EXHIBIT 1.2
THIS WARRANT HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
AND IS NOT TRANSFERABLE
EXCEPT AS PROVIDED HEREIN
PACIFIC MERCANTILE BANCORP
PURCHASE WARRANT
Issued to:
XXXXXXX INVESTMENT COMPANY, INC.
Exercisable to Purchase
__________ Shares of Common Stock
of
PACIFIC MERCANTILE BANCORP
Void after ____________, 2005
This is to certify that, for value received and subject to the terms and
conditions set forth below, the Warrantholder (hereinafter defined) is entitled
to purchase, and the Company (hereinafter defined) promises and agrees to sell
and issue to the Warrantholder, at any time on or after ________________, 2001
and on or before ____________, 2005, up to ______ shares of the Company's common
stock at the Exercise Price (hereinafter defined).
This Warrant Certificate is issued subject to the following terms and
conditions:
1. Definitions of Certain Terms. Except as may be otherwise clearly
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required by the context, the following terms have the following meanings:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Cashless Exercise" means an exercise of Warrants in which, in lieu of
payment of the Exercise Price, the Holder elects to receive a lesser number of
Securities such that the value of the Securities that such Holder would
otherwise have been entitled to receive but has agreed not to receive, as
determined by the closing price of such Securities on the date of exercise or,
if such date is not a trading day, on the next prior trading day, is equal to
the Exercise Price with respect to such exercise. A Holder may only elect a
Cashless Exercise if the Securities issuable by the Company on such exercise are
publicly traded securities.
(c) "Closing Date" means the date on which the Offering is closed.
(d) "Commission" means the Securities and Exchange Commission.
(e) "Common Stock" means the common stock, without par value, of the
Company.
(f) "Company" means Pacific Mercantile Bancorp, a California corporation.
(g) "Company's Expenses" means any and all expenses payable by the Company
or the Warrantholder in connection with an offering described in Section 6
hereof, except Warrantholder's Expenses.
(h) "Effective Date" means the date on which the Registration Statement is
declared effective by the Commission.
(i) "Exercise Price" means the price at which the Warrantholder may
purchase one Share upon exercise of Warrants as determined from time to time
pursuant to the provisions hereof. The initial Exercise Price is $____ per
Share.
(j) "Offering" means the public offering of Common Stock made pursuant to
the Registration Statement.
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(k) "Participating Underwriter" means any underwriter participating in the
sale of the Securities pursuant to a registration under Section 6 of this
Warrant Certificate.
(l) "Registration Statement" means the Company's registration statement
(File No. 333 -_____) as amended on the Closing Date.
(m) "Rules and Regulations" means the rules and regulations of the
Commission adopted under the Act.
(n) "Securities" means the securities obtained or obtainable upon exercise
of the Warrant or securities obtained or obtainable upon exercise, exchange, or
conversion of such securities.
(o) "Share" or "Shares" refers to one or more shares of Common Stock
issuable on exercise of the Warrant.
(o) "Warrant Certificate" means a certificate evidencing the Warrant or a
portion thereof.
(t) "Warrantholder" means a record holder of the Warrant or Securities.
The initial Warrantholder is Xxxxxxx Investment Company, Inc.
(u) "Warrantholder's Expenses" means the sum of (i) the aggregate amount
of cash payments made to an underwriter, underwriting syndicate, or agent in
connection with an offering described in Section 6 hereof multiplied by a
fraction the numerator of which is the aggregate sales price of the Securities
sold by such underwriter, underwriting syndicate, or agent in such offering and
the denominator of which is the aggregate sales price of all of the securities
sold by such underwriter, underwriting syndicate, or agent in such offering and
(ii) all out-of-pocket expenses of the Warrantholder, except for the fees and
disbursements of one firm retained as legal counsel for the Warrantholder that
will be paid by the Company.
(v) "Warrant" means the warrant evidenced by this certificate, any similar
certificate issued in connection with the Offering, or any certificate obtained
upon transfer or partial exercise of the Warrant evidenced by any such
certificate.
2. Exercise of Warrants. All or any part of the Warrant may be
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exercised commencing on the first anniversary of the Effective Date and ending
at 5 p.m. Pacific Time on the fifth anniversary of the Effective Date by
surrendering this Warrant Certificate, together with appropriate instructions,
duly executed by the Warrantholder or by its duly authorized attorney, at the
office of the Company, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, Attention: _________________, or at such other office or
agency as the Company may designate. The date on which such instructions are
received by the Company shall be the date of exercise. If the Holder has
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elected a Cashless Exercise, such instructions shall so state. Upon receipt of
notice of exercise, the Company shall immediately instruct its transfer agent to
prepare certificates for the Securities to be received by the Warrantholder upon
completion of the Warrant exercise. When such certificates are prepared, the
Company shall notify the Warrantholder and deliver such certificates to the
Warrantholder or in accordance with the Warrantholder's instructions immediately
upon payment in full by the Warrantholder, in lawful money of the United States,
of the Exercise Price payable with respect to the Securities being purchased, if
any. If the Warrantholder shall represent and warrant that all applicable
registration and prospectus delivery requirements for their sale have been
complied with upon sale of the Securities received upon exercise of the Warrant,
such certificates shall not bear a legend with respect to the Securities Act of
1933.
If fewer than all the Securities purchasable under the Warrant are purchased,
the Company will, upon such partial exercise, execute and deliver to the
Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.
3. Adjustments in Certain Events. The number, class, and price of the Stock
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Derivative Securities are subject to adjustment from time to time upon the
happening of certain events as follows:
(a) If the outstanding shares of the Company's Common Stock are divided into
a greater number of shares or a dividend in stock is paid on the Common Stock,
the number of Shares for which the Warrant is then exercisable will be
proportionately increased and the Exercise Price will be proportionately
reduced; and, conversely, if the outstanding shares of Common Stock are combined
into a smaller number of shares of Common Stock, the number of Shares for which
the Warrant is then exercisable will be proportionately reduced and the Exercise
Price will be proportionately increased. The increases and reductions provided
for in this subsection 3(a) will be made with the intent and, as nearly as
practicable, the effect that neither the percentage of the total equity of the
Company obtainable on exercise of the Warrants nor the price payable for such
percentage upon such exercise will be affected by any event described in this
subsection 3(a).
(b) In case of any change in the Common Stock through merger, consolidation,
reclassification, reorganization, partial or complete liquidation, purchase of
substantially all the assets of the Company, or other change in the capital
structure of the Company, then, as a condition of such change, lawful and
adequate provision will be made so that the holder of this Warrant Certificate
will have the right thereafter to receive upon the exercise of the Warrant the
kind and amount of shares of stock or other securities or property to which he
would have been entitled if, immediately prior to such event, he had held the
number of Shares obtainable upon the exercise of the Warrant. In any such case,
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appropriate adjustment will be made in the application of the provisions set
forth herein with respect to the rights and interest thereafter of the
Warrantholder, to the end that the provisions set forth herein will thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other property thereafter deliverable upon the exercise of the Warrant.
The Company will not permit any change in its capital structure to occur unless
the issuer of the shares of stock or other securities to be received by the
holder of this Warrant Certificate, if not the Company, agrees to be bound by
and comply with the provisions of this Warrant Certificate.
(c) When any adjustment is required to be made in the number of Shares or
other securities or property purchasable upon exercise of the Warrant, the
Company will promptly determine the new number of such Shares or other
securities or property purchasable upon exercise of the Warrant and (i) prepare
and retain on file a statement describing in reasonable detail the method used
in arriving at the new number of such Shares or other securities or property
purchasable upon exercise of the Warrant and (ii) cause a copy of such statement
to be mailed to the Warrantholder within thirty (30) days after the date of the
event giving rise to the adjustment.
(d) No fractional shares of Common Stock or other securities will be issued
in connection with the exercise of the Warrant, but the Company will pay, in
lieu of fractional shares, a cash payment therefor on the basis of the mean
between the bid and asked prices of the Common Stock in the over-the-counter
market or the closing price on a national securities exchange on the day
immediately prior to exercise.
(e) If securities of the Company or securities of any subsidiary of the
Company are distributed pro rata to holders of Common Stock, such number of such
securities will be distributed to the Warrantholder or his assignee upon
exercise of this Warrant as the Warrantholder or assignee would have been
entitled to if the portion of the Warrant evidenced by this Warrant Certificate
had been exercised prior to the record date for such distribution. The
provisions with respect to adjustment of the Common Stock provided in this
Section 3 will also apply to the securities to which the Warrantholder or his
assignee is entitled under this subsection 3(e).
(f) Notwithstanding anything herein to the contrary, there will be no
adjustment made hereunder on account of the sale of the Shares or other
Securities purchasable upon exercise of the Warrant.
4. Reservation of Securities. The Company agrees that the number of shares of
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Common Stock or other Securities sufficient to provide for the exercise of the
Warrant upon the basis set forth above will at all times during the term of the
Warrant be reserved for exercise.
5. Validity of Securities. All Securities delivered upon the exercise of the
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Warrant will be duly and validly issued in accordance with their terms, and the
Company
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will pay all documentary and transfer taxes, if any, in respect of the original
issuance thereof upon exercise of the Warrant.
6. Registration of Securities Issuable on Exercise of Warrant Certificate.
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(a) The Company will register the Shares with the Commission pursuant to the
Act so as to allow the unrestricted sale of the Shares to the public from time
to time commencing on the first anniversary of the Effective Date and ending at
5:00 p.m. Pacific Time on the fifth anniversary of the Effective Date (the
"Registration Period"). The Company will also file such applications and other
documents necessary to permit the sale of the Shares to the public during the
Registration Period in those states in which the Shares were qualified for sale
in the Offering or such other states as the Company and the Warrantholder agree
to. In order to comply with the provisions of this Section 6(a), the Company is
not required to file more than one registration statement. No registration
right of any kind, "piggyback" or otherwise, will last longer than five years
from the Effective Date.
(b) The Company will pay all of the Company's Expenses and each Warrantholder
will pay its pro rata share of the Warrantholder's Expenses relating to the
registration, offer, and sale of the Shares.
(c) Except as specifically provided herein, the manner and conduct of the
registration, including the contents of the registration, will be entirely in
the control and at the discretion of the Company. The Company will file such
post-effective amendments and supplements as may be necessary to maintain the
currency of the registration statement during the period of its use. In
addition, if the Warrantholder participating in the registration is advised by
counsel that the registration statement, in their opinion, is deficient in any
material respect, the Company will use its best efforts to cause the
registration statement to be amended to eliminate the concerns raised.
(d) The Company will furnish to the Warrantholder the number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as it may reasonably request
in order to facilitate the disposition of Securities owned by it.
(e) The Company will, at the request of Warrantholders holding at least 50
percent of the then outstanding Warrants, (i) furnish an opinion of the counsel
representing the Company for the purposes of the registration pursuant to this
Section 6, addressed to the Warrantholders and any Participating Underwriter,
(ii) furnish an appropriate letter from the independent public accountants of
the Company, addressed to the Warrantholders and any Participating Underwriter,
and (iii) make representations and warranties to the Warrantholders and any
Participating Underwriter. A request pursuant to this subsection (e) may be made
on three occasions. The documents required to be delivered pursuant to this
subsection (e) will be dated within ten days of the request and will be, in form
and substance, equivalent to similar documents furnished to the
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underwriters in connection with the Offering, with such changes as may be
appropriate in light of changed circumstances.
7. Indemnification in Connection with Registration.
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(a) If any of the Securities are registered, the Company will indemnify and
hold harmless each selling Warrantholder, any person who controls any selling
Warrantholder within the meaning of the Act, and any Participating Underwriter
against any losses, claims, damages, or liabilities, joint or several, to which
any Warrantholder, controlling person, or Participating Underwriter may be
subject under the Act or otherwise; and it will reimburse each Warrantholder,
each controlling person, and each Participating Underwriter for any legal or
other expenses reasonably incurred by the Warrantholder, controlling person, or
Participating Underwriter in connection with investigating or defending any such
loss, claim, damage, liability, or action, insofar as such losses, claims,
damages, or liabilities, joint or several (or actions in respect thereof), arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any such registration
statement or any preliminary prospectus or final prospectus, or any amendment or
supplement thereto, or arise out of or are 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
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the Company will not be liable in any case to the extent that any loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any
registration statement, preliminary prospectus, final prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished by a Warrantholder for use in the preparation thereof.
The indemnity agreement contained in this subparagraph (a) will not apply to
amounts paid to any claimant in settlement of any suit or claim unless such
payment is first approved by the Company, such approval not to be unreasonably
withheld.
(b) Each selling Warrantholder, as a condition of the Company's registration
obligation, will indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed any registration statement or other filing
or any amendment or supplement thereto, and any person who controls the Company
within the meaning of the Act, against any losses, claims, damages, or
liabilities to which the Company or any such director, officer, or controlling
person may become subject under the Act or otherwise, and will reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, or controlling person in connection with investigating or defending any
such loss, claim, damage, liability, or action, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue or alleged untrue statement of any material fact contained
in said registration statement, any preliminary or final prospectus, or other
filing, or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue
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statement or alleged untrue statement or omission or alleged omission was made
in said registration statement, preliminary or final prospectus, or other
filing, or amendment or supplement, in reliance upon and in conformity with
written information furnished by such Warrantholder for use in the preparation
thereof; provided, however, that the indemnity agreement contained in this
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subparagraph (b) will not apply to amounts paid to any claimant in settlement of
any suit or claim unless such payment is first approved by the Warrantholder,
such approval not to be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under subparagraphs (a) or
(b) above of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
notify the indemnifying party of the commencement thereof; but the omission to
notify the indemnifying party will not relieve it from any liability that it may
have to any indemnified party otherwise than under subparagraphs (a) and (b).
(d) If any such action is brought against any indemnified party and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party; and after
notice from the indemnifying party to such indemnified party of its election to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
8. Restrictions on Transfer. This Warrant Certificate and the Warrant may not
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be sold, transferred, assigned or hypothecated for a one-year period after the
Effective Date except to underwriters of the Offering or to individuals who are
either a partner or an officer of such an underwriter or by will or by operation
of law. The Warrant may be divided or combined, upon request to the Company by
the Warrantholder, into a certificate or certificates evidencing the same
aggregate number of Warrants.
9. No Rights as a Shareholder. Except as otherwise provided herein, the
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Warrantholder will not, by virtue of ownership of the Warrant, be entitled to
any rights of a shareholder of the Company but will, upon written request to the
Company, be entitled to receive such quarterly or annual reports as the Company
distributes to its shareholders.
10. Notice. Any notices required or permitted to be given hereunder will be
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in writing and may be served personally or by mail; and if served will be
addressed as follows:
If to the Company:
Pacific Mercantile Bancorp
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000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: _________________
If to the Warrantholder:
at the address furnished
by the Warrantholder to the
Company for the purpose of
notice.
Any notice so given by mail will be deemed effectively given 48 hours
after mailing when deposited in the United States mail, registered or certified
mail, return receipt requested, postage prepaid and addressed as specified
above. Any party may by written notice to the other specify a different address
for notice purposes.
11. Applicable Law. This Warrant Certificate will be governed by and
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construed in accordance with the laws of the State of Oregon, without reference
to conflict of laws principles thereunder. All disputes relating to this
Warrant Certificate shall be tried before the courts of Oregon located in
Multnomah County, Oregon to the exclusion of all other courts that might have
jurisdiction.
Dated as of _______________, 1999
PACIFIC MERCANTILE BANCORP
By:
__________________________________
President
Agreed and Accepted as of __________________, 2000
XXXXXXX INVESTMENT COMPANY, INC.
By:____________________________________________
Xxxxxxxx Xxxxxxxx, Senior Vice President -- Research
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