WARRANT AGREEMENT
______________, 1998
TEJAS SECURITIES GROUP, INC.
As Representative of the Several Underwriters
c/o Tejas Securities Group, Inc.
1250 Capital of Texas Hwy., South Building Two
Suite 500
Austin, Texas 78746
Gentlemen:
AutoBond Acceptance Corporation, a Texas corporation (the "Company"),
hereby agrees to sell to you, and you hereby agree to purchase from the Company
at an aggregate purchase price of $100, purchase warrants (the "Underwriter
Warrants") covering 100,000 shares of the Company's Common Stock, no par value.
The Underwriter Warrants will be exercisable by you as to all or any lesser
number of shares of the Company's Common Stock, no par value, covered thereby,
at the Purchase Price per share as defined below, at any time and from time to
time on and after the first anniversary of the date hereof and ending at 5:00
p.m. on the fifth anniversary of the date hereof.
1. Definitions.
As used herein, the following terms, unless the context otherwise requires,
shall have for all purposes hereof the following meanings:
The term "Act" refers to the Securities Act of 1933, as amended.
The term "Affiliate" of any Person refers to any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with, such other Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
The term "Commission" refers to the Securities and Exchange Commission.
The term "Common Stock" refers to all stock of any class or classes
(however designated) of the Company, now or hereafter authorized, the holders of
which shall have the right without limitation as to amount, either to all or to
a part of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingency, be
entitled to vote for the election of a majority of the directors of the Company
(even though the right so to vote has been suspended by the occurrence of such a
contingency).
The term "Current Market Price" on any date refers to the average of the
daily Market Price per share for the 30 consecutive Trading Days commencing 45
Trading Days before the date in question.
The term "Exchange Act" refers to the Securities Exchange Act of 1934, as
amended.
The term "Market Price" refers to the closing sale price (or, if no closing
sale price is reported, the closing bid price) of the Common Stock in the
over-the-counter market, as quoted on the Nasdaq National Market, or, if the
Common Stock is not quoted on the Nasdaq National Market, as reported by the
National Quotation Bureau Incorporated. In the event that the Common Stock is
hereafter listed for trading on one or more United States national or regional
securities exchanges, Market Price shall be the closing price on the exchange or
system designated by the Board of Directors of the Company as the principal
United States market in which the Common Stock is traded. If Market Price cannot
be established as described above, market price shall be the fair market value
of the Common Stock as determined in good faith by the Board of
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Directors whose determination shall be conclusive.
The term "Other Securities" refers to any stock (other than Common Stock)
and other securities of the Company or any other person (corporate or otherwise)
which the holders of the Underwriter Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Underwriter Warrants,
in lieu of or in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in replacement of Common
Stock or Other Securities pursuant to Section 6 below or otherwise.
The term "Person" refers to an individual, a partnership, a corporation, a
trust, a joint venture, an unincorporated organization and a government or any
department or agency thereof.
The term "Purchase Price" refers to the purchase price, per share, of the
shares of Common Stock subject to this Agreement. The Purchase Price shall equal
105% of the average closing bid price per share of Common Stock, as quoted on
the Nasdaq National Market for the five (5) Trading Days prior to the date
hereof. The Purchase Price is subject to adjustment as provided in Section 6
below.
The term "Registration Statement" refers to a Registration Statement filed
with the Commission pursuant to the Rules and Regulations of the Commission
promulgated under the Act.
The term "Trading Day" shall mean a day on which the Nasdaq National Market
or the principal national securities exchange on which the Common Stock is
listed or admitted to trading is open for the transaction of business.
The term "Underlying Stock" refers to the shares of Common Stock (or Other
Securities) issuable under this Warrant Agreement pursuant to the exercise, in
whole or in part, of the Underwriter Warrants.
The purchase and sale of the Underwriter Warrants shall take place, and the
purchase price therefore shall be paid by delivery of your check, simultaneously
with the purchase of and payment for any shares of ___% Series A Cumulative
Preferred Stock as provided in that certain Underwriting Agreement dated
_____________, 1998, relating to the public offering of shares of the ___%
Series A Cumulative Preferred Stock pursuant to a Registration Statement filed
under the Act.
2. Representations and Warranties.
The Company represents and warrants to you as follows:
(a) Corporate Action. The Company has all requisite corporate power and
authority, and has taken all necessary corporate action, to execute and deliver
this Agreement, to issue and deliver the Underwriter Warrants and certificates
evidencing same, and to authorize and reserve for issuance, and upon payment
from time to time of the Purchase Price to issue and deliver, the Shares.
(b) No Violation. Neither the execution nor delivery of this Agreement, the
consummation of the actions herein contemplated nor compliance with the terms
and provisions hereof will conflict with, or result in a breach of, or
constitute a default or an event permitting acceleration under, any of the
terms, provisions or conditions of the Articles of Incorporation or Bylaws of
the Company or any indenture, mortgage, deed of trust, note, bank loan, credit
agreement, franchise, license, lease, permit, judgment, decree, order, statute,
rule or regulation or any other agreement, understanding or instrument to which
the Company is a party or by which it is bound.
3. Compliance with the Act.
(a) Transferability of Underwriter Warrants. You agree that the Underwriter
Warrants may not be transferred, sold, assigned or hypothecated for a period of
one (1) year from the date hereof, except to (i) persons who are officers of
you; (ii) a successor to you in a merger or consolidation; (iii) a purchaser of
all or substantially all of your assets; (iv) your shareholders in the event you
are liquidated or dissolved; and (v) persons who are officers of participating
broker-dealers.
(b) Registration of Underlying Stock. The Underlying Stock issuable upon
the exercise of the Underwriter
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Warrants have not been registered under the Act. You agree not to make any sale
or other disposition of the Underlying Stock except pursuant to a Registration
Statement which has become effective under the Act, setting forth the terms of
such offering, the underwriting discount and the commissions and any other
pertinent data with respect thereto, unless you have provided the Company with
an opinion of counsel reasonably acceptable to the Company that such
registration is not required.
(c) Demand Registration. At any time and from time to time after the
effective date hereof but prior to the fifth anniversary of the effective date
hereof, the holders of Underwriter Warrants shall have the right to make written
request of the Company on one occasion to register under the Act at least fifty
percent (50%) of the Underlying Stock which would be issuable upon exercise of
the Underwriter Warrants pursuant to the terms and conditions hereof. The
Underlying Stock specified in such request or a request pursuant to Section 3(d)
hereof is referred to herein as the "Subject Stock." Promptly upon receipt of
such request, the Company shall file with the Commission a Registration
Statement on the applicable form for the registration of the Subject Stock and
use its best efforts to cause such Registration Statement to become effective
(including, without limitation, filing post-effective amendments, appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with the Act and the Rules and Regulations promulgated
thereunder) as soon as practicable to permit or facilitate the sale and
distribution of the Subject Stock. Immediately upon receipt of a request for
registration pursuant to this Section 3(c), the Company shall notify each of the
holders of Underwriter Warrants of such request.
Notwithstanding the provisions of this Section 3(c), if the Company shall
furnish to the holders of Underwriter Warrants a certificate signed by the Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company it would be seriously detrimental to the
Company and its stockholders for such a Registration Statement to be filed and
it is therefore essential to defer a filing of such Registration Statement, the
Company shall have the right to defer such filing for a period of not more than
one hundred twenty (120) days after receipt of the request from the holders of
Underwriter Warrants to effect such a registration; provided, however, that the
Company may not utilize the right more than once in any twenty-four (24) month
period; and, provided further, that the holders of Underwriter Warrants may, at
any time in writing, withdraw such request for such registration and therefore
preserve the right provided in this Section 3(c) for the holders of Underwriter
Warrants to request such registration.
(d) Inclusion in Registration of Other Securities. If at any time after the
effective date hereof but prior to the fifth anniversary of the effective date
hereof, the Company shall propose the registration on an appropriate form under
the Act of any shares of Common Stock or Other Securities, the Company shall at
least 30 days prior to the filing of such Registration Statement give you
written notice, or telegraphic or telephonic notice followed as soon as
practicable by written confirmation thereof, of such proposed registration and,
upon written notice, or telegraphic or telephonic notice followed as soon as
practicable by written confirmation thereof, given to the Company within five
business days after the giving of such notice by the Company, shall include or
cause to be included in any such Registration Statement all or such portion of
the Underlying Stock as you may request, provided, however, that the Company may
at any time withdraw or cease proceeding with any such registration if it shall
at the same time withdraw or cease proceeding with the registration of such
Common Stock or such Other Securities originally proposed to be registered.
Notwithstanding any provision of this Agreement to the contrary, if any
holder of Underwriter Warrants exercises such Underwriter Warrants but shall not
have included all the Underlying Stock in a Registration Statement which
complies with Section 10(a)(3) of the Act, which has been effective for at least
30 calendar days following the exercise of the Underwriter Warrants, the
registration rights set forth in this Section 3(d) shall be extended until such
time as (i) such a Registration Statement including such Underlying Stock has
been effective for at least 30 calendar days or (ii) in the opinion of counsel
satisfactory to you and the Company, registration is not required under the Act
or under applicable state laws for resale of the Underlying Stock in the manner
proposed.
(e) Company's Obligations in Registration. In connection with any offering
of Subject Stock pursuant to Section 3(c) or 3(d) above, the Company shall:
(i) Notify you as to the filing thereof and of all amendments or
supplements thereto filed prior to the effective date thereof;
(ii) Comply with all applicable rules and regulations of the
Commission;
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(iii) Notify you immediately, and confirm the notice in writing, (1)
when the Registration Statement becomes effective, (2) of the
issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceedings for that
purpose, (3) of the receipt by the Company of any notification
with respect to the suspension of qualification of the Subject
Stock for sale in any jurisdiction or of the initiation, or
the threatening, of any proceedings for that purpose and (4)
of the receipt of any comments, or requests for additional
information, from the Commission or any state regulatory
authority. If the Commission or any state regulatory authority
shall enter such a stop order or order suspending
qualification at any time, the Company will make every
reasonable effort to obtain the lifting of such order as
promptly as practicable.
(iv) During the time when a Prospectus is required to be delivered
under the Act during the period required for the distribution
of the Subject Stock, comply so far as it is able with all
requirements imposed upon it by the Act, as hereafter amended,
and by the Rules and Regulations promulgated thereunder, as
from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Subject Stock. If
at any time when a Prospectus relating to the Subject Stock is
required to be delivered under the Act any event shall have
occurred as a result of which, in the opinion of counsel for
the Company or your counsel, the Prospectus relating to the
Subject Stock as then amended or supplemented includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is
necessary at any time to amend such Prospectus to comply with
the Act, the Company will promptly prepare and file with the
Commission an appropriate amendment or supplement (in form
satisfactory to you).
(v) Endeavor in good faith, in cooperation with you, at or prior
to the time the Registration Statement becomes effective, to
qualify the Subject Stock for offering and sale under the
securities laws relating to the offering or sale of the
Subject Stock of such jurisdictions as you may reasonably
designate and to continue the qualifications in effect so long
as required for purposes of the sale of the Subject Stock;
provided that no such qualification shall be required in any
jurisdiction where, as a result thereof, the Company would be
subject to service of general process, or to taxation as a
foreign corporation doing business in such jurisdiction. In
each jurisdiction where such qualification shall be effected,
the Company will, unless you agree that such action is not at
the time necessary or advisable, file and make such statements
or reports at such times as are or may reasonably be required
by the laws of such jurisdiction. For the purposes of this
paragraph, "good faith" is defined as the same standard of
care and degree of effort as the Company will use to qualify
its securities other than the Subject Stock.
(vi) Make generally available to its security holders as soon as
practicable, but not later than the first day of the
eighteenth full calendar month following the effective date of
the Registration Statement, an earnings statement (which need
not be certified by independent public or independent
certified public accountants unless required by the Act or the
rules and regulations promulgated thereunder, but which shall
satisfy the provisions of Section 11(a) of the Act) covering a
period of at least twelve months beginning after the effective
date of the Registration Statement.
(vii) After the effective date of such Registration Statement,
prepare, and promptly notify you of the proposed filing of,
and promptly file with the Commission, each and every
amendment or supplement thereto or to any Prospectus forming a
part thereof as may be necessary to make any statements
therein not misleading; provided that no such amendment or
supplement shall be filed if you shall object thereto in
writing promptly after being furnished a copy thereof.
(viii) Furnish to you, as soon as available, copies of any such
Registration Statement and each preliminary or final
Prospectus, or supplement or amendment prepared pursuant
thereto, all in such quantities as you may from time to time
reasonably request;
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(ix) Make such representations and warranties to any underwriter of
the Subject Stock, and use your best efforts to cause Company
counsel to render such opinions to such underwriter, as such
underwriter may reasonably request; and
(x) Pay all costs and expenses incident to the performance of the
Company's obligations under Section 3(c) or 3(d) above and
under this Section 3(e), including without limitation the fees
and disbursements of the Company's auditors and legal counsel,
of legal counsel for you and of legal counsel responsible for
qualifying the Subject Stock under blue sky laws, all filing
fees and printing expenses, all expenses in connection with
the transfer and delivery of the Underlying Stock, and all
expenses in connection with the qualification of the Subject
Stock under blue sky laws; provided, however, that the Company
shall not be responsible for compensation and reimbursement of
expenses to underwriters or selling agents for the included
Subject Stock.
(f) Agreements by Warrant Holder. In connection with the filing of a
Registration Statement pursuant to Section 3(c) or 3(d) above, if you
participate in the offering of the Subject Stock by including shares owned by
you, you agree:
(i) To furnish the Company all material information requested by
the Company concerning yourself and your holdings of
securities of the Company and the proposed method of sale or
other disposition of the Subject Stock and such other
information and undertakings as shall be reasonably required
in connection with the preparation and filing of any such
Registration Statement covering all or a part of the Subject
Stock and in order to ensure full compliance with the Act; and
(ii) To cooperate in good faith with the Company and its
underwriters, if any, in connection with such registration,
including placing the shares of Subject Stock to be included
in such Registration Statement in escrow or custody to
facilitate the sale and distribution thereof.
(g) Indemnification. The Company shall indemnify and hold harmless you and
any underwriter (as defined in the Act) for you, and each person, if any, who
respectively controls you or such underwriter within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, against any loss, liability,
claim, damage and expense whatsoever (including but not limited to any and all
expense whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever), joint
or several, to which any of you or such underwriter or such controlling person
becomes subject, under the Act or otherwise, insofar as such loss, liability,
claim, damage and expense (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in (i) a Registration Statement covering the Subject Stock, in the
prospectus contained therein, or in an amendment or supplement thereto or (ii)
in any application or other document or communication (in this Section
collectively called "application") executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Subject Stock under the securities laws
thereof or filed with the Commission, or arise out of or based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company shall not be obligated to indemnify in any such case
to the extent that any such loss, claim, damage, expense or liability arises out
of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon, and in conformity with, written
information respectively furnished by you or such underwriter or such
controlling person for use in the Registration Statement, or any amendment or
supplement thereto, or any application, as the case may be.
If any action is brought against a person in respect of which indemnity may
be sought against, the Company pursuant to the foregoing paragraph, such person
shall promptly notify the Company in writing of the institution of such action
and the Company shall assume the defense of the action, including the employment
of counsel (satisfactory to the indemnified person in its reasonable judgment)
and payment of expenses. The indemnified person shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified person or unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of the action or the Company shall not have
employed counsel to have charge of the defense of the action or the indemnified
person shall have reasonably concluded that there may be defenses available to
it or them which
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are different from or additional to those available to the Company (in which
case the Company shall not have the right to direct the defense of the action on
behalf of the indemnified person), in any of which events these fees and
expenses shall be borne by the Company. Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for any settlement of
any claim or action effected without its written consent. The Company's
indemnity agreements contained in this Section shall remain in full force and
effect regardless of any investigation made by or on behalf of any indemnified
person, and shall survive any termination of this Agreement. The Company agrees
promptly to notify you of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
Registration Statement pursuant to Section 3(c) or 3(d) above.
If you choose to include any Subject Stock in a public offering pursuant to
Section 3(c) or 3(d) above, then you agree to indemnify and hold harmless the
Company and each of its directors and officers who have signed any such
Registration Statement, and any underwriter for the Company (as defined in the
Act), and each person, if any, who controls the Company or such underwriter
within the meaning of the Act, to the same extent as the indemnity by the
Company in this Section 3(g) but only with respect to statements or omissions,
if any, made in such Registration Statement, or any amendment or supplement
thereto, or in any application in reliance upon, and in conformity with, written
information furnished by you to the Company for use in the Registration
Statement, or any amendment or supplement thereto, or any application, as the
case may be. In case any action shall be brought in respect of which indemnity
may be sought against you, you shall have the rights and duties given to the
Company, and the persons so indemnified shall have the rights and duties given
to you by the provisions of the first paragraph of this Section.
The Company further agrees that, if the indemnity provisions of the
foregoing paragraphs are held to be unenforceable, any holder of an Underwriter
Warrant or controlling person of such a holder may recover contribution from the
Company in an amount which, when added to contributions such holder or
controlling person has theretofore received or concurrently receives from
officers and directors of the Company or controlling persons of the Company,
will reimburse such holder or controlling person for all losses, claims, damages
or liabilities and legal or other expenses; provided, however, that if the full
amount of the contribution specified in this Section 3(g) is not permitted by
law, then such holder or controlling person shall be entitled to contribution
from the Company and its officers, directors and controlling persons to the full
extent permitted by law.
4. Exercise of Underwriter Warrants.
(a) Cash Exercise. Each Underwriter Warrant may be exercised in full or in
part (but not as to a fractional share of Common Stock) by the holder thereof by
surrender of the Warrant Certificate, with the form of subscription at the end
thereof duly executed by such holder, to the Company at its principal office,
accompanied by payment, in cash or by certified or bank cashiers' check payable
to the order of the Company, in the respective amount obtained by multiplying
the number of shares of the Underlying Stock to be purchased by the Purchase
Price per share.
(b) Net Exercise. Notwithstanding anything to the contrary contained in
Section 4(a), any holder of an Underwriter Warrant may elect to exercise the
Underwriter Warrant and receive shares on a "net exercise" basis in an amount
equal to the value of the Underwriter Warrant by delivery of the form of
subscription attached to the Warrant Certificate and surrender of the
Underwriter Warrant at the principal office of the Company, in which event the
Company shall issue to the holder a number of shares computed using the
following formula:
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X= (P)(Y)(A-B)
-----------
A
Where: X= the number of shares of Common Stock to be issued
to holder.
P= the portion of the Underwriter Warrant being
exercised (expressed as a fraction).
Y= the total number of shares of Common Stock
issuable upon exercise of the Underwriter Warrant.
A= the Current Market Price of one share of Common
Stock.
B= Purchase Price.
(c) Partial Exercise. Prior to the expiration of the Underwriter Warrants,
upon any partial exercise, the Company at its expense will forthwith issue and
deliver to or upon the order of the purchasing holder, a new Warrant Certificate
or Certificates of like tenor, in the name of the holder thereof or as such
holder (upon payment by such holder of any applicable transfer taxes) may
request calling in the aggregate for the purchase of the number of shares of the
Underlying Stock equal to the number of such shares called for on the face of
the Warrant Certificate (after giving effect to any adjustment therein as
provided in Section 6 below) minus the number of such shares (after giving
effect to such adjustment) designated by the holder in the aforementioned form
of subscription.
(d) Company to Reaffirm Obligations. The Company will, at the time of any
exercise of any Underwriter Warrant, upon the request of the holder thereof,
acknowledge in writing its continuing obligation to afford to such holder any
rights (including without limitation any right to registration of the shares of
the Underlying Stock issued upon such exercise) to which such holder shall
continue to be entitled after such exercise in accordance with the provisions of
this Agreement; provided, however, that if the holder of an Underwriter Warrant
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such rights.
5. Delivery of Certificates, etc, on Exercise.
As soon as practicable after the exercise of any Underwriter Warrant in
full or in part, and in any event within twenty days thereafter, the Company at
its expense (including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the purchasing holder
thereof, a certificate or certificates for the number of fully paid and
nonassessable shares of the Underlying Stock to which such holder shall be
entitled upon such exercise, plus in lieu of any fractional share to which such
holder would otherwise be entitled, cash in an amount determined pursuant to
Section 7(g), together with any other stock or other securities and property
(including cash, where applicable) to which such holder is entitled upon such
exercise pursuant to Section 6 below or otherwise.
6. Anti-dilution Provisions.
The Underwriter Warrants are subject to the following terms and conditions
during the term thereof:
(a) Stock Distributions and Splits. In case (i) the outstanding shares of
Common Stock (or Other Securities) shall be subdivided into a greater number of
shares or (ii) a dividend in Common Stock (or Other Securities) shall be paid in
respect of Common Stock (or Other Securities), the Purchase Price per share in
effect immediately prior to such subdivision or at the record date of such
dividend or distribution shall simultaneously with the effectiveness of such
subdivision or immediately after the record date of such dividend or
distribution be proportionately reduced; and if outstanding shares of Common
Stock (or Other Securities) shall be combined into a smaller number of shares
thereof, the Purchase Price per share in effect immediately prior to such
combination shall simultaneously with the effectiveness of such combination be
proportionately increased. Any dividend paid or distributed on the Common Stock
(or Other Securities) in stock or any other securities convertible into shares
of Common Stock (or Other Securities) shall be treated as a dividend paid in
Common Stock (or Other Securities) to the extent that shares of Common Stock (or
Other Securities) are issuable upon the conversion thereof.
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(b) Adjustments. Whenever the Purchase Price per share is adjusted as
provided in Section 6(a) above, the number of shares of the Underlying Stock
purchasable upon exercise of the Underwriter Warrants immediately prior to such
Purchase Price adjustment shall be adjusted, effective simultaneously with such
Purchase Price adjustment, to equal the product obtained (calculated to the
nearest full share) by multiplying such number of shares of the Underlying Stock
by a fraction, the numerator of which is the Purchase Price per share in effect
immediately prior to such Purchase Price adjustment and the denominator of which
is the Purchase Price per share in effect upon such Purchase Price adjustment,
which adjusted number of shares of the Underlying Stock shall thereupon be the
number of shares of the Underlying Stock purchasable upon exercise of the
Underwriter Warrants until further adjusted as provided herein.
(c) Reorganizations. In case the Company shall be recapitalized by
reclassifying its outstanding Common Stock (or Other Securities) into a stock
with a different par value or by changing its outstanding Common Stock (or Other
Securities) with par value to stock without par value, then, as a condition of
such reorganization, lawful and adequate provision shall be made whereby each
holder of an Underwriter Warrant shall thereafter have the right to purchase,
upon the terms and conditions specified herein, in lieu of the shares of Common
Stock (or Other Securities) theretofore purchasable upon the exercise of the
Underwriter Warrants, the kind and amount of shares of stock and other
securities receivable upon such recapitalization by a holder of the number of
shares of Common Stock (or Other Securities) which the holder of an Underwriter
Warrant might have purchased immediately prior to such recapitalization. If any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation, shall be effected
in such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such consolidation, merger or sale, lawful and adequate provisions
shall be made whereby the holder hereof shall thereafter have the right to
purchase and receive upon the basis and upon the terms and conditions specified
in this Warrant Agreement and in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby had such consolidation, merger or sale not taken
place, and in any such case, appropriate provision shall be made with respect to
the rights and interests of the holders of Underwriter Warrants to the end that
the provisions hereof (including without limitation provisions for adjustments
of the Purchase Price and of the number of shares purchasable and receivable
upon the exercise of the Underwriter Warrants) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof (including an immediate
adjustment, by reason of such consolidation or merger, of the Purchase Price to
the value for the Common Stock reflected by the terms of such consolidation or
merger if the value so reflected is less than the Purchase Price in effect
immediately prior to such consolidation or merger). In the event of a merger or
consolidation of the Company with or into another corporation as a result of
which a number of shares of Common Stock of the surviving corporation greater or
lesser than the number of shares of Common Stock of the Company outstanding
immediately prior to such merger or consolidation are issuable to holders of
Common Stock of the Company, then the Purchase Price in effect immediately prior
to such merger or consolidation shall be adjusted in the same manner as though
there were a subdivision or combination of the outstanding shares of Common
Stock of the Company. The Company will not effect any such consolidation, merger
or sale, unless prior to the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument executed
and mailed or delivered to the registered holder hereof at the last address of
such holder appearing on the books of the Company, the obligation to deliver to
such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to purchase. If a
purchase, tender or exchange offer is made to and accepted by the holders of
more than of the outstanding shares of Common Stock of the Company, the Company
shall not effect any consolidation, merger or sale with the Person having made
such offer or with any Affiliate of such Person, unless prior to the
consummation of such consolidation, merger or sale the holders of Underwriter
Warrants shall have been given a reasonable opportunity to then elect to receive
upon the exercise of Underwriter Warrants either the stock, securities or assets
then issuable with respect to the Common Stock of the Company or the stock,
securities or assets, or the equivalent issued to previous holders of the Common
Stock in accordance with such offer.
(d) Effect of Dissolution or Liquidation. In case the Company shall
dissolve or liquidate all or substantially all of its assets, all rights under
this Agreement shall terminate as of the date upon which a certificate of
dissolution or liquidation shall be filed with the Secretary of the State of
Texas (or, if the Company theretofore shall have been merged or consolidated
with a corporation incorporated under the laws of another state, the date upon
which action of equivalent effect shall have been taken); provided, however,
that (i) no dissolution or liquidation shall affect the rights under Section
6(c) of
8
any holder of an Underwriter Warrant and (ii) if the Company's Board of
Directors shall propose to dissolve or liquidate the Company, each holder of an
Underwriter Warrant shall be given written notice of such proposal at the
earlier of (x) the time when the Company's shareholders are first given notice
of the proposal or (y) the time when notice to the Company's shareholders is
first required.
(e) Notice of Change of Purchase Price. Whenever the Purchase Price per
share or the kind or amount of securities purchasable under the Underwriter
Warrants shall be adjusted pursuant to any of the provisions of this Agreement,
the Company shall forthwith thereafter cause to be sent to each holder of an
Underwriter Warrant, a certificate setting forth the adjustments in the Purchase
Price per share and/or in such number of shares, and also setting forth in
detail the facts requiring, such adjustments, including without limitation a
statement of the consideration received or deemed to have been received by the
Company for any additional shares of stock issued by it requiring such
adjustment. In addition, the Company at its expense shall within 90 days
following the end of each of its fiscal years during the term of this Agreement,
and promptly upon the reasonable request of any holder of an Underwriter Warrant
in connection with the exercise from time to time of all or any portion of any
Underwriter Warrant, cause independent certified public accountants of
recognized standing selected by the Company to compute any such adjustment in
accordance with the terms of the Underwriter Warrants and prepare a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based.
(f) Notice of a Record Date. In the event of (i) any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend payable out of earned surplus of the Company) or other
distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, (ii) any capital reorganization of the Company, or any
reclassification or recapitalization of the capital stock of the Company, or any
transfer of all or substantially all of the assets of the Company to, or
consolidation or merger of the Company with or into, any other person or (iii)
any voluntary or involuntary dissolution or liquidation of the Company, then and
in each such event the Company will mail or cause to be mailed to each holder of
an Underwriter Warrant a notice specifying not only the date on which any such
record is to be taken for the purpose of such dividend, distribution or right
and stating the amount and character of such dividend, distribution or right,
but also the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or other Securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the proposed record date
therein specified.
7. Further Covenants of the Company.
(a) Reservation of Stock. The Company shall at all times reserve and keep
available, solely for issuance and delivery upon the exercise of the Underwriter
Warrants, all shares of the Underlying Stock from time to time issuable upon the
exercise of the Underwriter Warrants and shall take all necessary actions to
ensure that the par value per share, if any, of the Underlying Stock is, at all
times equal to or less than the then effective Purchase Price per share.
(b) Title to Shares. All shares of the Underlying Stock delivered upon the
exercise of the Underwriter Warrants shall be validly issued, fully paid and
nonassessable; each holder of an Underwriter Warrant shall receive good and
marketable title to the Underlying Stock, free and clear of all voting and other
trust arrangements, liens, encumbrances, equities and claims whatsoever; and the
Company shall have paid all taxes, if any, in respect of the issuance thereof.
(c) Listing on Securities Exchanges; Registration. If the Company at any
time shall list any Common Stock on any national securities exchange, the
Company will, at its expense, simultaneously list on such exchange, upon
official notice of issuance upon the exercise of the Underwriter Warrants, and
maintain such listing of, all shares of the Underlying Stock from time to time
issuable upon the exercise of the Underwriter Warrants; and the Company will so
list on any national securities exchange, will so register and will maintain
such listing of, any Other Securities if and at the time that any securities of
like class or similar type shall be listed on such national securities exchange
by the Company.
(d) Exchange of Underwriter Warrants. Subject to Section 3(a) hereof, upon
surrender for exchange of any Warrant Certificate to the Company, the Company at
its expense will promptly issue and deliver to or upon the order of the holder
thereof a new Warrant Certificate or certificates of like tenor, in the name of
such holder or as such holder (upon
9
payment by such holder of any applicable transfer taxes) may direct, calling in
the aggregate for the purchase of the number of shares of the Underlying Stock
called for on the face or faces of the Warrant Certificate or Certificates so
surrendered.
(e) Replacement of Underwriter Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant Certificate and, in the case of any such loss, theft
or destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant Certificate, the Company, at the
expense of the warrant holder will execute and deliver, in lieu thereof, a new
Warrant Certificate of like tenor.
(f) Reporting by the Company. The Company agrees that, if it files a
Registration Statement during the term of the Underwriter Warrants, it will use
its best efforts to keep current in the filing of all forms and other materials
which it may be required to file with the appropriate regulatory authority
pursuant to the Exchange Act, and all other forms and reports required to be
filed with any regulatory authority having jurisdiction over the Company.
(g) Fractional Shares. No fractional shares of Underlying Stock are to be
issued upon the exercise of any Underwriter Warrant, but the Company shall pay a
cash adjustment in respect of any fraction of a share which would otherwise be
issuable in an amount equal to the same fraction of the highest market price per
share of Underlying Stock on the day of exercise, as determined by the Company.
8. Other Holders.
The Underwriter Warrants are issued upon the following terms, to all of
which each holder or owner thereof by the taking thereof consents and agrees as
follows: (a) any person who shall become a transferee, within the limitations on
transfer imposed by Section 3(a) hereof, of an Underwriter Warrant properly
endorsed shall take such Underwriter Warrant subject to the provisions of
Section 3(a) hereof and thereupon shall be authorized to represent himself as
absolute owner thereof and, subject to the restrictions contained in this
Agreement, shall be empowered to transfer absolute title by endorsement and
delivery thereof to a permitted bona fide purchaser for value; (b) each prior
taker or owner waives and renounces all of his equities or rights in such
Underwriter Warrant in favor of each such permitted bona fide purchaser, and
each such permitted bona fide purchaser shall acquire absolute title thereto and
to all rights presented thereby; (c) until such time as the respective
Underwriter Warrant is transferred on the books of the Company, the Company may
treat the registered holder thereof as the absolute owner thereof for all
purposes, notwithstanding any notice to the contrary and (d) all references to
the word "you" in this Warrant Agreement shall be deemed to apply with equal
effect to any person to whom a Warrant Certificate or Certificates have been
transferred in accordance with the terms hereof, and where appropriate, to any
person holding shares of the Underlying Stock.
9. Miscellaneous.
All notices, certificates and other communications from or at the request
of the Company to the holder of any Underwriter Warrant shall be mailed by first
class, registered or certified mail, postage prepaid, to such address as may
have been furnished to the Company in writing by such holder, or, until an
address is so furnished, to the address of the last holder of such Underwriter
Warrant who has so furnished an address to the Company, except as otherwise
provided herein. This Agreement and any of the terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Texas. The headings in this Agreement are
for reference only and shall not limit or otherwise affect any of the terms
hereof. This Agreement, together with the forms of instruments annexed hereto as
Schedule I, constitutes the full and complete agreement of the parties hereto
with respect to the subject matter hereof.
10
IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
executed on this _____ day of ______1998, in Austin, Texas, by its proper
corporate officers thereunto duly authorized.
AutoBond Acceptance Corporation
By:
----------------------------------
Xxxxxxx X. Xxxxxxxx
Chairman of the Board and
Chief Executive Officer
The above Warrant Agreement is confirmed this _____ day of ________________1998.
Tejas Securities Group, Inc.
By:
----------------------------------
Xxxxxx X. Xxxxx, III
11
SCHEDULE I
AUTOBOND ACCEPTANCE CORPORATION
Stock Purchase Warrant
Certificate Evidencing Right to Purchase 100,000 Shares of Common Stock
This is to certify that Tejas Securities Group, Inc. ("TSG") or assigns, is
entitled to purchase at any time or from time to time after 9 A.M., Austin,
Texas time, on____, 1999 and until 9 A.M., Austin, Texas time, on ________, 2003
up to the above referenced number of shares of Common Stock, no par value, of
AutoBond Acceptance Corporation, a Texas corporation (the "Company"), for the
consideration specified in Section 4 of the Warrant Agreement dated ________,
1998 between the Company and TSG (the "Warrant Agreement"), pursuant to which
this Warrant is issued. All rights of the holder of this Warrant Certificate are
subject to the terms and provisions of the Warrant Agreement, copies of which
are available for inspection at the office of the Company.
The shares of Common Stock issuable upon the exercise of this Warrant have
not been registered under the Securities Act of 1933, as amended (the "Act"),
and no distribution of such shares may be made until the effectiveness of a
Registration Statement under the Act covering such Shares. Transfer of this
Warrant Certificate is restricted as provided in Section 3(a) of the Warrant
Agreement.
This Warrant has been issued to the registered owner in reliance upon
written representations necessary to ensure that this Warrant was issued in
accordance with an appropriate exemption from registration under any applicable
state and federal securities laws, rules and regulations. This Warrant may not
be sold, transferred, or assigned unless, in the opinion of the Company and its
legal counsel, such sale, transfer or assignment will not be in violation of the
Act, applicable rules and regulations of the Securities and Exchange Commission,
and any applicable state securities laws.
Subject to the provisions of the Act and of such Warrant Agreement, this
Warrant Certificate and all rights hereunder are transferable, in whole or in
part, at the offices of the Company, by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant Certificate, together with
the Assignment hereof duly endorsed. Until transfer of this Warrant Certificate
on the books of the Company, the Company may treat the registered holder hereof
as the owner hereof for all purposes.
Any shares of Common Stock (or other securities) which are acquired
pursuant to the exercise of this Warrant shall be acquired in accordance with
the Warrant Agreement and certificates representing all securities so acquired
shall bear a restrictive legend reading substantially as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF
1933 AND ANY APPLICABLE STATE LAW, OR (2) AN OPINION OF COUNSEL
(SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS NOT REQUIRED.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
executed on this ___ day of ________ , 1998, in Austin, Texas, by its proper
corporate officer's thereunto duly authorized.
AutoBond Acceptance Corporation
By: _______________________________ Attest:____________________________
Xxxxxxx X. Xxxxxxxx
Chairman of the Board and
Chief Executive Officer
SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: AutoBond Acceptance Corporation
The undersigned, the holder of the enclosed Warrant Certificate, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, _________________ shares of Common
Stock, no par value, of AutoBond Acceptance Corporation and either tenders
herewith payment of the purchase price in full in the form of cash or a
certified or official bank check in the amount of $______________ therefor or,
if the undersigned elects pursuant to Section 4(b) of the Warrant Agreement to
convert the Warrant into Common Stock by net issuance, the undersigned exercises
the Warrant by exchange under the terms of said Section 4(b), and requests that
the certificate or certificates for such shares be issued in the name of and
delivered to the undersigned.
Date:
--------------------------
----------------------------------
(Signature must conform
in all respects to name
of holder as specified on
the face of the Warrant
Certificate)
----------------------------------
----------------------------------
(Address)
Please indicate in the space below the number of shares called for on
the face of the Warrant Certificate (or, in the case of a partial exercise, the
portion thereof as to which the Warrant is being exercised), in either case
without making any adjustment for additional shares or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise and whether the exercise is a cash exercise
pursuant to Section 4(a) of the Warrant Agreement or a net issuance exercise
pursuant to Section 4(b) of the Warrant Agreement.
Number of Shares:__________
Cash:____________________
Net issuance:______________
ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers unto
_______________________________ the right represented by the enclosed Warrant
Certificate to purchase ________ shares of Common Stock, no par value, of
AutoBond Acceptance Corporation with full power of substitution in the premises.
The undersigned represents and warrants that the transfer, in whole in or
in part, of such right to purchase represented by the enclosed Warrant
Certificate is permitted by the terms of the Warrant Agreement pursuant to which
the enclosed Warrant has been issued, and the transferee hereof, by his
acceptance of this Assignment, represents and warrants that he is familiar with
the terms of such Warrant Agreement and agrees to be bound by the terms thereof
with the same force and effect as if a signatory thereto.
Date:
--------------------------
----------------------------------
(Signature must conform
in all respects to name
of holder as specified on
the face of the Warrant
Certificate)
----------------------------------
(Address)
Signed in the presence of:
