from time to time and
together with all documents and agreements executed and delivered in connection
therewith, collectively, the "Warehouse Agreement"); and
WHEREAS, as a condition to the obligation of PSCC to enter into the
Warehouse Agreement, PSI has required, inter alia, that the Company shall have
executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto agree as follows:
Section 1. Definitions. For purposes of this Agreement, the terms set
forth below in this Section 1 shall have the respective meanings hereinafter
assigned to them in this Agreement:
"Act" shall mean the Securities Act of 1933, as amended, or any
similar successor federal statute.
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person if
such first Person possesses directly or indirectly the power to direct, or
cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Agreement.
"Appraiser" shall mean an investment bank or other qualified
independent appraiser of national standing.
"Benefit Plans" shall mean the Company's option and benefit plans,
whether currently in effect or adopted in the future, which are used to
compensate the officers and other employees of the Manager (as defined in the
Warehouse Agreement) and any successor manager under the Management Agreement
(as defined in the Warehouse Agreement), and Affiliates of the Manager,
including, without limitation, the AMRESCO Capital Trust 1998 Share Option and
Award Plan.
"Blue Sky Laws" shall mean any and all applicable state securities
laws.
3
"Board of Trust Managers" shall have the same meaning as in the
Company's Charter, and shall also include any governing body with similar
functions of any successor entity of the Company as it may then be constituted.
"Business Day" shall mean any day that is not a Saturday or Sunday or
a day on which banks are required or permitted to be closed in the States of
New York, Texas or Georgia.
"Closing Date" shall mean the date this Agreement is originally
executed.
"Commission" shall mean the Securities and Exchange Commission or any
entity succeeding to its functions relating to the registration of securities
and securities markets under the federal securities laws.
"Common Shares" shall mean (except where the context otherwise
indicates) the common shares of beneficial interest of the Company as
constituted on the Closing Date, and any equity interests (whether in the form
of common stock or otherwise) into which such Common Shares may thereafter be
changed, by reclassification or otherwise, and shall also include (i) equity
interests (whether in the form of common stock or otherwise) of the Company of
any other class (regardless of how denominated) which is also not preferred as
to dividends or distributions of assets over any other class of equity of the
Company and which is not subject to redemption, and (ii) equity interests
(whether in the form of common stock or otherwise) of any successor or
acquiring Person received by or distributed to the holders of Common Shares of
Company in the circumstances contemplated by Section 14(f).
"Common Share Certificate" shall mean a certificate evidencing one or
more Common Shares.
"Company" shall mean AMRESCO Capital Trust, a Texas real estate
investment trust.
"Company's Charter" shall mean the Company's Declaration of Trust and
By-laws, true, accurate and correct copies of which are attached hereto as
Exhibit A.
"Convertible Securities" shall mean any evidences of indebtedness,
shares of stock or other securities directly or indirectly convertible into or
exchangeable (with or without payment of additional consideration) for Common
Shares.
"Current Price" with respect to any security on any day shall mean the
closing sale price, regular way, on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices,
regular way, in each case on the Nasdaq Stock Market or, if such security is
not quoted on the Nasdaq Stock Market, on the principal national securities
exchange or quotation system on which such security is quoted or listed or
admitted to trading or, if not quoted or listed or admitted to trading on any
national securities exchange or quotation system, the average of the closing
bid and asked prices of such security on the over-the-counter market on the day
in question as reported by the National Quotation Bureau Incorporated, or a
similar generally accepted reporting service, or, if the security is not
publicly traded, the Fair Market Value of such security determined in
accordance with Section 13.
2
4
"Date of Exercise" shall mean, with respect to any Warrant, the first
date on which the Company shall have received (i) the Warrant Certificate
evidencing such Warrant, together with a purchase form (in the form attached
hereto as Exhibit C) duly completed and signed, and (ii) payment of the
Exercise Price.
"Demanding Parties" is defined in Section 12(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute.
"Exercise Price" shall mean the exercise price of a Warrant, which
shall initially be $9.83 per Warrant Share, subject to adjustment as provided
in Section 14.
"Expiration Date" shall mean, with respect to any Warrant, the
calendar date corresponding to the date seven (7) years from the Closing Date.
"Fair Market Value" is defined in Section 13.
"GAAP" shall mean generally accepted accounting principles as in
effect in the United States of America from time to time.
"Holder" shall mean the registered holder, from time to time, of any
Subject Security.
"Indemnified Person" is defined in Section 12(f)(i).
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq Stock Market" shall mean The Nasdaq Stock Market's National
Market.
"Options" shall mean rights, options or warrants (other than the
Warrants) to subscribe for, purchase or otherwise acquire either Common Shares
or Convertible Securities.
"Other Registrable Securities" shall mean securities of the Company
(other than the Registrable Securities) as to which the holders of such
securities have registration rights as of or subsequent to the Closing Date and
as to which other Persons are granted registration rights.
"Other Securities" shall mean any securities (other than Common
Shares) of the Company or any other Person which the Holders at any time shall
be entitled to receive, or shall have received, upon the exercise of the
Warrants, in lieu of or in addition to the Warrant Shares, or which at any time
shall be issuable or shall have been issued to holders of the Warrant Shares in
exchange for, in addition to or in replacement of, the Warrant Shares.
"Person" shall mean an individual, an association, a partnership, a
corporation, a limited liability company, a trust, an unincorporated
organization, a government or any other entity or organization.
"Piggyback Registration" is defined in Section 12(a)(i).
3
5
"Preferred Shares" shall mean shares of beneficial interest which are
preferred as to dividends or distributions of assets over any other class of
equity securities of the Company.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
Registration Statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"PSCC" shall mean Prudential Securities Credit Corp.
"PSI" shall mean Prudential Securities Incorporated.
"Public Offering" shall mean an offering and/or sale to the public of
Common Shares, which offering and sale are registered under the Act.
"Register" shall mean the register for the registration and
registration of transfer of the Warrants, which shall be maintained by the
Company at its principal office, or such other place as the Company may specify
in writing to the Persons named therein as Holders of the Warrants.
"Registrable Securities" shall mean the Warrants, any Common Shares or
Other Securities issuable or issued upon exercise of the Warrants, any Common
Shares or Other Securities of the Company issued as a dividend or other
distribution with respect to, or in exchange or in replacement of such Common
Shares.
"Registration Statement" shall mean any registration statement of the
Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference or deemed
to be incorporated by reference in such Registration Statement.
"Representative" is defined in Section 13.
"Shelf Registration Statement" shall have the meaning provided in
Section 12 (c) hereof.
"Supplemental Shelf Registration Statement" shall have the meaning
provided in Section 12(c)(ii) hereof.
"Subject Securities" shall mean, without duplication if the context
requires, the Warrants issued hereunder and the Warrant Shares and Other
Securities issued upon exercise of such Warrants.
"Third-Party Warrants" shall have the meaning set forth in Section
2(b)(vi) of this Agreement.
4
6
"Trading Day" shall mean (x) if the applicable security is quoted on
the Nasdaq Stock Market, a day on which a trade may be made on the Nasdaq Stock
Market, (y) if the applicable security is listed or admitted for trading on a
national securities exchange, a day on which such national securities exchange
is open for business or (z) if the applicable security is not otherwise listed,
admitted for trading or quoted, any day other than a Saturday or Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Warehouse Agreement" is defined in the first Recital.
"Warrant" shall mean a Warrant issued to PSI pursuant hereto and all
Warrants issued upon transfer, division or combination of, or in substitution
for, any thereof.
"Warrant Certificate" shall mean a certificate substantially in the
form of Exhibit B attached hereto evidencing one or more Warrants.
"Warrant Shares" shall mean the Common Shares issuable, from time to
time, upon exercise of the Warrants.
Section 2. Representations, Warranties and Covenants.
(a) The Company represents and warrants to the Holder that:
(i) The Company has the power to execute and deliver this
Agreement and has the power to issue the Warrant Shares and to perform
its obligations under this Agreement and the Warrant Certificates.
(ii) The execution, delivery and performance by the Company
of this Agreement and the issuance of Warrant Shares upon the exercise
of the Warrants have been duly authorized by all necessary action, and
do not (A) violate any provision of applicable law or regulation, or
of the Company's Charter, or of any order, writ, injunction or decree
of any court or governmental authority applicable to the Company, or
(B) result in a breach of, or constitute a default under, or require
any consent under, any contractual obligation to which the Company is
a party or by which the Company is bound or affected. The Company has
taken sufficient corporate action to reserve a sufficient number of
authorized but unissued Common Shares in connection with the
prospective issuance of the Warrant Shares.
(iii) This Agreement has been duly executed and delivered by
the Company and constitutes a legal, valid, binding and enforceable
obligation of the Company, except as limited by bankruptcy, insolvency
or other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights and by the application of equitable
principles. The Warrants and the Warrant Certificates constitute
legal, valid, binding and enforceable obligations of the Company,
except as limited by bankruptcy, insolvency or other similar laws now
or hereafter in effect affecting the enforcement of creditors' rights
and by the application of equitable principles, and the Warrant
Shares, when issued upon exercise of the Warrants, will be duly
authorized, validly issued, fully paid and
5
7
nonassessable and be free from all taxes, liens and charges with
respect to the issuance thereof (other than any liens or charges
resulting from the Holder's actions).
(iv) The Company's authorized Common Shares are as described
in the Company's Charter. A total of 10,006,111 Common Shares were
issued and outstanding on the Closing Date.
(v) Except as set forth on Exhibit E attached hereto, there
are no Options, subscriptions or similar rights to acquire from the
Company, or agreements or other obligations by the Company, absolute
or contingent, to issue, sell or register Common Shares, whether by
Public Offering or on conversion or exchange of Convertible Securities
or otherwise.
(vi) No holder of Common Shares has any preemptive rights to
subscribe for or to purchase any Warrants or Warrant Shares under the
Company's Charter, any agreement to which the Company is a party or
otherwise bound or the corporate law of the Company's jurisdiction of
organization.
(vii) No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other
governmental body is required to be obtained by the Company in
connection with the execution of this Agreement and the transactions
contemplated hereby, including the valid issuance of the Subject
Securities.
(viii) It is not necessary in connection with the offer,
issuance or sale to PSI of the Subject Securities to register the
Subject Securities under the Act or any Blue Sky Law.
(ix) No legal proceeding or investigation is pending or to
the best knowledge of the Company threatened before any court,
arbitrator or administrative or governmental authority, bureau or
agency to restrain or prohibit the Company from performing this
Agreement or the transactions contemplated hereby.
(x) No representation or warranty made by the Company in this
Agreement, or in any schedule, written statement or certificate
furnished to the Holder in connection with the transactions
contemplated by this Agreement, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein and therein not false or misleading.
(b) The Company hereby covenants for so long as this Agreement remains
in effect that:
(i) The Company will not (and will cause any Affiliate not
to) take any action, including, without limitation, amending the
Company's Charter, reorganizing, consolidating, merging, dissolving,
transferring assets or issuing or selling securities or take any other
voluntary action, to avoid, or seek to avoid, observing or performing
any of the terms, conditions or covenants, of this Agreement or the
Subject Securities, and will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of the
Holders
6
8
against dilution or impairment to the extent contemplated by the terms
hereof. In furtherance and not in limitation of the foregoing, the
Company shall not (1) enter into any agreement with respect to its
securities that is inconsistent with the rights granted to Holders of
Subject Securities in this Agreement or otherwise conflicts with the
provisions hereof, or (2) increase the par value of any Warrant Shares
or Other Securities above the Exercise Price then in effect. Before
taking any action that would cause an adjustment pursuant to Section
14, the Company will take all corporate action that, in the opinion of
its legal counsel, may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares
at the then applicable Exercise Price.
(ii) The Company will take all actions necessary or
appropriate to be taken by it to validly and legally issue fully paid
and nonassessable Common Shares upon exercise of the Warrants and will
use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Agreement. In respect of the
issuance of the Warrants to the Holders, the exercise thereof by the
Holders and the resulting issuance of Subject Securities, the Company
shall not set off, recoup, claim, xxxxx, withhold or defer any
property or amount for any reason whatsoever.
(iii) At all times during the term of this Agreement, the
Company shall retain a nationally recognized accounting firm as its
auditor.
(iv) (A) The Company will file with the Commission such
information as the Commission may require under Section 13 or 15(d) of
the Exchange Act, as applicable, and shall use commercially reasonable
efforts to take all action as may be required as a condition to the
availability of Rule 144 or Rule 144A under the Act (or any successor
or similar exemptive rules hereafter in effect) and (B) the Company
shall make available to Holders of Subject Securities such reports,
documents and information as such Holders reasonably request to enable
such Holders to make sales of Subject Securities pursuant to such
rules. If the Company ceases to be subject to Section 13 or 15(d) of
the Exchange Act, the Company shall make available to the Holder of
Subject Securities in connection with any sale thereof, the
information required by Rule 144A(d)(4) under the Act in order to
permit resales of Subject Securities pursuant to Rule 144A.
(v) The Company shall use commercially reasonable efforts to
qualify at all times after May 12, 1999 for registration of its Common
Shares on Form S-3 or such successor form.
(vi) In the event that any of the terms of any warrant
agreement or any warrants issued by the Company (other than Options
granted under Benefit Plans after the Closing Date which entitle all
of the holders thereof to purchase not more that 1,000,000 shares of
Common Stock of the Company and any Options granted under the Benefit
Plans prior to the Closing Date) to any other third party are more
favorable to such third party than the terms hereof are to the
Holders, then a majority-in-interest of the Holders may prepare, and
the Company agrees to sign, an amendment to this Agreement making such
changes as shall be necessary in order to make the terms of this
Agreement at least as favorable as those set forth in the warrant
agreement or warrants issued to such third party ("Third-Party
Warrants").
7
9
(c) PSI hereby represents and warrants to and agrees with the Company
that:
(i) PSI is acquiring and will acquire the Subject Securities
for its own account for investment and not with a view to any
distribution thereof that might cause a violation of the Act or any
rules or regulations thereunder; provided, however, that subject to
Section 6 hereof, the disposition of the Subject Securities shall be
at all times within the sole discretion of the Holders.
(ii) PSI has had an opportunity to ask questions of the
principal officers and representatives of the Company and to obtain
any additional information necessary to permit an evaluation of the
benefits and risks associated with the investment made hereby.
(iii) PSI has had sufficient experience in business,
financial and investment matters to evaluate the merits and risks
involved in the investment made hereby and is able to bear the
economic risk (including complete loss) of such investment for an
indefinite period of time.
(d) In addition to any reduction in the Exercise Price required by
Section 14, the Company and PSI hereby agree that the Company shall have the
right to reduce the Exercise Price at any time, in its sole discretion, for
such limited periods as it may from time to time determine, upon no less than
ten days and no more than sixty days prior written notice to Holders, provided
that no such reduction may be effected without the approval of a majority of
the Board of Trust Managers.
Section 3. Warrant Certificates. The Warrant Certificates shall be in
registered form only and shall be substantially in the form of Exhibit B
attached hereto, with such changes therein as may be required from time to time
to reflect any adjustments made pursuant to Section 14 hereof. The Warrant
Certificates may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed
or engraved thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law, or with any rule or regulation made pursuant thereto, or
with any rule or regulation of any stock exchange on which the Common Shares or
the Warrants may be listed, or any inter-dealer quotation system upon which the
Common Shares or the Warrants may be quoted. Warrant Certificates shall be
executed on behalf of the Company by its Chairman of the Board, President or
any Executive or Senior Vice President, and attested by its Secretary or an
Assistant Secretary. The signature of any of such officers may be manual or
facsimile. Warrant Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that any of such individuals shall have ceased to
hold such offices prior to the delivery of such Warrant Certificates or did not
hold such offices on the date of this Agreement.
8
10
Section 4. Issuance and Delivery of Warrant Certificates. The Company
hereby agrees to issue and deliver on the Closing Date to PSI 250,002 Warrants
registered in the name of PSI, and shall deliver to PSI one (1) Warrant
Certificate in the amount of 250,002 Warrants, evidencing such Warrants.
Section 5. Registration. The Warrants shall be registered in the
name(s) of the recordholder(s) thereof from time to time. The Company may deem
and treat the registered Holder(s) of the Warrants as the absolute owner(s)
thereof (notwithstanding any notation of ownership or other writing on the
Warrant Certificates made by anyone) for the purpose of any exercise thereof or
any distribution to the Holder(s) thereof, and for all other purposes.
Section 6. Transfer; Registration of Transfers and Exchanges.
(a) Subject to compliance with U.S. securities laws, the Warrants and
all rights thereunder are fully transferable in whole or in part and from time
to time to any "qualified institutional buyer" (as defined in Rule 144A under
the Act) or "accredited investor" (as defined in Rule 501 under the Act), and
to any other individual with the consent of the Company, which consent shall
not be unreasonably withheld or delayed, provided, however, that PSI shall not
transfer the Warrants to more than seven Persons. The Company shall register
the transfer of any outstanding Warrants made in accordance with the terms
hereof and applicable law upon the Register, upon surrender of the Warrant
Certificate(s) to the Company's principal office, accompanied by a written
instrument of transfer substantially in the form attached hereto as Exhibit D,
duly executed by the registered Holder(s) thereof or by the duly appointed
legal representative thereof. Upon any such registration of transfer, new
Warrant Certificate(s) evidencing such transferred Warrants shall be issued to
the transferee(s) and the surrendered Warrant Certificate(s) shall be
cancelled.
(b) Warrant Certificates may be exchanged at the option of the Holder
thereof, when surrendered to the Company at its principal office, for other
Warrant Certificates of like tenor and representing in the aggregate a like
number of Warrants. Warrant Certificates surrendered for exchange shall be
cancelled.
Section 7. Duration and Exercise of Warrants.
(a) The Warrants shall be exercisable by the Holder thereof on any
Business Day on or after the Closing Date and prior to the close of business on
the Expiration Date.
(b) Subject to the provisions of this Agreement, the Holder of each
Warrant shall have the right to purchase from the Company (and the Company
shall issue and sell to such Holder of a Warrant) one fully paid and
nonassessable Common Share per Warrant held upon (i) surrender of the Warrant
Certificate evidencing such Warrant, with a purchase form substantially in the
form attached hereto as Exhibit C duly completed and signed, to the Company at
its principal office or at such other address as the Company may specify in
writing to the then registered Holders, and (ii) payment of the Exercise Price.
Payment of the Exercise Price shall be made at the option of the Holder by (i)
cash or certified or official bank check, (ii) by surrendering additional
Warrants or shares of Common Stock for cancellation to the extent the Company
may lawfully accept shares of Common Stock, with the value of such shares of
9
11
Common Stock for such purpose to equal the average Current Price of the Common
Stock during the ten Trading Days immediately preceding the date of surrender,
and the value of such additional Warrants to equal the difference between the
aggregate value of the Warrant Shares issuable on the exercise of such
Warrants, calculated as set forth in this clause 7(b)(ii), and the aggregate
Exercise Price, or (iii) any combination thereof, duly endorsed by or
accompanied by appropriate instruments of transfer duly executed by Holder or
by Holder's attorney duly authorized in writing.
(c) Upon such surrender of the Warrant Certificate evidencing any
Warrants and payment of the Exercise Price, the Company shall, as promptly as
practicable, and in any event within five Business Days thereafter, issue and
cause to be delivered to, or upon the written order of, the Holder of such
Warrants and in such name or names as such Holder may designate, a certificate
for the Warrant Shares issued upon such exercise of such Warrants. Any
Person(s) so designated to be named therein shall be deemed to have become the
Holder of record of the Warrant Shares as of the Date of Exercise of such
Warrants. The stock certificate or certificates so delivered shall be, to the
extent possible, in such denomination or denominations as such Holder shall
request.
(d) The Warrants evidenced by a Warrant Certificate are exercisable,
from time to time, either in whole or in part for any number of Warrant Shares
up to the number of Warrant Shares evidenced by the Warrant Certificate. If
fewer than all of the Warrants evidenced by a Warrant Certificate are exercised
at any time, a new Warrant Certificate or Certificates shall be issued as
promptly as practicable (and in any event within five Business Days), at the
Company's expense, for the remaining number of Warrants evidenced by such
Warrant Certificate. All Warrant Certificates surrendered upon exercise of
Warrants shall be cancelled.
Section 8. Payment of Expenses and Taxes. The Company shall pay all
expenses in connection with, and all taxes and other governmental charges
(other than any corporate, personal or other income taxes of the Holder) that
may be imposed with respect to, the issue or delivery of Warrant Shares, unless
such tax or charge is imposed by law upon the Holder, in which case such taxes
or charges shall be paid by the Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for Warrant Shares in any name other
than that of the Holder.
Section 9. Mutilated or Missing Warrant Certificates. Upon receipt by
the Company from any Holder of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of a Warrant Certificate and indemnity
reasonably satisfactory to it (it being understood that the written indemnity
agreement of PSI, without posting of a bond, shall be sufficient indemnity),
and in case of mutilation upon surrender and cancellation of the mutilated
Warrant Certificate, the Company will execute and deliver in lieu thereof a new
Warrant Certificate of like tenor to such Holder; provided, in the case of
mutilation, no indemnity shall be required if the mutilated Warrant Certificate
in identifiable form is surrendered to Company for cancellation.
10
12
Section 10. Reservation and Issuance of Warrant Shares. The Company
will at all times authorize, reserve and have available, free from preemptive
rights, solely for the purpose of enabling it to satisfy any obligation to
issue and deliver Warrant Shares upon the exercise of the Warrants, the number
of Common Shares that is equal to the total number of Warrant Shares issuable
upon the exercise of the Warrants, as such number shall vary from time to time
in accordance with Section 14, and, if necessary, will amend its Declaration of
Trust to provide sufficient reserves of Common Shares issuable upon exercise of
the Warrants. The transfer agent for the Common Shares and every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the Warrants shall be irrevocably authorized and directed at all
times to reserve the maximum number of authorized shares as shall be required
for such purpose. The Company shall keep a copy of this Agreement on file with
the transfer agent for the Common Shares and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the Warrants.
Section 11. No Registration under the Act; Legend. None of the Subject
Securities has been registered under the Act. Assuming the accuracy of the
representations of PSI contained in Section 2(c) hereof, but based on the
Company's analysis of the applicable securities laws, the Company represents
and warrants that the offer, sale and issuance of the Warrants qualifies for
the exemption from registration provided by Section 4(2) of the Act on the
ground that Warrants are to be issued in transactions by an issuer not
involving any Public Offering.
A copy of this Agreement shall be filed with the Secretary of the
Company and kept at its principal office. The Warrant Certificates shall
contain a legend substantially in the following form:
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON SHARES
ISSUABLE PURSUANT TO THE TERMS HEREOF HAVE THE BENEFIT AND ARE SUBJECT
TO THE TERMS AND CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT DATED
AS OF MAY 4, 1999, BETWEEN THE COMPANY AND THE INITIAL HOLDER OF THE
WARRANTS THEREIN NAMED, AS FROM TIME TO TIME AMENDED, A COMPLETE AND
CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL
OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE HOLDER OF THIS
WARRANT UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THE WARRANTS AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THE
WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE OR OTHER SECURITIES LAW AND MAY NOT
BE TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, OR (ii) UPON FIRST FURNISHING TO THE COMPANY
AN OPINION OF COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE
REGISTRATION REQUIREMENTS OF THE ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE TRUST'S
MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED ("THE CODE"). PURSUANT TO
THE TRUST'S DECLARATION OF TRUST, AND
11
13
EXCEPT AS OTHERWISE PROVIDED THEREIN, NO PERSON MAY (1) BENEFICIALLY
OWN SHARES IN EXCESS OF 9.8% (IN VALUE OR NUMBER OF SHARES) OF ALL
OUTSTANDING SHARES OF ANY CLASS, OR (2) BENEFICIALLY OWN SHARES THAT
WOULD RESULT IN THE TRUST BEING "CLOSELY HELD" UNDER SECTION 856(h) OF
THE CODE OR OTHERWISE CAUSE THE TRUST TO FAIL TO QUALIFY AS A REIT. IF
THE RESTRICTIONS ON OWNERSHIP OR TRANSFER ARE VIOLATED BY THE HOLDER
HEREOF, THE EXCESS SHARES REPRESENTED HEREBY WILL BE AUTOMATICALLY
TRANSFERRED TO A TRUSTEE OF A CHARITABLE TRUST FOR THE BENEFIT OF ONE
OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, UPON THE OCCURRENCE OF
CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE ABOVE
RESTRICTIONS MAY BE VOID. ALL TERMS IN THIS LEGEND NOT OTHERWISE
DEFINED HEREIN HAVE THE MEANINGS ASCRIBED THERETO IN THE TRUST'S
DECLARATION OF TRUST, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A
COPY OF WHICH, INCLUDING THE RESTRICTIONS ON OWNERSHIP OR TRANSFER,
WILL BE SENT WITHOUT CHARGE TO THE RECORD HOLDER OF THE CERTIFICATE
UPON WRITTEN REQUEST TO THE TRUST AT ITS PRINCIPAL PLACE OF BUSINESS.
IN ADDITION, THE COMPANY WILL FURNISH TO ANY SHAREHOLDER ON REQUEST
AND WITHOUT CHARGE A FULL STATEMENT OR SUMMARY OF THE DESIGNATIONS AND
PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS,
LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS AND TERMS AND CONDITIONS
OF REDEMPTION OF THE SHARES OF EACH CLASS WHICH THE COMPANY IS
AUTHORIZED TO ISSUE AND THE DIFFERENCES IN THE RELATIVE RIGHTS AND
PREFERENCES BETWEEN SUCH SHARES OF EACH SERIES, IF ANY, TO THE EXTENT
THEY HAVE BEEN SET, AND OF THE AUTHORITY OF THE BOARD OF TRUST
MANAGERS TO SET THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT
SERIES. SUCH REQUEST MAY BE MADE TO THE SECRETARY OF THE COMPANY.
The Common Share Certificates shall contain a legend which is
substantially similar to the legend on the Company's current Common Share
Certificates and which also contains provisions substantially in the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE OR OTHER SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT
(i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR
(ii) UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL THAT
SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION REQUIREMENTS OF
THE ACT.
12
14
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE TRUST'S
MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED ("THE CODE"). PURSUANT TO
THE TRUST'S DECLARATION OF TRUST, AND EXCEPT AS OTHERWISE PROVIDED
THEREIN, NO PERSON MAY (1) BENEFICIALLY OWN SHARES IN EXCESS OF 9.8%
(IN VALUE OR NUMBER OF SHARES) OF ALL OUTSTANDING SHARES OF ANY CLASS,
OR (2) BENEFICIALLY OWN SHARES THAT WOULD RESULT IN THE TRUST BEING
"CLOSELY HELD" UNDER SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE THE
TRUST TO FAIL TO QUALIFY AS A REIT. IF THE RESTRICTIONS ON OWNERSHIP
OR TRANSFER ARE VIOLATED BY THE HOLDER HEREOF, THE EXCESS SHARES
REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A
CHARITABLE TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE
BENEFICIARIES. IN ADDITION, UPON THE OCCURRENCE OF CERTAIN EVENTS,
ATTEMPTED TRANSFERS IN VIOLATION OF THE ABOVE RESTRICTIONS MAY BE
VOID. ALL TERMS IN THIS LEGEND NOT OTHERWISE DEFINED HEREIN HAVE THE
MEANINGS ASCRIBED THERETO IN THE TRUST'S DECLARATION OF TRUST, AS THE
SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE
RESTRICTIONS ON OWNERSHIP OR TRANSFER, WILL BE SENT WITHOUT CHARGE TO
THE RECORD HOLDER OF THE CERTIFICATE UPON WRITTEN REQUEST TO THE TRUST
AT ITS PRINCIPAL PLACE OF BUSINESS.
Any opinion of counsel obtained in connection with a transfer or
delegending of the Subject Securities will be at the expense of the relevant
Holder. At such time as a legend stated above (or any part thereof) is no
longer applicable for any reason, including, without limitation, the operation
of Section 12 or Rule 144(k), the Company will, upon receipt of an opinion of
counsel to the relevant Holder to such effect, issue new Warrant Certificates
or Common Stock Certificates which do not contain such legend.
Section 12. Registration Rights.
(a) Piggyback Registration.
(i) If (and on each occasion that) the Company proposes to
register any of its securities under the Act in connection with a
Public Offering or effect an underwritten Public Offering under an
effective Registration Statement, either for the Company's own account
and/or for the account of any of its securityholders, other than any
such registration described in the last sentence of clause (ii) below
(each such registration being herein called a "Piggyback
Registration"), then the Company will give written notice to all
Holders who then hold Registrable Securities of the Company's
intention to effect such Piggyback Registration not later than the
earlier to occur of (A) thirty days prior to the anticipated initial
filing date of such Piggyback Registration if such registration is on
Form S-3, and (B) forty-five days prior to such date if the
registration is on any other form.
13
15
(ii) Subject to the provisions contained in Section 12(b) and
in the last sentence of this clause (ii), in connection with any
registration subject to the provisions of this Section 12(a), if
within twenty days after the date of the Company notice pursuant to
clause (i) above Holders of Registrable Securities request the
inclusion of some or all of the Registrable Securities owned by them
in such registration (in the form of shares of Common Stock to be
obtained upon exercise of the Warrants then held by them), the Company
will use commercially reasonable efforts to effect the registration
under the Act of all Registrable Securities which such Holders request
to be registered. Holders of Registrable Securities shall be permitted
to withdraw all or any part of the Registrable Securities of such
Holders from any Piggyback Registration at any time prior to the final
filing (which has been made by and in the discretion of the Company)
of such Piggyback Registration. Notwithstanding anything herein to the
contrary, the Company will not be obligated or required to include any
Registrable Securities in any registration effected on Form S-4 (or
any similar successor form); on Form S-8 (or any similar successor
form) solely to implement an employee benefit plan (including any
option plan) or a transaction of the type to which Rule 145 of the
Commission or any successor provision is applicable, or in connection
with a dividend reinvestment or direct stock purchase plan for the
benefit of the Company's stockholders.
(b) Allocation on Piggyback Registrations. In connection with an
underwritten Public Offering, if the managing underwriter or underwriters in
connection with a Piggyback Registration shall advise the Company in writing
that, in the reasonable opinion of such managing underwriter or underwriters,
the inclusion of all Registrable Securities for which registration is requested
pursuant to Section 12(a) hereof would materially and adversely affect the
success of such offering, then registration of the Company's securities shall
be cut-back in the following order:
(i) First, the registration for the Other Registrable
Securities shall be cut-back such that no holder of Other Registrable
Securities shall be entitled to participate in such underwritten
Public Offering unless all Registrable Securities and all Common
Shares proposed to be sold by the Company for its own account or for
the account of the parties for which the underwritten Public Offering
was commenced as a result of the exercise of demand registration
rights ("Demanding Parties") have been included in such underwritten
Public Offering. If the managing underwriter or underwriters of the
Public Offering reasonably determine that the Holders of the
Registrable Securities can include all of their Registrable Securities
in such Public Offering, then the holders of the Other Registrable
Securities shall be entitled to include their Other Registrable
Securities in an amount up to the amount that such managing
underwriter or underwriters advise may be included therein (as
allocated among the holders of the Other Registrable Securities, pro
rata on the basis of the number of Other Registrable Securities
requested to be included therein by such holders).
(ii) Second, the registration for the Registrable Securities
shall be cut-back such that no Holder of Registrable Securities shall
be entitled to participate in such underwritten Public Offering unless
all Common Shares proposed to be sold by the Company for its own
account and for the account of the Demanding Parties have been
included in such underwritten Public Offering. If the managing
underwriter or
14
16
underwriters of the Public Offering reasonably determine that all
Common Shares proposed to be sold by the Company for its own account
and for the account of the Demanding Parties can be included in such
Public Offering, then the Holders of the Registrable Securities shall
be entitled to include their Registrable Securities in an amount up to
the amount that such managing underwriter or underwriters advise may
be included therein (as allocated among the Holders of the Registrable
Securities, pro rata on the basis of the number of Registrable
Securities requested to be included therein by such holders).
(c) Demand Registration.
(i) The Company shall cause to be filed with the Commission
as promptly as practicable, but in no event later than August 15,
1999, a shelf Registration Statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement") on Form S-3 (or
other appropriate form) to cover sales of the Registrable Securities
(in the form of shares of Common Stock to be obtained upon exercise of
the Warrants then held by them). In connection with the Shelf
Registration Statement, the Company shall also register the offer and
sale of the Warrant Shares issuable upon exercise of the Warrants as a
primary registration. The Company shall use commercially reasonable
efforts to cause such Shelf Registration Statement to be declared
effective by the Commission as soon as practicable thereafter. The
Company shall use commercially reasonable efforts to keep such Shelf
Registration Statement continuously effective until the earlier to
occur of two years following the Date of Exercise of the last Warrant
issued pursuant to this Agreement or such time as, in the written
opinion of counsel to the Company, which opinion is reasonably
acceptable to such Holders, such registration is not required for the
unrestricted resale under Rule 144 (k) of Registrable Securities
entitled to registration rights under this Agreement. If Holders of a
majority of the Registrable Securities to be registered for resale in
the Shelf Registration Statement so elect, an offering of Registrable
Securities pursuant to the Shelf Registration Statement may be
effected in the form of an underwritten offering. Upon the receipt of
a notice of election by a majority of the Registrable Securities to
effect an underwritten offering, the Company will notify in writing
all Holders whose names are not included in such notice and such
non-electing Holders may, within five business days of receipt of such
notice, elect to be included with, and treated as, an electing Holder.
If the managing underwriter or underwriters advises the Company and
the Holders of such Registrable Securities that in its opinion the
amount of Registrable Securities proposed to be sold in such offering
exceeds the amount of Registrable Securities which can be sold in such
offering, there shall be included in such underwritten offering the
amount of such Registrable Securities which in the opinion of such
underwriter(s) can be sold, and such amount or number of shares of
such Registrable Securities shall be allocated pro rata among the
Holders electing to participate in such underwritten offering.
(ii) In addition to their rights under Sections 12(a), (b)
and (c)(i) hereof, following the expiration of the Shelf Registration
Statement, Holders collectively holding at least 75,000 shares of the
then outstanding Registrable Securities (or if less than 75,000 shares
of the Registrable Securities are then outstanding, then such lesser
amount) shall have the right to request and have effected
registrations of Registrable Securities for a
15
17
Public Offering of Registrable Securities unless, in the written
opinion of counsel to the Company, which opinion is reasonably
acceptable to such Holders, such registration is not necessary for
such Holders to sell their Registrable Securities in the manner
contemplated in compliance with applicable securities laws. Such
requests shall be in writing and shall state the number of Registrable
Securities to be disposed of and the intended method of disposition of
such Registrable Securities by such Holders. The Company shall give
notice to all of the Holders of Registrable Securities of the receipt
of a request for registration pursuant to this Section 12(c)(ii) and
shall provide a reasonable opportunity for such Persons to participate
in such a registration provided they elect to do so in writing to the
Company within fifteen days after the date of the Company's notice.
Subject to the foregoing, the Company will use commercially reasonable
efforts to effect promptly the registration of all Registrable
Securities to the extent requested by the Holder or Holders thereof,
and to keep such registration effective for thirty-six months or until
all such Holder's Registrable Securities registered thereunder are
sold, whichever is shorter. If so requested by any Holder in
connection with a registration under this Section 12(c)(ii), and if
the Company is then eligible to use Form S-11 or Form S-3, the Company
shall take such steps as are required to register such Holder's
Registrable Securities for sale on a delayed or continuous basis (the
"Supplemental Shelf Registration") under Rule 415 of the Act or any
successor provision (if applicable).
(iii) The Company further agrees to use commercially
reasonable efforts to prevent the happening of any event that would
cause a Registration Statement to contain a material misstatement or
omission or to be not effective and usable for resale of the
Registrable Securities during the period that such Registration
Statement is required to be effective and usable. Upon the occurrence
of any event that would cause a Registration Statement (1) to contain
a material misstatement or omission, or (2) to be not effective and
usable for resale of Registrable Securities during the period that
such Registration Statement is required to be effective and usable,
the Company shall as promptly as reasonably practicable file an
amendment to the Registration Statement, in the case of clause (1)
immediately above, correcting any such misstatement or omission, and
in the case of either clause (1) or (2) immediately above, use
commercially reasonable efforts to cause such amendment to be declared
effective and such Registration Statement to become usable as soon as
reasonably practicable thereafter. If the majority-in-interest of the
Holders selling Registrable Securities so elect, an offering of
Registrable Securities may be effected in the form of an underwritten
offering, and if so, the Company's management shall cooperate in
roadshow presentations to assist such Holders in selling their
Registrable Securities and shall otherwise work in good faith with any
managing underwriter(s) in connection with taking all actions
necessary to successfully consummate the Public Offering. If any
demand registration pursuant to this Section 12(c) involves an
underwritten public offering, the underwriter(s) to be used in
connection with such registration shall be selected by a
majority-in-interest of the Holders of Registrable Securities to be
sold in such registration, subject to the approval of the Company
(which shall not be unreasonably withheld or delayed).
(iv) The Company agrees that without the written consent of
the managing underwriter or underwriters in an underwritten offering
of Registrable Securities pursuant to Sections 12(a) and 12(c) hereof,
it will not effect any public sale or distribution of its
16
18
equity securities (except (i) pursuant to registrations on Form S-4 or
Form S-8 or any successor form or pursuant to any dividend
reinvestment or direct stock purchase plan of the Company, (ii) in
connection with an exchange offer, or (iii) in connection with the
acquisition of assets by the Company or its subsidiaries) from the
date the Company receives a notice of election to effect an
underwritten offering under Section 12(c) (i) or a demand for
registration under Section 12(c) (ii) until the earlier of (A) the
abandonment of such underwritten offering, or (B) ninety days after
the effective date of the registration statement for such previously
proposed Public Offering or, in the case of a previously proposed
Public Offering pursuant to an effective Shelf Registration Statement,
seventy-five days after the first day on which sales to the public
commence pursuant to such offering, in either case unless a shorter
time period is agreed upon by the managing underwriter or
underwriters.
(d) Other Provisions Relating to Registration Rights. In connection
with the Company's registration obligations pursuant to this Section 12, the
Company shall as expeditiously as possible:
(i) Prepare and file with the Commission, as soon as
practicable, a Registration Statement or Registration Statements on
such form as shall be available for the sale of the Registrable
Securities by the Holders thereof in accordance with the intended
method or methods of distribution thereof, and use commercially
reasonable efforts to cause such Registration Statement to become
effective and to remain effective as provided herein; provided,
however, that before filing a Registration Statement or Prospectus or
any amendments or supplements thereto (including documents that would
be incorporated or deemed to be incorporated therein by reference),
the Company shall notify the Holders of the Registrable Securities
covered by such Registration Statement, their counsel and the managing
underwriters, if any, of its intention to file such documents, and
upon written request shall furnish to such parties so requesting
copies of all such documents proposed to be filed, which documents
will be subject to the reasonably prompt review of such Holders, their
counsel and such underwriters, if any.
(ii) Prepare and file with the Commission such amendments and
post- effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement continuously effective
during the period provided in this Agreement with respect to the
disposition of all securities covered by such Registration Statement,
and cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Act.
(iii) Notify the selling Holders of the Registrable
Securities, their counsel and the managing underwriters, if any,
promptly, and (if requested in writing by any such Person), confirm
such notice in writing: (1) when a Registration Statement or any
amendment thereto has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become
effective; (2) of any request by the Commission or any other Federal
or state governmental authority for amendments or supplements to a
Registration Statement or related Prospectus or for additional
information; (3) of the issuance by the Commission of any stop order
suspending the
17
19
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose; (4) if at any time the representations
and warranties of the Company contained in any agreement (including
any underwriting agreement) contemplated by Section 12(d)(xiv) below
cease to be true and correct; (5) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for
sale in any jurisdiction, or the initiation or threat in writing of
any proceeding for such purpose; and (6) of the happening of any event
that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or
that requires the making of any changes to such Registration
Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, not misleading,
and that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iv) Use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of a Registration
Statement, or the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction.
(v) If requested by the managing underwriters, if any, or the
Holders of a majority-in-interest of the Registrable Securities being
sold in connection with an underwritten offering, promptly include in
a Prospectus supplement or post-effective amendment such information
as the managing underwriters, if any, and such Holders may reasonably
request in order to permit the intended method of distribution of such
securities and make all required filings of such Prospectus supplement
or such post- effective amendment as soon as practicable after the
Company has received such request.
(vi) Furnish to each selling Holder of Registrable
Securities, their counsel and each managing underwriter, if any,
without charge, at least one conformed copy of the Registration
Statement and each post-effective amendment thereto, including
financial statements (including schedules, all documents incorporated
or deemed to be incorporated therein by reference, and all exhibits).
(vii) Deliver to each selling Holder, their counsel, and the
underwriters, if any, without charge, as many copies of the Prospectus
or Prospectuses (including each form of Prospectus) and each amendment
or supplement thereto as such Persons may reasonably request in
connection with the distribution of the Registrable Securities; and
the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of
Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by
such Prospectus and any such amendment or supplement thereto.
18
20
(viii) Use commercially reasonable efforts to register or
qualify, or obtain an exemption therefrom (or cooperate with the
selling Holders of Registrable Securities, the underwriters, if any,
and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification))
of such Registrable Securities for offer and sale under the securities
or Blue Sky Laws of such jurisdictions within the United States as any
selling Holder (or underwriter) reasonably requests in writing and to
keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective; provided, however, that the Company will not be
required to (1) qualify generally to do business in any jurisdiction
where it is not then so qualified, or (2) take any action that would
subject it to general service of process in any jurisdiction where it
is not then so subject, other than as to matters and transactions
related to such Registration Statement.
(ix) Cooperate with the selling Holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates shall be in a
form eligible for deposit with The Depository Trust Company; and
enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or
Holders may request in writing at least two business days prior to any
sale of Registrable Securities.
(x) Use commercially reasonable efforts to cause the
Registrable Securities covered by such Registration Statement to be
registered with or approved by such other governmental agencies or
authorities within the United States as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Registrable Securities.
(xi) Upon the occurrence of any event contemplated by Section
12(d)(iii)(6) above, prepare a supplement or post-effective amendment
to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(xii) Prior to the effective date of the Registration
Statement relating to the Registrable Securities, provide a CUSIP
number for the Registrable Securities.
(xiii) Use commercially reasonable efforts to cause the
Common Shares covered by such Registration Statement to be listed on
the Nasdaq Stock Market (or on such other exchange or trading system
on which the Common Shares are then listed or authorized to be
quoted), and to cause all Registrable Securities other than Common
Shares that are covered by such Registration Statement to be
authorized to be quoted on the Nasdaq Stock Market (or on such other
exchange or trading system on which the Common Shares are then listed
or authorized to be quoted and to the extent eligible therefor under
the rules of the Nasdaq Stock Market or such national securities
exchange).
19
21
(xiv) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other actions reasonably requested by the
Holders of a majority-in-interest of the Registrable Securities being
sold in connection therewith (including those reasonably requested by
the managing underwriters, if any) in order to expedite or facilitate
the disposition of such Registrable Securities, and in such
connection, whether or not an underwriting agreement is entered into,
(1) make such representations and warranties to the Holders of such
Registrable Securities and the underwriters, if any, with respect to
the business of the Company and its Affiliates, and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to
be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in
underwritten offerings, and, if true, confirm the same if and when
requested in writing to do so, (2) if an underwritten offering or if
any Holder or its counsel reasonably concludes that such Holder may be
deemed an "affiliate" of the Company for purposes of the Act, obtain
opinions of counsel to the Company and updates thereof (which counsel
and opinions, in form, scope and substance, shall be reasonably
satisfactory to the managing underwriters, if any, and counsel to the
Holders of Registrable Securities being sold), addressed to each
selling Holder and each of the underwriters, if any, covering the
matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested in
writing by such counsel and underwriters, (3) if an underwritten
offering or if any Holder or its counsel reasonably concludes that
such Holder may be deemed an "affiliate" of the Company for purposes
of the Act, obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of
Affiliates of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each
selling Holder (unless such accountants shall be prohibited from so
addressing such letters by applicable standards of the accounting
profession) and each of the underwriters, if any, such letters to be
in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings,
(4) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures substantially to the
effect set forth in Section 12(f) hereof with respect to all parties
to be indemnified pursuant to Section 12(f), and (5) deliver such
additional documents and certificates as may be reasonably requested
by the Holders of a majority of the Registrable Securities being sold,
their counsel and the managing underwriters, if any, to evidence the
continued validity of the representations and warranties made pursuant
to Section 12(d)(xiv)(1) above and to evidence compliance with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company. The above shall be done at each
closing under such underwriting or similar agreement, and as and to
the extent required thereunder.
(xv) Make available for inspection by a representative of the
Holders of Registrable Securities being sold, each underwriter
participating in any such disposition of Registrable Securities, if
any, and any attorney or accountant retained by such selling Holder or
underwriter, at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the
20
22
Company and its Affiliates as may be reasonably requested, and cause
the officers, directors and employees of the Company and its
Affiliates to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with
such Registration Statement; provided, however, that any information
that is designated by the Company in writing as confidential at the
time of delivery of such information shall be kept confidential by
such Persons unless (1) disclosure of such information is required by
court or administrative order, (2) disclosure of such information, in
the opinion of counsel to such Person, is required by law, or (3) such
information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by such Person. Without
limiting the foregoing, no such information shall be used by such
Person as the basis for any market transactions in securities of the
Company or its Affiliates in violation of law.
(xvi) Comply with all applicable rules and regulations of the
Commission and make generally available to its security Holders
earning statements satisfying the provisions of Section 11(a) of the
Act and Rule 158 thereunder, or any similar rule promulgated under the
Act, no later than forty-five days after the end of any twelve month
period (or ninety days after the end of any twelve month period if
such period is a fiscal year) (A) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering, and (B) if not
sold to underwriters in such an offering, commencing on the first day
of the first fiscal quarter of the Company after the effective date of
a Registration Statement, which statements shall cover such twelve
month periods.
(xvii) Make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of any Registration
Statement at the earliest possible moment.
(xviii) Cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter" that is required to be retained in accordance with the
rules and regulations of the NASD).
(e) Registration Expenses. All fees and expenses incident to the
Company's performance of or compliance with this Section 12 will be borne by
the Company, regardless of whether a Registration Statement filed pursuant to
this Section 12 becomes effective and whether or not any securities are sold
pursuant to such Registration Statement, including without limitation:
(i) all registration and filing fees and expenses associated
therewith including, without limitation, fees and expenses with
respect to filings required to be made with the Commission and the
NASD;
(ii) fees and expenses of compliance with federal securities
or state Blue Sky Laws (including fees and disbursements of counsel
for the underwriters or selling Holders in connection with Blue Sky
qualifications of the Registrable Securities pursuant to Section
12(d)(viii) hereof);
21
23
(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Registrable
Securities in a form eligible for deposit with The Depositary Trust
Company and of printing Prospectuses), messenger and delivery services
and telephone;
(iv) reasonable fees and disbursements of counsel for the
Company and of not more than one counsel for the Holders of
Registrable Securities (chosen by a majority of the Holders of the
Registrable Securities to be included in the Registration Statement);
(v) fees and disbursements of all independent certified
public accountants of the Company (including the expenses of any
special audit and "cold comfort" letters required by or incident to
such performance);
(vi) fees and expenses associated with any NASD filing
required to be made in connection with a Registration Statement,
including, if applicable, the fees and expenses of any "qualified
independent underwriter" (and its counsel) that is required to be
retained in accordance with the rules and regulations of the NASD; and
(vii) fees and expenses of listing the Registrable Securities
on any securities exchange or quotation system in accordance with
Section 12(d)(xii) hereof.
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, rating
agency fees and the fees and expenses of any Person, including special experts,
retained by the Company. The Holders of Registrable Securities shall bear the
expense of any broker's commission or underwriters' discount or commission.
(f) Indemnification; Contribution.
(i) Subject to applicable law, the Company will indemnify and
hold harmless each Holder of Registrable Securities (and each
underwriter for such Holder (if any and if retained by the Holder))
being registered, each of its officers, directors, employees and
partners and each person who controls any of them within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act (each, an
"Indemnified Person"), to the full extent lawful, from and against any
and all losses, claims, damages, judgments, expenses and liabilities,
joint or several (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in any
settlement (if approved by the Company in the exercise of its good
faith and reasonable discretion) of, any action, suit or proceeding or
any claim asserted), to which they, or any of them, may become subject
under the Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages, judgments, expenses or liabilities arise out of or
are based on (A) any untrue statement or alleged untrue statement of a
material fact contained in such Registration Statement (including any
related preliminary or definitive Prospectus, or any amendment or
supplement to such Registration Statement or Prospectus), (B) any
omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it
not misleading, or (C) any violation by the Company of the Act, the
22
24
Exchange Act, any Blue Sky Laws or any rule or regulation thereunder
in connection with such registration; provided, however, that the
Company will not be liable to the extent that such loss, claim,
damage, judgment, expense or liability arises from and is based on a
material untrue statement or omission or alleged material untrue
statement or omission made in reliance on and in conformity with
information furnished in writing to the Company by such Holder
expressly for use in such Registration Statement or otherwise arises
from the sole and willful misconduct of such Holder. Each Holder of
Registrable Securities will indemnify and hold harmless the Company,
each other Holder of Registrable Securities and each Person who
controls any of them within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, judgments, expenses and liabilities, joint or
several, to which they, or any of them, may become subject under the
Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise insofar as such losses, claims,
damages, judgments, expenses and liabilities arise solely by reason of
a material untrue statement or omission made in reliance on and in
conformity with information furnished in writing to the Company by
such Holder for express use in such Registration Statement. The
obligations of any Holder under this clause (i) shall be limited to
the net proceeds to such Holder of the Registrable Securities sold
pursuant to the Registration Statement to which the loss, claim,
damage, judgment, expense or liability relates.
(ii) If the indemnification provided for in clause (i) above
for any reason is held by a court of competent jurisdiction to be
unavailable to an indemnified party in respect of any losses, claims,
damages, judgments, expenses or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses,
claims, damages, judgments, expenses or liabilities in such proportion
as is appropriate to reflect the relative fault, if any, of the
Company and the other selling Holders in connection with the
statements or omissions which resulted in such losses, claims,
damages, expenses or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company and the
selling Holders shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the selling
Holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, the Holders, and the underwriters agree that it
would not be just or equitable if contribution pursuant to this clause
(ii) were determined by pro rata or per capita allocation or by any
other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
sentence. The obligations of any Holder under this clause (ii) are
several, not joint, and shall be limited to an amount equal to the net
proceeds to such Holder of Registrable Securities sold pursuant to the
Registration Statement to which the loss, claim, damage, judgment
expense or liability relates. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
23
25
(iii) If any claim is brought or asserted against PSI or
another Indemnified Person, the Company shall be promptly notified of
such in writing. The failure to give such notice shall not relieve the
Company of any liability hereunder, except to the extent that the
Company can demonstrate that it has been materially prejudiced
thereby. If the Company and one or more Indemnified Persons are
subject to such claim, upon notice by the Company to such Indemnified
Person(s), the Company may elect to assume such defense. Upon such
election, the Company shall not be liable hereunder for fees and
disbursements of counsel to any such Indemnified Person subsequently
incurred, other than reasonable costs of investigation and other than
as provided herein, and such election shall be deemed an
acknowledgment by the Company that it is liable for indemnification
and contribution for any such claims and costs, subject to the terms
of this Agreement. PSI and any other Indemnified Person may
participate in the defense of such claim with their own counsel at
their own expense. Notwithstanding the assumption of such defense by
the Company, each Indemnified Person shall have the right to employ
separate counsel and to participate in such defense, and the Company
shall bear the reasonable fees and disbursements of such counsel
(which shall be promptly paid as incurred) if: (i) the Company has
agreed to the retention of such counsel; (ii) the defendants in, or
targets of, any such claim include more than one Indemnified Person or
the Company and an Indemnified Person, and such Indemnified Person
shall have reasonably concluded, based upon advice of such Indemnified
Person's counsel, that representation of such Indemnified Person by
the same counsel (a) would present such counsel with a conflict of
interest, or (b) would be inappropriate due to actual or potential
differing interests between them in the conduct of the defense of the
claim, or (c) would be inappropriate because there may be legal
defenses available to such Indemnified Person that are different from,
or in addition to, those available to any other Indemnified Person or
the Company; or (iii) the Company fails to employ counsel reasonably
satisfactory to PSI or such Indemnified Person(s), as the case may be,
within a reasonable period of time after receipt by the Company of the
notice of the institution of such claim, as provided above. In no
event shall the Company be liable under this paragraph for more than
two counsel, in addition to local counsel, if appropriate. Regardless
of whether the Company elects to assume the defense of a claim against
an Indemnified Person, such Indemnified Person may not, without the
prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed, settle or compromise or consent to
the entry of any judgment with respect to such claim. The Company also
agrees that the Company will not, without the prior written consent of
PSI, which consent shall not be unreasonably withheld or delayed,
settle or compromise or consent to the entry of any judgment in any
pending or threatened claim in respect of which indemnification may be
sought hereunder (whether or not PSI or any Indemnified Person is an
actual or potential party to such claim). Such prior written consent
of PSI shall be required only with respect to PSI determining that
such settlement, compromise or consent complies with the terms of the
following sentence and does not impose any material obligation on PSI
or any other Indemnified Person or contain any admission of
culpability on the part of PSI or any Indemnified Person. Such
settlement, compromise or consent shall include an unconditional
release of PSI and each other Indemnified Person from all liability
arising out of such claim, and the Company shall furnish PSI with a
copy of such settlement reasonably in advance of entering into such
settlement.
24
26
(g) Survival. The provisions of this Section 12 shall survive the
termination or expiration of this Agreement.
Section 13. Fair Market Value. In order to determine Fair Market Value
for property other than publicly traded securities for purposes of this
Agreement, the Company and a representative (the "Representative") designated
in writing to the Company by the Holders shall attempt to agree upon such Fair
Market Value. If the Company and the Representative are unable to agree upon
the Fair Market Value within twenty days after notification of the event
requiring such a determination, the Company and the Representative shall agree
on an Appraiser to be appointed by the Company to determine the Fair Market
Value. In the event that the parties cannot agree upon an Appraiser in the
foregoing period, then the determination of Fair Market Value shall be
conducted by two Appraisers, one of whom shall be selected by the Company, and
one of whom shall be selected by the Representative. If either of such two
determinations of Fair Market Value is within 10% of the other determination of
Fair Market Value, then the Fair Market Value shall be the average of such two
determinations. The Company shall pay the expenses of each such Appraiser. If
neither of such two determinations of Fair Market Value is within 10% of the
other determination of Fair Market Value, a third Appraiser shall be selected
by the other two Appraisers. The third Appraiser shall make its own independent
final determination of Fair Market Value. The Company shall pay the expenses of
such third Appraiser. All appraisal reports shall be in writing, shall be
signed by the Appraisers and shall be delivered to the Company and the Holders.
The Fair Market Value determined pursuant to this Section 13 shall be final and
binding upon the Company and the Holders.
Section 14. Adjustment of Exercise Price and Number of Shares of
Common Stock Purchasable or Number of Warrants. In addition to any reduction in
the Exercise Price required pursuant to Section 2(b)(vi) above, prior to the
Expiration Date, the Exercise Price, the number of Common Shares purchasable
upon the exercise of each Warrant and the number of Warrants outstanding are
subject to adjustment from time to time upon the occurrence of any of the
events enumerated in this Section 14.
(a) In case the Company shall at any time after the date of this
Agreement (i) make a distribution to holders of Common Shares of additional
Common Shares or of Other Securities, (ii) subdivide the outstanding Common
Shares, (iii) combine the outstanding Common Shares into a smaller number of
Common Shares, or (iv) issue any Other Securities by reclassification of the
Common Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing entity), then
(1) the number and kind of Common Shares and/or Other Securities issuable, at
the time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that the Holder(s) after such time shall be entitled to receive upon
exercise of the Warrants the aggregate number and kind of Common Shares and/or
Other Securities which, if the Warrants had been exercised immediately prior to
such time, it would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification and
(2) the Exercise Price shall be proportionately adjusted. Such adjustment shall
be made successively whenever any event listed above shall occur.
25
27
(b) (i) In case the Company shall issue any Common Shares or
any class or series of capital stock that is not Preferred Shares at a
price per share less than the greater of (i) $9.83 and (ii) the Fair
Market Value per share of such security (such greater amount being
hereinafter referred to as the "Base Rate"), then the Exercise Price
in effect immediately following such issuance shall be adjusted to
equal the price determined by multiplying (A) the Exercise Price in
effect immediately prior to the opening of business on the day next
following such issuance by (B) a fraction, the numerator of which
shall be the -- sum of (x) the number of Common Shares of all classes
and series of capital stock (other than Preferred Shares) outstanding
immediately prior to such issuance and (y) the number of Common Shares
that could be purchased at the Base Rate from the aggregate proceeds
to the Company from the issuance of such new Common Shares, and the
denominator of which shall be the sum of (xx) the number of Common
Shares of all classes and series of capital stock (other than
Preferred Stock) outstanding immediately prior to such issuance and
(yy) the number of additional Common Shares being issued. For purposes
of this Section, "Fair Market Value" shall mean, as to any class or
series of capital stock that is not publicly traded, the Fair Market
Value of the shares of such class or series as determined in
accordance with Section 13 hereof and, as to publicly-traded
securities, shall mean the average of the daily Current Prices of a
share of such capital stock during the ten Trading Days immediately
preceding the effective day of the Exercise Price adjustment pursuant
to this subsection. Upon each adjustment of the Exercise Price, the
number of Warrant Shares that a Holder of a Warrant shall be entitled
to receive upon exercise shall be adjusted by multiplying the number
of Warrant Shares issuable upon exercise immediately prior to such
adjustment by a fraction, the numerator of which is $9.83 and the
denominator of which is the Exercise Price after such adjustment.
(ii) If at any time Company shall issue or sell any Options
(other than Options granted under Benefit Plans after the Closing Date
which entitle all of the holders thereof to purchase not more that
1,000,000 shares of Common Stock of the Company and any Options
granted under the Benefit Plans prior to the Closing Date) or any
Convertible Securities, whether or not the rights to exercise,
exchange or convert thereunder are immediately exercisable, and the
price per Common Share which is issuable upon the exercise of such
Options or upon conversion or exchange of such Convertible Securities
shall be less than the Base Rate in effect immediately prior to the
time of such issue or sale, then the number of shares for which a
Warrant is exercisable and the Exercise Price shall be adjusted as
provided in Section 12(b)(i) above on the basis that the maximum
number of additional Common Shares issuable pursuant to all such
Options or necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and
outstanding and Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of the issuance
of such Options and Convertible Securities. No further adjustments of
the Exercise Price shall be made upon the actual issue of such Common
Shares or of such Convertible Securities upon exercise of such Options
or upon the actual issue of such Common Stock upon such conversion or
exchange of such Convertible Securities or upon the expiration or
termination of such Options or Convertible Securities. In the event
that any such Options or the right to convert any such Convertible
Securities permanently and unconditionally expire without having been
exercised or converted, as applicable, the
26
28
number of shares for which a Warrant is exercisable and the Exercise
Price shall be re-adjusted as provided in Section 12(b)(i) above to
the extent and to give effect to the fact that all or a portion of
such Options are not exercised or such Convertible Securities have not
been converted or exchanged. If the number of shares for which any
Option is exercisable or the rate at which any Convertible Securities
are convertible into or exchangeable for shares of Common Stock shall
increase, the number of shares of Common Stock purchasable upon the
exercise of the Warrants in effect at the time of such event shall
promptly be readjusted to the number of shares of Common Stock which
would have been so purchasable at such time had such Options or
Convertible Securities initially been exercisable or convertible into
such changed number of shares of Common Stock and the Exercise Price
shall be adjusted accordingly. The provisions of this Section 14(b)
shall not apply to any issuance of shares of Common Stock upon
exercise of any Warrants or issuances covered by subsections (a), (c)
or (f) of this Section 14.
(c) In case the Company shall fix a record date for making a
distribution to any holders of Common Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of shares of stock other than Common Shares, other
securities, evidences of its indebtedness or assets or property of whatever
nature (excluding cash dividends consistent with past practice or in connection
with dividend equivalent rights or other similar rights under any Benefit
Plans), (i) the number of Common Shares for which a Warrant is exercisable
shall be adjusted to equal the product of the number of Common Shares for which
a Warrant is exercisable immediately prior to such adjustment multiplied by a
fraction (A) the numerator of which shall be the Fair Market Value per Common
Share immediately prior to such record date, and (B) the denominator of which
shall be such Fair Market Value per Common Share minus the amount allocable to
one Common Share of any such cash so distributable and of the Fair Market Value
of any and all such shares of stock, other securities, evidences of
indebtedness, or assets or property so distributable, and (ii) the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the current Fair Market Value per
Common Share immediately prior to such record date minus the amount allocable
to one Common Share of any such cash so distributable and of the Fair Market
Value of any and all such shares of stock, other securities, evidences of
indebtedness, or assets or property so distributable, and of which the
denominator shall be such current Fair Market Value per Common Share
immediately prior to such record date. Such adjustment shall be made
successively whenever such a record date is fixed; and, if such distribution is
not so made, the Exercise Price shall again be adjusted to be the Exercise
Price which would then be in effect if such record date had not been fixed.
(d) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided that any adjustments which by reason of this subsection (d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 14 shall be made to
the nearest hundredth of a cent or to the nearest Common Share, as the case may
be.
(e) If at any time, as a result of an adjustment made pursuant to
subsection (a) of this Section 14, a Holder shall become entitled to receive
any Other Securities, thereafter the number of such Other Securities so
receivable shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions contained in this
Section 14.
27
29
(f) In the case of any capital reorganization of the Company, or of
any reclassification of the Common Shares, or in case of the consolidation of
the Company with or the merger of the Company with or into any other
corporation (where the Company is not the surviving corporation) or of the sale
of the properties and assets of the Company as, or substantially as, an
entirety to any other company, each Warrant shall, after such capital
reorganization, reclassification of Common Shares, consolidation, merger or
sale, be exercisable, upon the terms and conditions specified in this
Agreement, for the number of shares of stock and the cash or other securities
or property of any nature whatsoever that is receivable upon or as a result of
the reorganization, reclassification, consolidation, merger or sale by a holder
of the number of Common Shares (or Other Securities) for which a Warrant is
exercisable immediately prior to such event; and in any such case, if
necessary, the provisions set forth in this Section 14 with respect to the
rights thereafter of the Holders shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock or other
securities or assets thereafter deliverable on the exercise of the Warrants.
The subdivision or combination of the Common Shares at any time outstanding
into a greater or lesser number of units or any other event covered by
subsection (a) of this Section 14 shall not be deemed to be a reclassification
of the Common Shares for the purposes of this subsection (f). The Company shall
not effect any such consolidation, merger or sale, unless prior to or
simultaneously with the consummation thereof, the successor corporation
resulting from such consolidation or merger or the corporation purchasing such
assets or the appropriate corporation or entity shall assume, by written
instrument, the obligation to deliver to each Holder the shares of stock, cash,
other securities or assets to which, in accordance with the foregoing
provisions, each Holder may be entitled to and all other obligations of the
Company under this Agreement.
(g) In case of any adjustment or readjustment in the Warrants, Warrant
Shares or Exercise Price in accordance with this Section 14, the Company at its
expense will promptly compute such adjustment or readjustment in accordance
with the terms of this Agreement and cause independent public accountants of
recognized national standing selected by the Company to verify such
computation; and the Company will prepare a report, certified by the principal
financial officer of the Company, setting forth such adjustment or readjustment
and showing, in detail, the facts upon which such adjustment or readjustment is
based, and all calculations relating to any adjustments made in accordance with
this Section 14. The Company will forthwith mail a copy of each such report to
each Holder, and will, upon the written request at any time of any Holder,
furnish to such Holder a report setting forth such information as may be
requested by such Holder, including any calculations with respect thereto in
order that such Holder may verify such calculations.
Section 15. Fractional Warrants and Fractional Warrant Shares. The
Company shall not be required to issue a fractional Common Share upon exercise
of any Warrant. As to any fraction of a share which the Holder of one or more
Warrants, the rights under which are exercised in the same transaction, would
otherwise be entitled to purchase upon such exercise, the Company shall pay a
cash adjustment in respect of such final fraction in an amount equal to the
same fraction of the Current Market Price per Common Share on the date of
exercise.
28
30
Section 16. Financial Information.
(a) The Company will furnish to the Holders the reports and
information that is required to be delivered to the Company's shareholders
under the Exchange Act.
(b) Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be
prepared in accordance with GAAP, applied on a basis consistent (except for
changes concurred in by the Company's independent public accountants) with the
most recent audited consolidated financial statements of the Company.
Section 17. No Rights or Liabilities as Shareholder. Nothing contained
in this Agreement shall be construed as conferring upon the Holder any rights
as a shareholder of the Company or as imposing any liabilities on the Holder as
a shareholder of the Company, whether such liabilities are asserted by the
Company or by creditors or shareholders of the Company or otherwise.
Section 18. Decisions of Holders. All decisions to be made and actions
to be taken by the Holders as a group pursuant to this Agreement will be made
or taken by a majority-in-interest of the Holders (each Warrant counting as the
number of Warrant Shares obtainable upon the exercise of the Warrant at such
time).
Section 19. Notices to Holders. In case:
(a) the Company shall authorize the issuance to any holders of Common
Shares of Options (other than Options granted under Benefit Plans after the
Closing Date which entitle all of the holders thereof to purchase not more that
1,000,000 shares of Common Stock of the Company and any Options granted under
the Benefit Plans prior to the Closing Date) to purchase Common Shares or any
other similar subscription rights; or
(b) the Company shall authorize a dividend or the distribution to all
holders of Common Shares of evidences of its indebtedness or assets (including
distributions payable in Common Shares and cash dividends or distributions,
other than cash dividends consistent with past practice); or
(c) of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of all or substantially all of the properties and assets
of the Company, or of a capital reorganization or reclassification or change of
the Common Shares; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any other action which would require
an adjustment of the number of Warrant Shares issuable upon exercise of the
Warrants or an adjustment of the Exercise Price pursuant to Section 14;
29
31
then the Company shall cause notice to be given to each holder of the Warrants
at its address appearing on the Register, at least thirty calendar days prior
to the applicable record or effective date specified. Such notice shall state
(i) the date as of which the holders of record of Common Shares to be entitled
to receive any such dividend, rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation, winding up or other action is
expected to become effective, and, if applicable, the date as of which it is
expected that holders of record of Common Shares shall be entitled to exchange
their Common Shares for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up.
Section 20. Amendments and Waivers. Any provision of this Agreement or
the Warrant Certificates may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Company and two-thirds
of the Holders; provided that this Agreement and the Warrant Certificate may
not be modified or amended to reduce the number of Common Shares for which a
Warrant is exercisable or to increase the price at which such shares may be
purchased upon exercise of a Warrant without the prior written consent of the
Holder thereof. Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof that relates exclusively to the rights of Holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Registrable Securities shall be valid only with the
written consent of Holders of at least two-thirds of the Registrable Securities
being sold.
Section 21. Survival. The provisions of this Agreement shall survive
the exercise of any Warrant in whole or part and, in event of such exercise,
the term "Holder" shall refer to the holder of any Warrant Shares issued upon
exercise hereunder.
Section 22. Indemnification. Company agrees to indemnify and hold
harmless the Holders from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, reasonable
attorneys' fees, expenses and disbursements of any kind which may be imposed
upon, incurred by or asserted against the Holders in any manner relating to or
arising out of any litigation to which a Holder is made a party in its capacity
as a stockholder or warrantholder of Company to the extent such Holder acquired
its status as a stockholder or warrantholder pursuant to the terms of this
Agreement; provided, however, that the Company will not be liable hereunder to
the extent that any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees, expenses or
disbursements are found in a final non-appealable judgment by a court to have
resulted from a Holder's sole and willful misconduct or gross negligence in its
capacity as a stockholder or warrantholder of the Company.
Section 23. Expenses. Except as provided herein, the Company shall pay
all reasonable legal and other professional fees (and related disbursements) of
PSI in connection with this Agreement and the transactions contemplated hereby.
Section 24. Notices. Any notice or demand authorized by this Warrant
Agreement to be given shall be in writing and shall be delivered in person,
sent by telecopy, mailed (registered or certified, return receipt requested),
postage prepaid, or sent by overnight delivery service
30
32
addressed to the Company or the Holders at their respective addresses specified
above or in the Register or, as to any such party, at such other address as may
be designated by it in a notice to the other parties hereto. All notices shall
be deemed to be properly given or made upon the earlier to occur of (i) actual
delivery, (ii) five days after being deposited in the mail addressed as
aforesaid, or (iii) one Business Day after being sent by facsimile (with answer
back confirmed) or overnight delivery service.
Section 25. Binding Effect. This Agreement shall be binding upon and
inure to the sole and exclusive benefit of the Company, and its permitted
successors and each registered Holder from time to time of the Subject
Securities and each of its respective permitted successors.
Section 26. Termination. Except for Section 22 of this Agreement which
shall survive the termination or expiration of this Agreement and except as
otherwise provided herein, this Agreement shall terminate and be of no further
force and effect at the close of business on the Expiration Date unless, prior
to such Expiration Date, there shall no longer be any Holders in which event
this Agreement shall terminate as of such date except with respect to the
provisions hereof which are intended to survive.
Section 27. Severability. In the event that any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction for any reason, unless such provision is narrowed by judicial
construction, this Agreement shall, as to such jurisdiction, be construed as if
such invalid, prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. Notwithstanding the
foregoing, if any provision of this Agreement is held to be invalid, prohibited
or unenforceable in any jurisdiction, such provision, as to such jurisdiction,
shall be ineffective to the extent of such invalidity, prohibition or
unenforceability without invalidating the remaining portion of such provision
or the other provisions of this Agreement and without affecting the validity or
enforceability of such provision or the other provisions of this Agreement in
any other jurisdiction.
Section 28. Counterparts. This Agreement may be executed by one or
more of the parties hereto on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 29. Governing Law; Remedies.
(a) This Agreement and each Warrant Certificate shall be construed in
accordance with and governed by the laws of the State of Texas (without giving
effect to its conflicts of law principles).
(b) Each holder of a Subject Security, in addition to being entitled
to exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
31
33
Section 30. No Impairment. If any event occurs as to which the
provisions of this Agreement or the Subject Securities are strictly applicable
and the application thereof would not fairly protect the rights of the Holders
in accordance with the essential intent and principles of such provisions, then
the Company shall make such adjustments in the application of such provisions,
in accordance with such essential intent and principles, as shall be reasonably
necessary to protect such rights as aforesaid.
Section 31. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX XX XXX XXXX. BY EXECUTING AND
DELIVERING THIS AGREEMENT, THE COMPANY IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO THE COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 24 OF THIS AGREEMENT;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE COMPANY IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT THE HOLDER RETAINS THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST THE
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 31 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION
5-1402 OR OTHERWISE.
Section 32. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS
BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing
of any and all
32
34
disputes that may be filed in any court and that relate to the subject matter
of this transaction, including contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already relied on this waiver in entering into this
Agreement, and that each will continue to rely on this waiver in their related
future dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 32 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the
event of litigation, this Agreement may be filed as a written consent to a
trial by the court.
[Signature Page Follows]
33
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers, as
of the date and year first above written.
"COMPANY"
AMRESCO CAPITAL TRUST, a Texas real
estate investment trust
By:
--------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: President
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
"PSI"
PRUDENTIAL SECURITIES
INCORPORATED, a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
S-1
36
EXHIBIT A
DECLARATION OF TRUST AND BYLAWS OF THE COMPANY
Reference is made to the following documents filed with the Securities and
Exchange Commission:
Amended and Restated Declaration of Trust of the Registrant (filed
as Exhibit 3.1 to the Registrant's Registration Statement on Form
S-11 (Registration No. 333-45543), which exhibit is incorporated
herein by reference).
First Amendment to Amended and Restated Declaration of Trust of the
Registrant (filed as Exhibit 3.1 to the Registrant's Current Report
on Form 8-K dated May 12, 1998, which exhibit is incorporated herein
by reference).
Second Amendment to Amended and Restated Declaration of Trust of the
Registrant (filed as Exhibit 3.2 to the Registrant's Current Report
on Form 8-K dated May 12, 1998, which exhibit is incorporated herein
by reference).
Form of Bylaws of the Registrant (filed as Exhibit 3.2 to the
Registrant's Registration Statement on Form S-11 (Registration No.
333-45543), which exhibit is incorporated herein by reference).
A-1
37
EXHIBIT B
WARRANT CERTIFICATE
No. 1 250,002 Warrants
VOID AFTER 5:00 P.M. NEW YORK CITY TIME
ON MAY 4, 2006
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE COMMON SHARES ISSUABLE
PURSUANT TO THE TERMS HEREOF HAVE THE BENEFIT AND ARE SUBJECT TO THE TERMS AND
CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF MAY 4, 1999, BETWEEN
THE COMPANY AND THE INITIAL HOLDER OF THE WARRANTS THEREIN NAMED, AS FROM TIME
TO TIME AMENDED, A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE
HOLDER OF THIS WARRANT UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THE WARRANTS AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THE WARRANTS HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE OR OTHER SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (ii) UPON
FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL THAT SUCH TRANSFER IS NOT
IN VIOLATION OF THE REGISTRATION REQUIREMENTS OF THE ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE TRUST'S MAINTENANCE OF ITS STATUS
AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED ("THE CODE"). PURSUANT TO THE TRUST'S DECLARATION OF TRUST, AND EXCEPT
AS OTHERWISE PROVIDED THEREIN, NO PERSON MAY (1) BENEFICIALLY OWN SHARES IN
EXCESS OF 9.8% (IN VALUE OR NUMBER OF SHARES) OF ALL OUTSTANDING SHARES OF ANY
CLASS, OR (2) BENEFICIALLY OWN SHARES THAT WOULD RESULT IN THE TRUST BEING
"CLOSELY HELD" UNDER SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE THE TRUST TO
FAIL TO QUALIFY AS A REIT. IF THE RESTRICTIONS ON OWNERSHIP OR TRANSFER ARE
VIOLATED BY THE HOLDER HEREOF, THE EXCESS SHARES REPRESENTED HEREBY WILL BE
AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A CHARITABLE TRUST FOR THE BENEFIT OF
ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, UPON THE OCCURRENCE OF
CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE ABOVE RESTRICTIONS MAY
BE VOID. ALL TERMS IN THIS LEGEND NOT OTHERWISE DEFINED HEREIN HAVE THE
MEANINGS ASCRIBED THERETO IN THE TRUST'S DECLARATION OF TRUST, AS THE SAME MAY
BE
B-1
38
AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON
OWNERSHIP OR TRANSFER, WILL BE SENT WITHOUT CHARGE TO THE RECORD HOLDER OF THE
CERTIFICATE UPON WRITTEN REQUEST TO THE TRUST AT ITS PRINCIPAL PLACE OF
BUSINESS.
IN ADDITION, THE COMPANY WILL FURNISH TO ANY SHAREHOLDER ON REQUEST AND WITHOUT
CHARGE A FULL STATEMENT OR SUMMARY OF THE DESIGNATIONS AND PREFERENCES,
CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO
DIVIDENDS, QUALIFICATIONS AND TERMS AND CONDITIONS OF REDEMPTION OF THE SHARES
OF EACH CLASS WHICH THE COMPANY IS AUTHORIZED TO ISSUE AND THE DIFFERENCES IN
THE RELATIVE RIGHTS AND PREFERENCES BETWEEN SUCH SHARES OF EACH SERIES, IF ANY,
TO THE EXTENT THEY HAVE BEEN SET, AND OF THE AUTHORITY OF THE BOARD OF TRUST
MANAGERS TO SET THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES. SUCH
REQUEST MAY BE MADE TO THE SECRETARY OF THE COMPANY.
THIS CERTIFIES THAT for value received the registered holder hereof or
registered assign (the "Holder"), is the owner of the number of Warrants set
forth above, each of which entitles the owner thereof to purchase at any time
on or before 5:00 P.M., New York City time, on May 4, 2006, one fully paid and
nonassessable Common Share of AMRESCO CAPITAL TRUST, a Texas real estate
investment trust (the "Company"), at the purchase price of $9.83 per Common
Share (the "Exercise Price"). As provided in the Warrant Agreement referred to
below, the Exercise Price and the number or kind of Common Shares which may be
purchased upon the exercise of the Warrants evidenced by this Warrant
Certificate are, upon the happening of certain events, subject to modification
and adjustment.
This Warrant Certificate is subject to and entitled to the benefits of
all of the terms, provisions and conditions of that certain agreement dated as
of May 4, 1999 (the "Warrant Agreement") by and between the Company and
PRUDENTIAL SECURITIES INCORPORATED, which Warrant Agreement is hereby
incorporated herein by reference and made a part hereof and to which Warrant
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Company and the Holders of the Warrant Certificates. Copies of the Warrant
Agreement are on file at the principal office of the Company.
The Holder hereof may be treated by the Company and all other persons
dealing with this Warrant Certificate as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby,
or to the transfer hereof on the books of the Company, any notice to the
contrary notwithstanding, and until such transfer on such books, the Company
may treat the Holder hereof as the owner for all purposes.
This Warrant Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Company, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor and date
evidencing Warrants entitling the Holder to purchase a like aggregate number of
Common Shares as the Warrants evidenced by the Warrant Certificate or Warrant
Certificates surrendered.
B-2
39
If this Warrant Certificate shall be exercised in part, the Holder shall be
entitled to receive upon surrender hereof, another Warrant Certificate or
Warrant Certificates for the number of whole Warrants not exercised.
No fractional Common Share will be issued upon the exercise of any
Warrant or Warrants evidenced hereby, as provided in the Warrant Agreement.
B-3
40
IN WITNESS WHEREOF, the Company has executed this Warrant Certificate.
AMRESCO CAPITAL TRUST, a Texas real
estate investment trust
By:
----------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: President
By:
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
Attest:
----------------------------
Name: Xxxxxxx X. XxXxx
Title: Secretary
B-4
41
EXHIBIT C
PURCHASE FORM
(To be signed only upon exercise of Warrant)
To: AMRESCO CAPITAL TRUST
The undersigned, the holder of the within Warrant Certificate, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, * Common Shares of AMRESCO CAPITAL
TRUST, and herewith makes payment of $ therefor, and requests that the
certificates for such Common Shares be issued in the name of, and delivered to,
_______________________, whose address is: __________________________________.
Dated:
---------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant certificate)
-------------------------- (Address)
--------------------------
--------------------------
--------------------------
--------
* Insert here the number of Common Shares called for on the face of the
Warrant Certificate (or, in the case of a partial exercise, the portion
thereof as to which Warrants are being exercised), in either case without
making any adjustment for additional Common Shares or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement, may be deliverable upon exercise.
C-1
42
EXHIBIT D
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the Warrants
represented by this Warrant Certificate, hereby sells, assigns and transfers
unto the Assignee named below all of the rights of the undersigned with respect
to the number of Warrants set forth below:
Name and Address of Assignee No. of Warrants
and does hereby irrevocably constitute and appoint _______ ________________
attorney-in-fact to register such transfer on the books of AMRESCO CAPITAL
TRUST maintained for the purpose, with full power of substitution in the
premises.
Dated: Print Name:
---------------------------- -----------------------------
Signature:
-----------------------------
Witness:
-----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant Certificate in every particular,
without alteration or any change whatsoever.
D-1
43
EXHIBIT E
FORM OF COMMERCIAL LOAN/ASSET SCHEDULE
AMRESCO CAPITAL TRUST
PRUDENTIAL SCHEDULE OF APPROVED ASSETS
$300 MILLION LINE OF CREDIT - SUBLIMIT REPORT
DATE
NO. LOAN NAME ACT COMMITMENT COLLATERAL COST COLLATERAL VALUE ACT OUTSTANDING BALANCE MAXIMUM PRIOR LIEN BALANCE
----------------------------------------------------------------------------------------------------------------------------------
1
2
----------------------------------------------------------------------------------------------------------------------------------
3
4
----------------------------------------------------------------------------------------------------------------------------------
5
6
----------------------------------------------------------------------------------------------------------------------------------
7
8
----------------------------------------------------------------------------------------------------------------------------------
9
10
----------------------------------------------------------------------------------------------------------------------------------
11
12
----------------------------------------------------------------------------------------------------------------------------------
13
14
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
TOTAL
----------------------------------------------------------------------------------------------------------------------------------
NO. PRUDENTIAL ADVANCE RATE PRUDENTIAL COMMITMENT PRUDENTIAL OUTSTANDING BALANCE TOTAL HAIRCUT AMOUNT 90% OF TOTAL HAIRCUT
----------------------------------------------------------------------------------------------------------------------------------
1
2
----------------------------------------------------------------------------------------------------------------------------------
3
4
----------------------------------------------------------------------------------------------------------------------------------
5
6
----------------------------------------------------------------------------------------------------------------------------------
7
8
----------------------------------------------------------------------------------------------------------------------------------
9
10
----------------------------------------------------------------------------------------------------------------------------------
11
12
----------------------------------------------------------------------------------------------------------------------------------
13
14
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
TOTAL
----------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
$300 MILLION LINE OF CREDIT
---------------------------------------------------------------------------------------------------------------
MAX. $115MM CONSTRUCTION
-------------------------------------------------
MAX. $50MM
CONSTRUCTION CONSTRUCTION
NO. 1ST LIEN UNLIMITED LESS THAN 70% GREATER THAN 70% MAX. $40MM 2ND LIEN OR MEZZ OR EQUITY
---------------------------------------------------------------------------------------------------------------------
1
2
---------------------------------------------------------------------------------------------------------------------
3
4
---------------------------------------------------------------------------------------------------------------------
5
6
---------------------------------------------------------------------------------------------------------------------
7
8
---------------------------------------------------------------------------------------------------------------------
9
10
---------------------------------------------------------------------------------------------------------------------
11
12
---------------------------------------------------------------------------------------------------------------------
13
14
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
TOTAL
---------------------------------------------------------------------------------------------------------------------
E-1
