EXHIBIT 4.6
VOID AFTER 5:00 P.M. PACIFIC TIME, ON JUNE 6, 2007
FORM OF SERIES B WARRANT
ISSUED PURSUANT TO JUNE 5, 1997
AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES LAWS OF ANY STATE IN RELIANCE ON EXEMPTIONS THEREFROM AND,
THEREFORE, MAY NOT BE RESOLD UNLESS REGISTERED UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THIS
WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE
IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE ACT.
COMMERCE SECURITY BANCORP, INC.
Common Stock Purchase Warrant
Expiring June 6, 2007
No. W-
COMMERCE SECURITY BANCORP, INC., a Delaware corporation (the "Company"),
for value received, hereby certifies that , or its
registered assigns (the "Holder"), is entitled to purchase from the Company
duly authorized, validly issued, fully paid and
nonassessable shares ("Warrant Shares") of the Company's Class B Common
Stock, $.01 par value per share (the "Class B Common Stock"), or the
Company's Class C Common Stock, $.01 par value per share (the "Class C
Common Stock"), as determined pursuant to Section 1.2, at the purchase price
per share of $4.81, as such price may be adjusted from time to time pursuant
to Section 7 hereof (the "Exercise Price"), at any time or from time to time
from the date hereof and up to and until 5:00 P.M., Pacific time, on June 6,
2007 or such later date determined in accordance with Section 9 hereof (the
"Expiration Date") all subject to the terms and conditions and adjustments
set forth below in this Warrant.
This Warrant is one of the Series B Warrants originally issued pursuant
to the Securities Purchase Agreement dated February 13, 1997 by and between
the Company and its subsidiaries and Madison Dearborn Capital Partners II,
L.P., Olympus Growth Fund II, L.P. and Olympus Executive Fund, L.P. (as
amended, and together with certain other agreements and instruments
contemplated thereby, the "Securities Purchase Agreement"). Reference is
hereby made to the Securities Purchase Agreement for additional terms and
provisions thereof affecting the Company and the holders of the Warrants.
The Company will provide a copy of the Securities Purchase
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Agreement to the Holder upon request. As used herein, "Common Stock" shall
refer to all classes of the Company's common stock and the term "Junior
Common Stock" shall refer to the Class B Common Stock and the Class C Common
Stock, collectively.
1. EXERCISE OF WARRANT.
1.1 Subject to the terms and conditions hereof, this Warrant may be
exercised in whole or in part at any time or from time to time from the date
hereof and up to and until the Expiration Date, or, if such date is a day on
which federal or state chartered banking institutions located in the State of
California are authorized by law to close, then on the next succeeding day
which shall not be such a day, by presentation and surrender to the Company
at its principal office, of this Warrant and the purchase form annexed hereto
as EXHIBIT A properly completed and duly executed and accompanied by payment,
in the manner provided herein, of an amount (the "Exercise Payment") equal to
the then-current Exercise Price multiplied by the number of Warrant Shares
specified in such form. The Exercise Payment may be made by (x) delivery to
the Company of shares of Series A Capital Securities having an aggregate
Redemption Value (as defined herein) equal to the Exercise Payment,
accompanied by a stock power endorsed in blank, or (y) delivery to the
Company of shares of Series B Preferred Stock or Series E Preferred Stock
having an aggregate Redemption Value equal to the Exercise Payment,
accompanied by a stock power endorsed in blank, or (z) any combination of the
consideration specified in clauses (x) and (y) of this sentence having an
aggregate value as provided herein equal to the Exercise Payment.
Notwithstanding the immediately preceding sentence, at the option of the
Holder, this Warrant may be exercised by conversion into a number of shares
of Junior Common Stock equal to (x) the number of Warrant Shares minus (y) a
number of shares of Junior Common Stock having a Market Value equal to the
Exercise Payment (a "Cashless Exercise"). The Exercise Payment may not be
made in cash. If the Warrant is exercised for less than the total number of
shares evidenced by the Warrant, the Company shall, promptly after
presentation of the Warrant upon such exercise, execute and deliver a new
warrant, dated the date hereof, evidencing the rights of the Holder to
purchase the balance of the Warrant Shares purchasable hereunder upon the
same terms and conditions herein set forth. Upon and as of receipt by the
Company of a properly completed and duly executed purchase form accompanied
by payment as herein provided, the Holder shall be deemed to be the holder of
record of the shares of Junior Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Junior Common Stock
shall not then actually be delivered to the Holder. Certificates
representing the shares so purchased shall be delivered to the Holder within
ten (10) business days after exercise. The issuance of certificates for
shares of Junior Common Stock upon exercise of this Warrant shall be made
without charge to the Holder for any issuance tax in respect thereof or other
cost incurred by the Company in connection with such exercise and the related
issuance of shares of Warrant Shares.
1.2 The Warrant Shares issuable upon the exercise of this Warrant
shall be either shares of Class B Common Stock or shares of Class C Common
Stock, or any combination thereof, at the sole election of the Holder; PROVIDED,
HOWEVER, that the Holder may not elect to
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exercise the Warrant for shares of Class B Common Stock if and to the extent
that the issuance of the same would result in the Holder owning more than
9.9% of the Company's pro forma Voting Securities (as defined herein)
outstanding following such exercise; and PROVIDED, FURTHER, that at any time
that the Holder owns more than 9.9% of the outstanding Voting Securities, any
exercise of this Warrant, in whole or in part, shall be solely for Class C
Common Stock. Notwithstanding the immediately preceding sentence, this
Warrant may be exercised for shares of Class B Common Stock that would result
in the Holder owning more than 9.9% of the outstanding Voting Securities,
provided that at the time of such exercise, such Holder has delivered to the
Secretary of the Corporation an opinion or memorandum of counsel, in form and
substance reasonably satisfactory to the Company, or other reasonably
satisfactory evidence that such Holder may beneficially own more than 9.9% of
the outstanding Voting Securities of the Company and will acquire such shares
in accordance with the Bank Holding Company Act of 1956. As used herein,
"Voting Securities" shall mean the pro forma number of shares of capital
stock of the Company entitled to vote in an election of the directors of the
Company as of the time of the exercise of the Warrant, giving effect to the
exercise of the Warrant to the extent proposed but not giving effect to the
exercise of any other outstanding common stock equivalents held by the Holder
or by any other person. The Holder shall indicate on the purchase form
delivered to the Company in connection with such exercise the class of Junior
Common Stock that the Holder elects to receive upon such exercise.
2. RESERVATION OF SHARES.
The Company shall, at all times from the date of original issuance of the
Warrant until its expiration, reserve for issuance and delivery upon exercise
of the Warrant the number of Warrant Shares as shall be required for issuance
and delivery upon exercise of the Warrant. All Warrant Shares, upon
issuance, shall be validly authorized, issued and outstanding shares, fully
paid and nonassessable, and free of all liens, encumbrances and (except as
otherwise provided herein) restrictions thereon. The Company shall take all
such actions as may be necessary to assure that all Warrant Shares may be so
issued without violation of any applicable law or governmental regulation or
any requirements of any domestic securities exchange upon which shares of
Warrant Shares may be listed (except for official notice of issuance which
shall be immediately delivered by the Company upon each such issuance). The
Company shall not take any action which would cause the number of authorized
but unissued shares of Warrant Shares to be less than the number of such
shares required to be reserved hereunder for issuance upon exercise of the
Warrant.
3. FRACTIONAL SHARES.
If the exercise of the Warrant would otherwise result in the issuance of
a fraction of a share, the Company shall instead of issuing any fractional
shares or scrip representing fractional shares pay to the Holder an amount in
cash equal to such fraction multiplied by the Market Value (determined in
accordance with Section 4 below) of a share of Junior Common Stock.
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4. MARKET VALUE OF JUNIOR COMMON STOCK; REDEMPTION VALUE OF PREFERRED
STOCK.
(a) For purposes of this Agreement, except as provided in Sections 6.2
and 6.3,
(x) if the Class B Common Stock is publicly traded, the Market Value
of the Junior Common Stock shall equal an amount per share of Class B
Common Stock equal to the average closing price for the thirty (30) trading
days immediately preceding the date of exercise as reported (i) on the
principal national securities exchange on which the Class B Common Stock is
traded or (ii) if the Class B Common Stock is not traded on a national
exchange, on The Nasdaq National Market System ("Nasdaq"); or
(y) if the Class B Common Stock is not so quoted on Nasdaq or listed
on a national securities exchange, the Market Value of the Junior Common
Stock shall be an amount (which shall be equal for the Class B Common Stock
and the Class C Common Stock) mutually agreed upon by the Company and the
Holder, or, if the Company and the Holder are unable to agree, by a
nationally recognized investment banking firm selected by the Holder and
consented to by the Company, such consent not to be unreasonably withheld.
Any fees or expenses incurred in connection with the retention of an
investment banking firm pursuant to this Section 4(a)(y) shall be split
equally between the Holder and the Company.
(b) For purposes of this Agreement, the "Redemption Value" of the Series
A Capital Securities shall equal the Redemption Amount thereof (as defined in
the Declaration of Trust governing such Securities) as of the exercise date,
giving effect to any Principal Adjustment (as so defined) occurring prior to
the exercise date, and the Redemption Value of each of the Series B Preferred
Stock and the Series E Preferred Stock shall equal the Redemption Price (as
defined in the Company's Amended and Restated Certificate of Incorporation)
per share thereof were such share to be redeemed on the exercise date.
5. NO RIGHTS AS STOCKHOLDER.
This Warrant shall not entitle the Holder to any rights as stockholder of
the Company, either at law or in equity. The rights of the Holder are
limited to those expressed in this Warrant or in the Securities Purchase
Agreement or otherwise provided to the Holder by law.
6. EVENTS COMPELLING IMMEDIATE EXERCISE OF WARRANT.
6.1 This Warrant shall be automatically exercised at its then applicable
Exercise Price upon the later of (i) the date of the consummation of any
Qualified Offering (as defined herein) or (ii) the first business day
following the second anniversary of the date of original issuance of the
Warrant on which the Market Value of the Junior Common Stock is at least 200%
of the then applicable Initial Share Price (as defined herein). In the event
the Warrant is exercised pursuant to this Section 6, the Holder may elect a
form of Exercise Payment permitted under Section 1
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hereof; PROVIDED, HOWEVER, that if the Holder does not make such an election
within ten (10) business days following written notice by the Company that
the warrant is being automatically exercised pursuant to this Section 6, the
Company may cause a Cashless Exercise of such Xxxxxx's Warrant. A "Qualified
Offering" shall mean a firm-commitment underwritten public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of Class B Common Stock to the public at
an offering price per share (prior to any underwriting discount or
commission) of at least 200% of the then-applicable Initial Share Price (as
defined herein) in which either (x) the aggregate offering price of shares
sold by the Company is not less than $25 million, or (y) the aggregate
offering price of all shares sold in the offering, including those sold by
the Company and those sold by other stockholders is not less than $30 million
of which the aggregate offering price of shares sold by the Company is not
less than $20 million. The "Initial Share Price" shall equal $4.81 per share
(as adjusted for any stock split, stock dividends or other similar
distributions to the holders of Class B Common Stock).
6.2 This Warrant shall be automatically exercised, in a Cashless
Exercise at its then applicable Exercise Price, upon the first business day
on which it is determined that the Market Value of the Junior Common Stock is
equal to or greater than $12.00 per share, as adjusted for any stock splits,
stock dividends or similar distributions to the holders of the Junior Common
Stock having a record date prior to the date of exercise of the Warrant. For
purposes determining the number of shares of Junior Common Stock to be issued
to the holder in the event of a an exercise effected under this Section 6.2,
the Market Value of the Junior Common Stock will be deemed to equal $12.00
per share (adjusted as aforesaid).
6.3 This Warrant shall be automatically exercised, in a Cashless
Exercise at its then applicable Exercise Price, in the event that, at any
time following the fifth anniversary of the date of original issuance of this
Warrant, one or more of the Series A Capital securities, the Series B
Preferred Stock or the Series E Preferred Stock shall be converted into
Common Stock, such automatic exercise of this Warrant to be effective
contemporaneously with such conversion. For purposes of determining the
number of shares of Junior Common Stock to be issued to the holder in the
event of an exercise effected under this Section 6.3, the Market Value of the
Junior Common Stock will be deemed to equal $6.00 per share (adjusted for any
stock splits, stock dividends or similar distributions to the holders of the
Junior Common Stock having a record date prior to the date of exercise of the
Warrant).
7. PRICES OF WARRANT SHARES; EFFECT OF DIVIDENDS ON COMMON STOCK.
7.1 The number of shares of Junior Common Stock for which this
Warrant may be exercised and the Exercise Price therefor shall be subject to
adjustment as follows:
(a) If the Company is recapitalized through the subdivision or
combination of its outstanding shares of Junior Common Stock into a larger
or smaller number of shares, the number of shares of Junior Common Stock
for which this Warrant may be exercised shall be increased or reduced, as
of the record date for such recapitalization, in the same
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proportion as the increase or decrease in the outstanding shares of
Junior Common Stock, and the Exercise Price shall be adjusted so that the
aggregate amount payable for the purchase of all Warrant Shares issuable
hereunder immediately after the record date for such recapitalization
shall equal the aggregate amount so payable immediately before such
record date.
(b) If the Company declares a dividend on Junior Common Stock, or
makes a distribution to holders of Junior Common Stock, and such dividend
or distribution is payable or made in Junior Common Stock or securities
convertible into or exchangeable for Junior Common Stock, or rights to
purchase Junior Common Stock or securities convertible into or exchangeable
for Junior Common Stock, the number of shares of Junior Common Stock for
which this Warrant may be exercised shall be increased, as of the record
date for determining which holders of Junior Common Stock shall be entitled
to receive such dividend or distribution, in proportion to the increase in
the number of outstanding shares (and shares of Junior Common Stock
issuable upon conversion of all such securities convertible into Junior
Common Stock) of Junior Common Stock as a result of such dividend or
distribution, and the Exercise Price shall be adjusted so that the
aggregate amount payable for the purchase of all the Warrant Shares
issuable hereunder immediately after the record date for such dividend or
distribution shall equal the aggregate amount so payable immediately before
such record date.
(c) If the Company declares a dividend on Junior Common Stock (other
than a dividend covered by subsection (b) above, or a dividend or other
distribution payable in cash covered by Section 7.6 below) or distributes
to holders of its Junior Common Stock, other than as part of its
dissolution or liquidation or the winding up of its affairs, any shares of
its stock, any evidence of indebtedness or any cash or other of its assets
(other than Junior Common Stock or securities convertible into or
exchangeable for Junior Common Stock) (an "Alternative Distribution"), the
Exercise Price shall be reduced by an amount equal to the value of the
Alternative Distribution per share of Junior Common Stock as determined in
good faith by the Company's Board of Directors based upon a written opinion
from a nationally recognized investment banking firm, selected by the
Holder, and taking into account, among other relevant factors, whether the
Holder acquired any Purchase Rights (as defined herein) with respect to
such dividend or distribution pursuant to the terms hereof. The selection
of such investment banking firm shall be consented to by the Company, which
consent shall not be unreasonably withheld, and such investment banking
firm's fees and expenses shall be paid by the Company. The Company shall
provide the Holder with written notice concerning an Alternative
Distribution at least ten (10) business days prior to the record date
therefor.
(d) In case the Company shall, at any time or from time to time
following the date hereof, issue or agree to issue by warrants, convertible
securities, stock options or otherwise, any of its Common Stock or Other
Securities (as defined herein), including treasury shares, (other than any
shares issued in contemplation of the Securities Purchase
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Agreement), for a consideration per share less than the Exercise Price
per share in effect immediately prior to the time of such issue or
sale, then forthwith upon such issue or sale, or agreement to issue
or sell, said Exercise Price shall be reduced to a price (calculated
to the nearest cent) determined by dividing (x) an amount equal to
(A) the product obtained by multiplying the number of shares of the
Common Stock outstanding (or then deemed to be outstanding as herein
provided) immediately prior to such issue by the Exercise Price in
effect at such time plus (B) the consideration received by the Company
upon such issue by (y) the number of shares of the Common Stock
outstanding (or then deemed to be outstanding as herein provided)
immediately after such issue. Whenever the Exercise Price is adjusted as
provided in this Section 7(d), the aggregate number of shares of Junior
Common Stock that the holder of this Warrant shall thereafter be entitled
to purchase at such adjusted Exercise Price shall be increased to the
number of shares determined by multiplying the number of shares of Junior
Common Stock issuable upon exercise of this Warrant immediately prior to
such adjustment by the Exercise Price in effect immediately prior to such
adjustment, and dividing the product so obtained by such adjusted Exercise
Price. For the purposes of this Section 7(d), the number of shares of
Common Stock deemed to be outstanding at any given time shall exclude
shares in the treasury of the Company but shall include all shares issuable
or to become issuable under any agreements, warrants (including this
Warrant), convertible securities, stock options, similar rights or
otherwise (hereinafter in this Section 7(d) referred to as "Options"). The
Board of Directors of the Company shall make a reasonable determination of
the fair value of the amount of consideration other than money received by
the Company upon the issue by it of any of its securities. Such Board
shall, in case any Common Stock or Options for the purchase thereof are
issued with other stock, securities or assets of the Company, determine
what part of the consideration received therefor is applicable to the issue
of the Common Stock or Options for the purchase thereof. If, as provided
herein, the Exercise Price is adjusted as a consequence of the Company's
issuance of Options, no further adjustment of the Exercise Price shall be
made upon the subsequent issuance of Common Stock upon the exercise of such
Options. To the extent that Options expire without having been exercised,
the Exercise Price computed upon their issuance, and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed to
take into account only the shares of Common Stock actually issued upon the
exercise of such Options. In any such recomputation, the consideration
applicable to the shares of Common Stock issued shall be the aggregate
consideration which was received by the Company upon the issuance of such
Options, whether or not exercised, plus the additional consideration
actually received by the Company upon the exercise thereof. No
recomputation shall have the effect of increasing the Exercise Price by an
amount in excess of the adjustment thereof made in respect of the issuance
of the expired Options. No adjustment shall be made pursuant to this
Section 7(d) for the issuance by the Company of (x) any securities issued
pursuant to executive compensation arrangements the terms of which are
disclosed in Disclosure Schedule 5.2(m)(18) to the Securities Purchase
Agreement, or (y) any securities that may be issued upon the conversion of
the mandatorily convertible debentures of SDN
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Bancorp, Inc. disclosed on Disclosure Schedule 5.2(b) to the Securities
Purchase Agreement.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease in the Exercise Price of
at least one percent; provided, however, that any adjustments which by
reason of this Section 7.1(e) are not required to be made immediately shall
be carried forward and taken into account at the time of exercise of this
Warrant or any subsequent adjustment in the Exercise Price which, singly or
in combination with any adjustment carried forward, is required to be made
under this Section 7.
(f) If the event as a result of which an adjustment is made under
paragraph (a), (b), (c) or (d) above does not occur, then any adjustments
in the Exercise Price or number of shares issuable pursuant to this Warrant
that were made in accordance with such paragraphs (a), (b), (c) or (d)
shall be adjusted to the Exercise Price and number of shares as were in
effect immediately prior to the record date for such event.
7.2 If at any time or from time to time there is a capital
reorganization of the Junior Common Stock (other than a recapitalization,
subdivision, combination, reclassification or other change of the Junior
Common Stock provided for in Section 7.1) or merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties and assets to any other person, then, as a
part of such reorganization, merger, consolidation or sale, provision shall
be made so that the Holder shall thereafter be entitled to receive, upon
exercise of the Warrant, the number of shares of stock or other securities or
property of the Company, resulting from such reorganization, merger or
consolidation or sale, to which a holder of Junior Common Stock, or other
securities deliverable upon the exercise of this Warrant, would have been
entitled on such reorganization, merger, consolidation, or sale. In any such
case, appropriate adjustments shall be made in the application of the
provisions of this Section 7 (including adjustment of the Exercise Price then
in effect and number of shares purchasable upon exercise of the Warrant)
which shall be applicable after such events; provided, however, that any such
adjustments shall be made so as to ensure that the provisions of this Section
7 applicable after such events shall be as equivalent as may be practicable
to the provisions of this Section 7 applicable before such events. In the
event of any such reorganization, merger, consolidation or sale, the
corporation formed by such consolidation or merger or the corporation which
shall have acquired the assets of the Company shall execute and deliver a
supplement hereto to the foregoing effect. If, as aforesaid, the Holder
would be entitled to receive property upon exercise of this Warrant and such
property consists, in whole or in part, of cash in excess of the Exercise
Price, the Holder may, at the Holder's option, exercise this Warrant without
making payment of the Exercise Price and, in such case, the Company or its
successor shall, upon distribution to the Holder, consider the Exercise Price
to have been paid in full and, in making settlement to the Holder, shall
deduct an amount equal to the Exercise Price from the amount payable to the
Holder.
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7.3 If the Company shall, at any time before the expiration of this
Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have
the right to exercise this Warrant. Upon such exercise the Holder shall have
the right to receive, in lieu of the shares of Junior Common Stock of the
Company that the Holder otherwise would have been entitled to receive, the
same kind and amount of assets as would have been issued, distributed or paid
to the Holder upon any such dissolution, liquidation or winding up with
respect to such shares of Junior Common Stock of the Company had the Holder
been the holder of record of such shares of Junior Common Stock receivable
upon exercise of this Warrant on the date for determining those entitled to
receive any such distribution. If any such dissolution, liquidation or
winding up will result in any cash distribution in excess of the Exercise
Price, the Holder may, at the Holder's option, exercise this Warrant without
making payment of the Exercise Price and, in such case, the Company shall,
upon distribution to the Holder, consider the Exercise Price to have been
paid in full and, in making settlement to the Holder, shall deduct an amount
equal to the Exercise Price from the amount payable to the Holder per share
of Junior Common Stock. For purposes of this Section 7.3, the sale of all or
substantially all of the assets of the Company and distribution of the
proceeds thereof to the Company's shareholders shall be deemed a liquidation.
7.4 The Company shall retain a firm of independent public
accountants of nationally recognized standing (who may be any such firm
regularly employed by the Company) to make any computation required under
this Section 7, and a certificate signed by such firm shall be conclusive
evidence of the correctness of any computation made under this Section 7.
7.5 Whenever the number of Warrant Shares or the Exercise Price
shall be adjusted as required by the provisions of this Section 7, the
Company promptly shall file in the custody of its Secretary or an Assistant
Secretary, at its principal office, and furnish to each Holder hereof a
certificate prepared in accordance with Section 7.4 hereof, showing the
adjusted number of Warrant Shares and the Exercise Price and setting forth in
reasonable detail the circumstances requiring the adjustment.
7.6 If the Company declares a dividend or other distribution on the
Common Stock payable in cash prior to the earlier of the Expiration Date or
the exercise of this Warrant in full, the Company shall pay to the holder
hereof, in cash and contemporaneously with the payment of such dividend to
the holders of the Common Stock, an amount equal to the amount of such
dividend per share of Common Stock multiplied by the number of Warrant Shares
then covered by this Warrant as though such shares had been issued and
outstanding in the name of the holder as of the record date applicable to
such dividend.
7.7 If an event occurs which is similar in nature to the events
described in this Section 7, but is not expressly covered hereby, the Board
of Directors of the Company shall make or arrange for an equitable adjustment
to the number of Warrant Shares and the Exercise Price.
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8. PURCHASE RIGHTS.
If at any time the Company grants, issues or sells any options,
convertible securities or rights to purchase stock, warrants, securities or
other property pro rata to the record Holders of Junior Common Stock (the
"Purchase Rights"), then the Holder of this Warrant shall be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such Holder could have acquired if such Holder had held
the number of shares of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the date as of which the record holders of Junior Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights; provided
that (a) if the Purchase Rights involve Common Stock that constitutes Voting
Securities, the Company shall make available to the Holder of this Warrant,
at such Holder's request, Purchase Rights for Class C Common Stock, except
that, if and to the extent that the Holder would not be permitted to exercise
this Warrant for Class B Common Stock pursuant to Section 1.2, the Company
shall grant, issue or sell to the Holder only Purchase Rights relating to
Class C Common Stock; and (b) if the Purchase Rights involve Voting
Securities other than Common Stock, the Company shall use its best efforts to
make available to the Holder of this Warrant, at such Holder's request,
Purchase Rights involving non-voting securities (except where such securities
are entitled to voting rights pursuant to applicable laws) which are
otherwise identical to the Purchase Rights involving voting securities and
which non-voting securities are convertible or exchangeable into such voting
securities on the same terms as the Company's Class C Common Stock is
convertible into the Company's Class B Common Stock.
9. COVENANTS OF THE HOLDER.
The Holder covenants and agrees that, notwithstanding anything to the
contrary contained herein, this Warrant may not be exercised at any time
that, or to the extent that, immediately following such exercise the Holder
would beneficially own equity securities of the Company, of any class(es),
which securities would in the aggregate constitute in excess of 24.9% of the
Fully Diluted Equity (as hereinafter defined) of the Company, unless and
until such Holder has delivered to the Secretary of the Company an opinion or
memorandum of counsel, in form and substance reasonably satisfactory to the
Company, or other reasonably satisfactory evidence that such Holder may
beneficially own more than 24.9% of the Fully Diluted Equity of the Company
and will acquire such shares in accordance with the Bank Holding Company Act
of 1956. The expiration of this Warrant shall be extended by an amount of
time equal to that during which this Warrant may not be exercised pursuant to
this Section 9. As used herein, the "Fully Diluted Equity" of the Company
shall mean the Company's equity immediately following the Acquisition (as
defined in the Securities Purchase Agreement) as calculated by the Federal
Reserve Bank of San Francisco or the staff of the Board of Governors of the
Federal Reserve System.
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10. NOTICES TO HOLDER.
So long as this Warrant shall be outstanding, (a) if the Company shall
propose to pay any dividends or make any distribution upon the Class B Common
Stock or (b) if the Company shall offer generally to the holders of Junior
Common Stock the right to subscribe to or purchase any shares of any class of
Junior Common Stock or securities convertible into Junior Common Stock or any
other similar rights or (c) if there shall be any (or any vote regarding any)
proposed capital reorganization of the Company in which the Company is not
the surviving entity, recapitalization of the capital stock of the company,
consolidation or merger of the Company with or into another corporation,
sale, lease or other transfer of all or substantially all of the property and
assets of the Company, or voluntary or involuntary dissolution, liquidation
or winding up of the Company, then in such event, the Company shall cause to
be deposited with an nationally recognized air courier, addressed to the
Holder hereof at the address appearing on the records of the Company at least
60 days prior to the relevant date described below (or the longest period as
is reasonably possible if 60 days is not reasonably possible, but in no event
less than 30 days), a notice containing a description of the proposed action
and stating the date or expected date on which a record of the Company's
stockholders is to be taken for the purpose of any such dividend,
distribution of rights, or such reclassification, reorganization,
consolidation, merger, conveyance, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected date, if
any is to be fixed, as of which the holders of Junior Common Stock of record
shall be entitled to exchange their shares of Junior Common Stock for
securities or other property deliverable upon such event.
11. RESTRICTIONS ON TRANSFER.
This Warrant, the Warrant Shares and any other securities received
pursuant to this Warrant ("Other Securities") may be subject to restrictions
on transferability provided by United States federal securities laws, if
applicable. This Warrant, the Warrant Shares or Other Securities may also be
subject to restrictions on transferability under applicable state or other
jurisdiction's securities or "blue sky" laws. Until and unless this Warrant,
the Warrant Shares or Other Securities have been registered under the
Securities Act, the Holder shall, if requested by the Company prior to a
proposed transfer by the Holder, provide to the Company an opinion of counsel
reasonably satisfactory to the Company, to the effect that (i) the Warrant,
the Warrant Shares or Other Securities may be transferred without such
registration and (ii) the transfer will not violate any applicable state or
other jurisdiction's securities or "blue sky" laws. An opinion delivered
pursuant to this Section by the law firm of Xxxxxxxx & Xxxxx, in form and
substance reasonably satisfactory to the Company, will be acceptable to the
Company. Subject to (i) the transfer conditions described in this Section 11
and (ii) compliance with the terms of Section 3 of the Shareholder Agreement
dated [June 6], 1997, this Warrant and all rights hereunder are freely
transferable, in whole or in part, without restriction by the Company or
charge to the Holder, upon surrender of this Warrant to the Company.
D-11
12. GOVERNING LAW.
This Warrant shall be governed by, and construed in accordance with, the
laws of the State of Delaware without regard to the conflict of laws
provisions thereof.
13. COMPANY BOOKS.
The Company shall not close its books against the transfer of this
Warrant or of any share of Warrant Shares issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant. The Company shall from time to time as may be
necessary use its best efforts to assure that the par value per share of the
unissued Warrant Shares acquirable upon exercise of this Warrant is at all
times equal to or less than the Exercise Price then in effect.
14. REGULATORY FILINGS.
Upon the Holder's reasonable request from time to time, the Company shall
assist and cooperate with the Holder in connection with any required
governmental filings such Holder is require to make or any governmental
approvals such Holder must obtain prior to or in connection with any exercise
of this Warrant (including, without limitation, making any filings required
to be made by the Company).
D-12
15. CONDITIONAL EXERCISE.
Notwithstanding any other provision hereof, if an exercise of any portion
of this Warrant is to be made in connection with a registered public offering
or the reorganization, merger, consolidation or sale of the Company (as
described in Section 7.2), the exercise of any portion of this Warrant may,
at the election of the Holder, be conditioned upon the consummation of the
public offering or the reorganization, merger, consolidation or sale of the
Company, in which case such exercise shall not be deemed to be effective
until the consummation of such transaction.
IN WITNESS WHEREOF, the Company has executed this Agreement as of the 6th
day of June, 1997.
COMMERCE SECURITY BANCORP, INC.
By:
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[CORPORATE
SEAL]
BWARRANT.
D-13
Exhibit A
To Warrant
ELECTION TO PURCHASE
Subject to the condition set forth in Section 15 of this Warrant, and
consistent with the limitations set forth in Section 1.2 of this Warrant, the
undersigned hereby irrevocably elects to exercise this Warrant and to
purchase shares of Commerce Security Bancorp, Inc. CLASS
B Common Stock and shares of Commerce Security Bancorp,
Inc. CLASS C Common Stock issuable upon the exercise of this Warrant, and
requests that certificates for such shares shall be issued in the name of:
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(Name)
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(Address)
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(United States Social Security or other taxpayer
identifying number, if applicable)
and, if different from above, be delivered to:
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(Name)
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(Address)
and, if the number of Warrant Shares so purchased are not all of the Warrant
Shares issuable upon exercise of this Warrant, that a Warrant to purchase the
balance of such Warrant Shares be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated:
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Name of Registered Owner:
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Address:
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Signature:
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D-14
BWARRANT.
D-15
