LOANS/APTSVLLC
0839/39038-028 NYLIB2/549871 v4 10/05/98 11:03 AM (10559)
WARRANT AGREEMENT dated as of September 15, 1998 between Insignia/ESG
Holdings, Inc., a Delaware corporation (the "Corporation"), and APTS V, L.L.C.,
a Delaware limited liability company ("APTS").
Preliminary Statement
This Warrant Agreement sets forth the terms and conditions of Warrants
transferred to APTS in connection with the exchange of the warrants held by APTS
to purchase shares of Class A Common Stock, par value $.01 per share, of
Insignia Financial Group, Inc. ("IFG") under the Amended and Restated Warrant
Agreement dated as of December 5, 1995 between IFG and APTS, such exchange
resulting from the distribution by IFG to its stockholders of all of the then
outstanding shares of Common Stock of the Corporation in a transaction intending
to qualify as a tax-free distribution and reorganization under Sections 355 and
368 of the Internal Revenue Code.
Accordingly, the parties hereto agree as follows.
1. Definitions. As used in this Warrant Agreement, the following terms shall
have the following meanings, unless the context otherwise requires.
a. "Aggregate Consideration Receivable" by the Corporation in connection
with the issuance of any shares of Common Stock (or any rights,
warrants, options or convertible or exercisable securities entitling
the holders thereof to subscribe for or purchase any shares of Common
Stock or any stock appreciation rights entitling the holders thereof
to any interest in an increase in value, however measured, of shares
of Common Stock) shall mean the sum of:
i. the aggregate consideration paid to the Corporation for such shares,
rights, warrants, options or convertible or exercisable securities,
and
ii. the aggregate consideration or premiums stated in such rights,
warrants, options or convertible or exercisable securities to be
payable for the shares of Common Stock covered thereby.
In case all or any portion of the consideration to be received by the
Corporation may be paid in a form other than cash, the value of such
consideration shall be determined in good faith by the Board of
Directors or a duly authorized committee thereof (irrespective of the
accounting treatment thereof), and described in a resolution of the
Board of Directors or such committee.
b. "APTS" shall mean APTS V, L.L.C., a Delaware limited liability
company.
c. "Board of Directors" shall mean the board of directors of the
Corporation.
d. "Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are required by
law to close.
e. "Capital Stock" shall mean any and all shares, rights to purchase,
warrants, options, convertible securities, participations in or other
equivalents of or interests (other than security interests) in
(however designated and whether voting or nonvoting) corporate stock.
f. "Change in Control" shall mean the occurrence of any of the following
events:
i. Xxxxxx Xxxxxx has ceased to serve on a full-time basis as the
Chief Executive Officer of the Corporation for any reason;
ii. Xxxxxx Xxxxxx has ceased to own beneficially (within the meaning
of rule 13d-3 promulgated under the Exchange Act) at least
700,000 shares of Common Stock (as adjusted to reflect stock
dividends or distributions, subdivisions or reclassifications,
splits and combinations);
iii. any Person or group (within the meaning of section 13(d)(3) or
14(d)(2) of the Exchange Act) other than a group controlled by
Xxxxxx Xxxxxx or by APTS or any affiliate of Xxxxxx Xxxxxx or
APTS acquires beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 45% or more of the
number of shares of Common Stock or the combined voting power of
Voting Stock of the Corporation outstanding immediately prior to
such acquisition;
iv. individuals who, as of the Distribution Date, constitute the
Board of Directors and individuals nominated or elected to serve
on the Board of Directors by individuals described in this
section 2(f)(iv) cease for any reason to constitute at least a
majority of the Board of Directors; and
v. the Corporation consummates any merger or consolidation (other
than a Permitted Merger or Consolidation) of the Corporation with
or into any other entity, the sale of all or substantially all of
the assets of the Corporation, the reorganization, liquidation or
dissolution of the Corporation, or any similar transaction or
event.
g. "Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation and, in the case of a reclassification,
recapitalization or other similar change in such Common Stock or
in the case of a consolidation or merger of the Corporation with
or into another Person, such consideration to which a holder of a
share of Common Stock would have been entitled upon the
occurrence of such event.
h. "Common Stock Equivalents" shall mean, without double counting:
i. shares of Common Stock, where one share of Common Stock
shall constitute one Common Stock Equivalent;
ii. shares of Capital Stock convertible into Common Stock, where
any one share of Capital Stock shall constitute a number of
Common Stock Equivalents equal to the number of shares of
Common Stock issuable in respect of such share of Capital
Stock;
iii. any rights, warrants, options and convertible or exercisable
securities entitling the holder thereof to subscribe for or
purchase any shares of Common Stock, where any such rights,
warrants, options and convertible or exercisable securities
shall constitute a number of Common Stock Equivalents equal
to the number of shares of Common Stock issuable in respect
of such rights, warrants, options or convertible or
exercisable securities; and
iv. any stock appreciation rights entitling the holders thereof
to any interest in an increase in value, however measured,
of shares of Common Stock, where any such stock appreciation
rights shall constitute a number of Common Stock Equivalents
equal to the Common Stock equivalent, as nearly as it may be
calculated, of such stock appreciation rights.
i. "Corporation" shall mean Insignia /ESG Holdings, Inc., a Delaware
corporation.
j. "Distribution" shall mean the distribution by Insignia Financial
Group, Inc. to its stockholders of all of the then outstanding
shares of Common Stock of the Corporation.
k. "Distribution Date" shall mean the record date for the
Distribution.
l. "Effective Purchase Price per Share" at which the Corporation
issues any shares of Common Stock (or any rights, warrants,
options or convertible or exercisable securities entitling the
holders thereof to subscribe for or purchase any shares of Common
Stock or any stock appreciation rights entitling the holders
thereof to any interest in an increase in value, however
measured, of shares of Common Stock) shall mean an amount equal
to the ratio of:
i. the Aggregate Consideration Receivable by the Corporation in
connection with the issuance of such shares of Common Stock
(or any such rights, warrants, options, convertible or
exercisable securities or stock appreciation rights) to
ii. the number of shares of Common Stock so issued (or issuable
upon the exercise or conversion of such rights, warrants,
options or convertible or exercisable securities or the
Common Stock Equivalents, as nearly as it may be calculated,
of such stock appreciation rights).
m. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute.
n. "Excluded Transaction" shall mean any of the following
transactions:
i. the issuance of any shares of Capital Stock of the Corporation to
employees or directors of the Corporation under an employee
benefit plan or arrangement adopted by the Corporation, whether
or not referred to or described in the Form 10;
ii0 the issuance of Common Stock Equivalents in an amount not to
exceed 200,000 (as adjusted, as appropriate, to reflect any stock
dividends, distributions, subdivisions, reclassifications or
combinations of the Common Stock), provided that, within 10
Business Days following such issuance, the Corporation has
furnished to each Warrant Holder written notice of the fact that
the Corporation intends to treat such issuance as an Excluded
Transaction within the meaning of this clause (ii); and
iii0 any issuance of securities referred to or described in the Form
10.
o "Exercise Price per Share" of any Warrant shall mean:
i0 until adjusted in accordance with section 12 hereof, an amount
equal to $8.25 per share, and
ii0 thereafter, such other amount as may from time to time be
determined in accordance with the provisions of section 12
hereof.
p "Expiration Date" shall mean January 1, 1999.
q "Fair Market Value" of a share of Common Stock as of any date shall
mean, as of any date, the average of the closing prices of Common
Stock for the 20 consecutive Trading Days next preceding the date five
days prior to the date in question. The closing price for each day
shall be:
i0 the average of the closing sale price or, in the absence of a
closing sale price, the highest bid and lowest asked prices of
one share of Common Stock quoted in the NYSE Composite Tape or,
if not then listed on the NYSE, the NASDAQ National Market System
or any similar system of automated dissemination of quotations of
securities prices then in common use, if so quoted; or
ii0 if not quoted as described in clause (i), the average of the
highest bid and lowest offered quotations for Common Stock as
reported by the National Quotation Bureau Incorporated if at
least two securities dealers have inserted both bid and offered
quotations for Common Stock on at least five of the 20
consecutive Trading Days next preceding the date five days prior
to the date in question; or
iii0 if the Common Stock is listed or admitted for trading on any
national securities exchange, the last sale price, or the closing
bid price if no sale occurred, of Common Stock on the principal
securities exchange on which the Common Stock is listed or
admitted for trading.
If none of the conditions set forth above is met, the closing price of
Common Stock on any day or the average of such closing prices for any
period shall be the Fair Market Value of Common Stock for such day or
period as determined by a member firm of the NYSE selected by the
Corporation and approved by the Holders of a majority of the
outstanding Warrants. If the Corporation and such Holders are unable
to agree on the selection of a member firm, then the issue of
selection of a member firm shall be submitted to the American
Arbitration Association.
r "Form 10" shall mean the Registration Statement on Form 10 of the
Corporation with respect to the Common Stock in the form in which it
is declared effective by the Securities and Exchange Commission.
s "GAAP" shall mean those generally accepted accounting principles and
practices which are recognized as such by the American Institute of
Certified Public Accountants acting through its Accounting Principles
Board or by the Financial Accounting Standards Board or through other
appropriate boards or committees thereof and which are consistently
applied for all periods after the date hereof so as to properly
reflect the financial condition, results of operations and changes in
financial position of any Person, except that any accounting principle
or practice required to be changed by such Accounting Principles Board
or Financial Accounting Standards Board (or other appropriate board or
committee of such Boards) in order to continue as a generally accepted
accounting principle or practice may be so changed.
t "Merger Transaction" shall mean any business combination transaction
or series of transactions involving the Corporation, regardless of
whether such transactions take the form of a merger, purchase and sale
of securities, purchase or sale of assets or otherwise, immediately
prior to which, following which or in connection with which a Change
in Control occurs.
u "NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
v "NYSE" shall mean the New York Stock Exchange.
w "Permitted Merger or Consolidation" shall mean any merger or
consolidation of the Corporation:
i0 with or into any wholly owned Subsidiary; or
ii0 immediately after which Persons who were stockholders of the
Corporation prior to such merger or consolidation hold at least
80% of the outstanding shares of Capital Stock of the Corporation
measured by voting power.
x "Person" shall mean an individual, corporation, joint venture, general
or limited partnership, trust, unincorporated organization, limited
liability company, limited liability partnership, government or any
agency or political subdivision thereof, association, sole
proprietorship or any other form of entity not specifically listed
herein.
y "Qualifying Transaction" shall mean:
i0 any acquisition by the Corporation of stock or other assets of
any kind in exchange, in whole or in part, for shares of any
class of Capital Stock of the Corporation; and
ii0 any transaction in which shares of Capital Stock of the
Corporation are issued for cash proceeds;
provided, however, that the term "Qualifying Transaction" shall not
include a Merger Transaction.
z "Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute.
aa "Subsidiary" shall mean:
i0 any corporation 50% or more of the Voting Stock of which is
owned, directly or indirectly, by the Corporation; or
ii0 any other Person whose accounts are required under GAAP to be
included in the Corporation's consolidated financial statements,
but shall exclude limited partnerships.
bb "Trading Day" shall mean, with respect to the Common Stock: (i) if the
Common Stock is quoted on the NYSE, the NASDAQ National Market System,
any similar system of automated dissemination of quotations of
securities prices, or the National Quotation Bureau Incorporated, each
day on which quotations may be made on such system; or (ii) if the
Common Stock is listed or admitted for trading on any national
securities exchange, days on which such national securities exchange
is open for business; or (iii)~if shares of the Corporation's Common
Stock are not quoted on any system or listed or admitted for trading
on any securities exchange, a Business Day.
cc "Voting Stock" shall mean, with respect to any Person, all classes of
Capital Stock of such Person then outstanding and normally entitled to
vote for the election of directors of such Person. Any reference to a
percentage of Voting Stock shall refer to the percentage of votes
eligible to be cast for the election of directors which are
attributable to the applicable shares of Voting Stock.
dd "Warrant Agreement" shall mean this warrant agreement.
ee "Warrant Certificate" shall mean a certificate evidencing one or more
Warrants, substantially in the form of Exhibit~A hereto.
ff "Warrant Holder" shall mean APTS, as the original registered holder of
the Warrants, and any registered transferee of a Warrant Holder.
gg "Warrant Office" shall mean the office or agency of the Corporation at
which the Warrant Register shall be maintained and where the Warrants
may be presented for exercise, exchange, substitution and transfer,
which office or agency will be the office of the Corporation at 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, which office or agency may be
changed by the Corporation pursuant to notice in writing to the
Persons named in the Warrant Register as the holders of the Warrants.
hh "Warrant Register" shall mean the register, substantially maintained
by the Corporation at the Warrant Office.
ii "Warrant Shares" shall mean the shares of Common Stock issued or
issuable upon exercise of the Warrants, as the same may be adjusted
from time to time pursuant to section 12 hereof, and any other shares
of Capital Stock issued or issuable upon the exercise of the Warrants
pursuant to section 12 hereof.
jj "Warrants" shall mean the warrants to purchase Common Stock issued by
the Corporation pursuant to this Warrant Agreement; individually, a
"Warrant."
2 Representations and Warranties. The Corporation hereby represents and
warrants as follows:
a The Corporation is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to conduct its business as presently
conducted, has the corporate power and authority to execute and
deliver this Warrant Agreement and the Warrant Certificates, to issue
the Warrants and to perform its obligations under this Warrant
Agreement and the Warrant Certificates.
b The execution, delivery and performance by the Corporation of this
Warrant Agreement and the Warrant Certificates, the issuance of the
Warrants, and the issuance of the Warrant Shares upon exercise of the
Warrants have been duly authorized by all necessary corporate action.
c This Warrant Agreement has been duly executed and delivered by the
Corporation and constitutes a legal, valid, binding and enforceable
obligation of the Corporation. When the Warrants and Warrant
Certificates have been issued as contemplated hereby the Warrants and
the Warrant Certificates will constitute legal, valid, binding and
enforceable obligations of the Corporation. The Warrant Shares, when
issued upon exercise of the Warrants in accordance with the terms
hereof, will be duly authorized, validly issued, fully paid and
nonassessable shares of the Common Stock or, in the event of an
adjustment pursuant to section 12, other shares of Capital Stock.
Statements in this section 2(c) as to validity, binding effect and
enforceability are subject to (i) limitations as to enforceability
imposed by bankruptcy, reorganization, moratorium, insolvency and
other laws of general application relating to or affecting the
enforceability of creditors' rights, including, without limitation,
limitations as to enforceability that may be imposed under Xxxxxxx 000
xx xxx Xxxxxx Xxxxxx Bankruptcy Code, Article 10 of the New York
Debtor Creditor Law or other provisions of law relating to fraudulent
transfers and obligations and (ii) equitable principles limiting the
availability of equitable remedies.
3 Number of Warrants. The Corporation hereby agrees to issue and deliver to
APTS on the Distribution Date Warrant Certificates evidencing 51,944
Warrants.
4 Registration, Transfer and Exchange of Certificates.
a The Corporation shall maintain at the Warrant Office the Warrant
Register for registration of the Warrants and Warrant Certificates and
transfers thereof. On the Distribution Date the Corporation shall
register the Warrants and Warrant Certificates in the Warrant Register
in the name of the Warrant Holder. The Corporation may deem and treat
the registered holders of the Warrant Certificates as the absolute
owners thereof and the Warrants represented thereby (notwithstanding
any notation of ownership or other writing on the Warrant Certificates
made by any person) for the purpose of any exercise thereof or any
distribution to the Warrant Holders thereof, and for all other
purposes, and the Corporation shall not be affected by any notice to
the contrary.
b Subject to section 14 hereof, the Corporation shall register the
transfer of any outstanding Warrants in the Warrant Register upon
surrender of the Warrant Certificates evidencing such Warrants to the
Corporation at the Warrant Office, accompanied (if so required by it)
by a written instrument or instruments of transfer in form
satisfactory to it, duly executed by the registered holder or holders
thereof or by the duly appointed legal representative thereof. Upon
any such registration of transfer, new Warrant Certificates evidencing
such transferred Warrants shall be issued to the transferee and the
surrendered Warrant Certificates shall be cancelled. If less than all
the Warrants evidenced by Warrant Certificates surrendered for
transfer are to be transferred, new Warrant Certificates shall be
issued to the holder surrendering such Warrant Certificates evidencing
such remaining number of Warrants.
c Warrant Certificates may be exchanged at the option of the holders
thereof when surrendered to the Corporation at the Warrant Office, for
another Warrant Certificate or other Warrant Certificates of like
tenor and representing in the aggregate a like number of Warrants.
Warrant Certificates surrendered for exchange shall be cancelled.
d No charge shall be made for any such transfer or exchange except for
any tax or other governmental charge imposed in connection therewith.
Except as provided in section 14(b) hereof, each Warrant Certificate
issued upon transfer or exchange shall bear the legend set forth in
section 14(b) hereof if the Warrant Certificate presented for transfer
or exchange bore such legend.
5 Mutilated or Missing Warrant Certificates. If any Warrant Certificate shall
be mutilated, lost, stolen or destroyed, the Corporation shall issue, in
exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon
receipt of evidence satisfactory to the Corporation of such loss, theft or
destruction of such Warrant Certificate and, if requested, indemnity
satisfactory to it. The Corporation acknowledges that a written indemnity
by the Warrant Holder shall be satisfactory to the Corporation for such
purpose. No service charge shall be made for any such substitution, but all
expenses and reasonable charges associated with procuring such indemnity
and all stamp, tax and other governmental duties that may be imposed in
relation thereto shall be borne by the holder of such Warrant Certificate.
Each Warrant Certificate issued in any such substitution shall bear the
legend set forth in section 14(b) hereof if the Warrant Certificate for
which such substitution was made bore such legend.
6 Duration and Exercise of Warrants.
a The Warrants evidenced by a Warrant Certificate shall be exercisable
in whole or in part by the registered holder thereof on any Business
Day after the Distribution Date and on or before 5:00 PM, New York
City time, on the Expiration Date.
b Upon presentation to the Corporation at the Warrant Office of the
Warrant Certificate evidencing the Warrants to be exercised, with the
form of election to purchase attached thereto duly completed, signed
by the Warrant Holder, and upon payment of an amount equal to the
product of:
i0 the Exercise Price per Share; and
ii0 the number of Warrant Shares being purchased,
in lawful money of the United States of America, the Corporation shall
issue and cause to be delivered to or upon the written order of the
registered holders of such Warrants and in such name or names as such
registered holder may designate, a certificate for the Warrant Share
or Warrant Shares issued upon such exercise of the Warrants being
exercised. Any Persons so designated to be named therein shall be
deemed to have become Warrant Holders of record of such Warrant Share
or Warrant Shares as of the date of exercise of such Warrants.
Any Persons so designated to be named therein shall be deemed to have
become holders of record of such Warrant Share or Warrant Shares as of
the date of exercise of such Warrants.
c If less than all of the Warrants evidenced by a Warrant Certificate
are exercised at any time, a new Warrant Certificate or Certificates
shall be issued for the remaining number of Warrants evidenced by such
Warrant Certificate. Each new Warrant Certificate so issued shall bear
the legend set forth in section 14(b) hereof if the Warrant
Certificate presented in connection with partial exercise thereof bore
such legend. All Warrant Certificates surrendered upon exercise of
Warrants shall be cancelled.
7 No Fractional Shares. The Corporation shall not be required to issue
fractional Warrant Shares upon exercise of the Warrants but shall pay for
any such fraction of a share an amount in cash equal to such fraction of
the Fair Market Value of a share of Common Stock.
8 Payment of Taxes. The Corporation will pay all taxes attributable to the
initial issuance of Warrant Shares to a Warrant Holder upon the exercise of
his Warrants, provided that the Corporation shall not be required to pay
any income tax incurred by the Warrant Holder or the holder of the Warrant
Shares upon exercise of the Warrants or issuance of the Warrant Shares.
9 Stockholder Rights.
a Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof
the right to vote or to consent or to receive notice as a stockholder
in respect of the meetings of stockholders or the election of
directors of the Corporation or any other matter, or any rights
whatsoever as a stockholder of the Corporation.
b Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as imposing any obligation on the
registered holders thereof to purchase any securities or as imposing
any liabilities on such Warrant Holders as stockholders of the
Corporation, whether such obligation or liabilities are asserted by
the Corporation or by creditors of the Corporation.
10 Reservation and Issuance of Warrant Shares.
a The Corporation will at all times have authorized, and reserve and
keep available, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon the exercise of the Warrants,
the number of shares of Common Stock deliverable upon exercise of all
outstanding Warrants.
b The Corporation will take any corporate action which may be necessary
in order that the Corporation may validly and legally issue fully paid
and nonassessable Warrant Shares at the Exercise Price per Share.
c The Corporation covenants that all Warrant Shares will, upon issuance
to the Warrant Holder in accordance with the terms of this Warrant
Agreement and the Corporation's certificate of incorporation, be fully
paid and nonassessable and free from all taxes with respect to the
issuance thereof and from all liens, charges and security interests
(other than any created by or on behalf of any Warrant Holder).
11 Obtaining of Governmental Approvals and Stock Exchange Listings. The
Corporation will, at its own expense, from time to time take all action
which may be necessary to obtain and keep effective any and all permits,
consents, orders and approvals of governmental agencies and authorities
which are or become requisite in connection with the issuance, sale,
transfer and delivery of the Warrant Certificates and the exercise of the
Warrants and the issuance, sale, transfer and delivery of the Warrant
Shares, and all action which may be necessary so that any Common Stock,
immediately upon its issuance upon the exercise of Warrants, will be listed
on each securities exchange or listing or quotation service, if any, on
which the Common Stock is then listed.
12 Adjustment of Exercise Price per Share and number of Warrant Shares
issuable on exercise of Warrants.
a Prior to the Expiration Date, the Exercise Price per Share, and in
some cases the number of Warrant Shares issuable upon exercise of each
Warrant, are subject to adjustment from time to time in the manner
provided in this section 12 upon the occurrence of any of the events
enumerated in this section~12.
b In the event that the Corporation shall at any time after the
Distribution Date:
i0 declare a dividend or make a distribution on any series of its
Common Stock in shares of any series of its Common Stock;
ii0 subdivide or reclassify shares of any series of its outstanding
Common Stock into a greater number of shares;
iii0 combine shares of any series of its outstanding Common Stock into
a smaller number of shares;
iv0 pay a dividend or make a distribution on any series of its Common
Stock in shares of any series of its Capital Stock other than
Common Stock; or
v0 issue by reclassification of any series of its Common Stock
shares of any series of its Capital Stock;
then each Warrant outstanding on the record date for such dividend or
distribution or on the effective date of such subdivision,
reclassification or combination shall thereafter entitle the holder
thereof to receive the aggregate number and kind of shares, other
securities and property which, if such Warrant had been exercised
immediately prior to such time, such holder would have owned or have
become entitled to receive by virtue of such dividend, distribution,
subdivision, reclassification or combination and, if after such
dividend, distribution, subdivision, reclassification or combination
the Warrants continue to represent the right to purchase only shares
of Common Stock (and not other securities or property), the Exercise
Price per Share shall be adjusted to be an amount equal to the product
of:
(x) the Exercise Price per Share in effect immediately prior to such
dividend, distribution, subdivision, reclassification or combination
and
(y) the ratio of:
(1) the number of shares of Common Stock issuable on exercise of a
single Warrant immediately before giving effect to the dividend,
distribution, subdivision, reclassification or combination and
(2) the number of shares of Common Stock issuable on exercise of a
single Warrant immediately after giving effect to such dividend,
distribution, subdivision, reclassification or combination.
If after such dividend, distribution, subdivision, reclassification or
combination the Warrants represent the right to purchase securities
other than shares of Common Stock or other property, the Exercise
Price per Share shall be adjusted equitably. An adjustment made
pursuant to this section 12(b) shall become effective immediately
after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the
case of subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall
occur.
c
i0 "Full-ratchet" Anti-dilution Adjustment. In the event that the
Corporation shall at any time after the Distribution Date issue
any shares of Common Stock (or any rights, warrants, options or
convertible or exercisable securities entitling the holders
thereof to subscribe for or purchase any shares of Common Stock,
or any stock appreciation rights entitling the holders thereof to
any interest in an increase in value, however measured, of shares
of Common Stock) other than in a Qualifying Transaction and other
than in an Excluded Transaction, at an Effective Purchase Price
per Share less than the Exercise Price per Share in effect
immediately prior to such issuance, then:
(1) the Exercise Price per Share shall be adjusted to be an amount
equal to such Effective Price per Share and
(2) no adjustment shall be made as a result of such issuance in the
number of Warrant Shares issuable on exercise of the Warrants.
For example, if on any given date the Corporation issues (other than
in a Qualifying Transaction and other than in an Excluded Transaction)
warrants exercisable at $3.00 per share to purchase shares of Common
Stock for a purchase price of $5.00 per warrant and the Exercise Price
per Share in effect immediately prior to such issuance is $8.25 per
share, then the Exercise Price per Share will be adjusted to $8.00 per
share and no adjustment will be made in the number of Warrant Shares
issuable upon exercise of a Warrant.
ii0 "Proportional" Anti-dilution Adjustment. In the event that the
Corporation shall at any time after the Distribution Date issue any
shares of Common Stock (or any rights, warrants, options or
convertible or exercisable securities entitling the holders thereof to
subscribe for or purchase any shares of Common Stock, or any stock
appreciation rights entitling the holders thereof to any interest in
an increase in value, however measured, of shares of Common Stock) in
a Qualifying Transaction or in an Excluded Transaction described in
clause (i) or (ii) of the definition of that term, at an Effective
Purchase Price per Share less than the Exercise Price per Share in
effect immediately prior to such issuance, then:
(1) the Exercise Price per Share shall be adjusted to be an amount
equal to the ratio of:
(a) the sum of:
(i) the product of:
1 the number of shares of Common Stock
outstanding immediately prior to such issuance and
2 the Exercise Price per Share in effect
immediately prior to such issuance and
(ii) the Aggregate Consideration Receivable by the
Corporation in connection with such issuance, to
(b) the sum of:
(i) the number of shares of Common Stock outstanding
immediately prior to such issuance and
(ii) the number of additional shares of Common Stock to be
so issued (including the number of shares underlying
such rights, warrants, options or convertible or
exercisable securities); and
(2) no adjustment shall be made as a result of such issuance in the
number of Warrant Shares issuable on exercise of the Warrants.
For example, if on any given date the Corporation has 10,000,000
shares of Common Stock outstanding, the Corporation issues (in a
Qualifying Transaction or in an Excluded Transaction described in
clause (i) or (ii) of the definition of that term) warrants
exercisable at $3.00 per share to purchase an additional
1,000,000 shares of Common Stock for a purchase price of $5.00
per warrant and the Exercise Price per Share in effect
immediately prior to such issuance is $8.25 per share, then the
Exercise Price per Share shall be adjusted to $8.227 per share
(calculated as follows: $8.227 per share = [(10,000,000 shares x
$8.25 per share) + $8,000,000] / (10,000,000 shares + 1,000,000
shares), and no adjustment will be made in the number of Warrant
Shares issuable upon exercise of a Warrant.
d No change in either the Exercise Price per Share or the number of
Warrant Shares issuable upon exercise of the Warrants shall occur
solely as the result of the issuance by the Corporation at any time
after the Distribution Date of any shares of Common Stock (or any
rights, warrants, options or convertible or exercisable securities
entitling the holders thereof to subscribe for or purchase any shares
of Common Stock or any stock appreciation rights entitling the holders
thereof to any interest in an increase in value, however measured, of
shares of Common Stock) in an Excluded Transaction described in clause
(iii) of the definition of that term.
e In case all or any portion of the consideration to be received by the
Corporation may be paid in a form other than cash, the value of such
consideration shall be determined in good faith by the Board of
Directors or a duly authorized committee thereof (irrespective of the
accounting treatment thereof), and described in a resolution of the
Board of Directors or such committee. An adjustment made pursuant to
section 12(c) hereof shall become effective immediately upon the
effective date of the issuance resulting in such adjustment. Such
adjustment shall be made successively whenever any shares, rights,
warrants, options or convertible or exercisable securities are so
issued at an Effective Purchase Price per Share that is less than the
Exercise Price per Share in effect on the date of such issuance. To
the extent that any such rights, warrants, options or convertible or
exercisable securities or stock appreciation rights expire without
having been converted or exercised, each Warrant outstanding shall, as
of the date of such expiration, have the same Exercise Price per Share
as would have been the case had such expired rights, warrants,
options, convertible or exercisable securities or stock appreciation
rights not been issued, but such readjustment shall not affect the
Exercise Price per Share paid for any shares of Common Stock or other
shares of Capital Stock delivered upon any exercise prior to the date
such readjustment is made.
f In the event that the Corporation shall distribute to all holders of
its Common Stock any of its assets or debt securities, or rights,
options, warrants or convertible or exercisable securities of the
Corporation (including securities for cash, but excluding:
i0 distributions of Capital Stock referred to in section 12(b)
hereof,
ii0 distributions of rights, warrants, options, convertible or
exercisable securities or stock appreciation rights referred to
in section 12(c) hereof, if the decrease in the Exercise Price
per Share under section 12(c) hereof would be greater than the
decrease in the Exercise Price per Share under this section 12(f)
(with section 12(c) applying rather than this section 12(f)), and
iii0 cash dividends or other cash distributions that are paid out of
Consolidated Net Income for any dividend period, earned surplus
or retained earnings,
then in each such case:
(1) the Exercise Price per Share shall be adjusted to be an
amount equal to the difference between:
(a) the Exercise Price per Share in effect immediately
prior to such issuance and
(b) an amount equal to the then fair market value (as
reasonably determined by the Board of Directors, in
good faith and as described in a resolution of the
Board of Directors) of the portion of the assets or
debt securities of the Corporation so distributed or of
such rights, options, warrants or convertible or
exercisable securities applicable to one share of
Common Stock, and
(2) no adjustment shall be made in any such case in the number
of Warrant Shares issuable on exercise of the Warrants.
Such adjustment shall become effective immediately after the record
date for the determination of shares entitled to receive such
distribution. Notwithstanding the foregoing, no such adjustment shall
be made upon any such distribution if the plan or arrangement under
which such distribution is made provides for a distribution to holders
of Warrant Shares in the same pro rata amounts upon exercise of the
Warrants. Such adjustment shall be made successively whenever any
event listed above shall occur.
g If at any time, as a result of an adjustment made pursuant to this
section 12, the holder of any Warrant thereafter exercised shall
become entitled to receive any shares of the Corporation other than
shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares
contained in this section 12, and the provisions of this Warrant
Agreement with respect to the Warrant Shares shall apply on like terms
to such other shares.
h If any of the following events occur, namely:
i0 any reclassification or change of Warrant Shares (other than a
change in par value, or from par value to no par value, or from
no par value to par value, or as a result of subdivision or
combination);
ii0 any consolidation or merger of the Corporation with another
Person shall be effected as a result of which holders of Warrant
Shares shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in
exchange for Warrant Shares; or
iii0 any sale or conveyance of the properties and assets of the
Corporation as, or substantially as, an entirety to any other
Person;
then the Corporation or such successor or purchasing Person, as the
case may be, shall make provisions to establish that each Warrant then
outstanding shall be exercisable for the kind and amount of shares of
stock and other securities or property or assets (including cash)
receivable upon the occurrence of such event by a holder of Warrant
Shares immediately prior to such event. The Corporation shall not
consummate any such event unless, prior to or simultaneously with such
consummation, the successor Person (if other than the Corporation)
resulting from such consolidation or merger or the Person purchasing
such properties and assets shall assume by written instrument, the
obligation to deliver to each Warrant Holder the shares of stock,
securities or assets to which, in accordance with the foregoing
provisions, such holder may be entitled and all other obligations of
the Corporation under this Warrant Agreement. The provisions of this
section 12(h) shall similarly apply to successive reclassifications,
consolidations, mergers, sales and conveyances.
i Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrant, Warrant Certificates
theretofore or thereafter issued may continue to express the same
number and kind of shares as are stated on the Warrant Certificates
initially issuable pursuant to this Warrant Agreement.
j Anything in this section 12 to the contrary notwithstanding, the
Corporation shall be entitled to make such decreases in the Exercise
Price per Share and such increases in the number of Warrant Shares
issuable upon the exercise of each Warrant, in addition to those
adjustments required by this section 12, as it in its sole discretion
shall determine to be advisable in order that any dividends,
distributions or, issuances of securities, rights, options, warrants
or convertible or exchangeable securities made by the Corporation to
its stockholders shall not be taxable to them.
13 Notices to Holders.
a Upon any adjustment pursuant to section 12 hereof in the Exercise
Price per Share or in the number of Warrant Shares issuable upon
exercise of a Warrant, the Corporation shall promptly but in any event
within 30 days thereafter, cause to be given to each of the Warrant
Holders, at its address appearing on the Warrant Register by
registered mail, postage prepaid, return receipt requested, a
certificate signed by its chairman, president or chief financial
officer setting forth the Exercise Price per Share and the number of
Warrant Shares purchasable upon exercise of a Warrant as so adjusted
and describing in reasonable detail the facts accounting for such
adjustment and the method of calculation used. When appropriate, such
certificate may be given in advance and included as a part of the
notice required to be mailed under the other provisions of this
section 13.
b In the event:
i0 that the Corporation shall authorize the issuance to all holders
of Common Stock of rights or warrants to subscribe for or
purchase Capital Stock of the Corporation or of any other
subscription rights or warrants;
ii0 that the Corporation shall authorize the distribution to all
holders of Common Stock of evidences of its indebtedness or
assets (including, without limitation, cash dividends or cash
distributions payable out of consolidated earnings or earned
surplus or dividends payable in Common Stock);
iii0 of any consolidation or merger to which the Corporation is a
party and for which approval of any stockholders of the
Corporation is required, or of the conveyance or transfer of the
properties and assets of the Corporation substantially as an
entirety, or of any capital reorganization or reclassification or
change of the Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination);
iv0 of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation; or
iv0 that the Corporation proposes to take any other action which
would require an adjustment in the Exercise Price per Share or in
the number of Warrant Shares or other securities or assets to
which each holder is entitled pursuant to section 12 hereof;
then the Corporation shall cause to be given to each of the Warrant
Holders at its address appearing on the Warrant Register, at least 30
calendar days prior to the applicable record date, if any, hereinafter
specified, or, if no such record date is specified, 30 calendar days
prior to the taking of any action referred to in clauses (i) through
(v) above (except that, if the action taken by the Corporation is an
issuance described in section 12(c)(i) or (ii) hereof, then as
promptly as possible but in no event later than the date that the
Corporation provides public notice of such issuance), by registered
mail, postage prepaid, return receipt requested, a written notice
stating (i) the date as of which the holders of record of Common Stock
to be entitled to receive any such rights, warrants or distribution
are to be determined, or (ii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective, or (iii) the date as of
which any such other action is to be effected, and, if applicable and
known to the Corporation, the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up; provided, however, that in the
event that the Corporation provides public notice of such proposed
action or event specifying the information set forth above at least 10
days prior to the proposed record date or effective date, then the
Corporation shall be deemed to have satisfied its obligation to
provide notice pursuant to this section 13(b). The failure to give the
notice required by this section 13 or any defect therein shall not
affect the legality or validity of any distribution, right, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up or other action referred to above, or the vote upon any
such action.
c The Corporation shall promptly, but in any event no less than 30 days
prior to the effective date of any Change in Control, cause to be
given to each of the registered holders of the Warrants, at its
address appearing on the Warrant Register by registered mail, postage
prepaid, return receipt requested, written notice of the pendency of
such Change in Control.
14 Restrictions on Transfer; Subsequent Transferees as Third Party
Beneficiaries.
a The Warrant Holder (i)~represents that it is acquiring the Warrants
for its own account for investment and not with a view to any
distribution or public offering within the meaning of the Securities
Act, (ii)~acknowledges that the Warrants and the Warrant Shares
issuable upon exercise thereof have not been registered under the
Securities Act or any state securities laws and (iii)~agrees that it
will not sell or otherwise transfer any of its Warrants or Warrant
Shares except upon the terms and conditions specified herein, provided
that the Warrant Holders may sell the Warrants or the Warrant Shares
purchased upon exercise of the Warrants in one or more private
transactions not requiring registration under the Securities Act.
b Except as otherwise provided in section~14(d) hereof, each Warrant
Certificate and each certificate for the Warrant Shares issued to a
Warrant Holder shall include a legend in substantially the following
form (with such changes therein as may be appropriate to reflect
whether such legend refers to Warrants or Warrant Shares), provided
that such legend shall not be required if such transfer is being made
in connection with a sale which is exempt from registration pursuant
to Rule~144 under the Securities Act or if the opinion of counsel
referred to in section~14(c) hereof is to the further effect that
neither such legend nor the restrictions on transfer in this
section~14 are required in order to ensure compliance with the
Securities Act:
THE [WARRANTS, AND THE SHARES ISSUABLE ON EXERCISE OF THE WARRANTS,]
[SHARES] REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES
LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAWS.
c Each Warrant Holder wishing to effect such a transfer of any Warrant
or Warrant Shares shall furnish to the Corporation an agreement by the
transferee thereof that it is taking and holding the same subject to
the terms and conditions specified herein and a written opinion of
such Warrant Holder's counsel, in form reasonably satisfactory to the
Corporation, to the effect that the proposed transfer may be effected
without registration under the Securities Act and any applicable state
securities laws.
d The restrictions set forth in this section~14 shall terminate and
cease to be effective with respect to any Warrants or Warrant Shares
registered under the Securities Act or receipt by the Corporation of
an opinion of counsel, in form reasonably satisfactory to the
Corporation, to the effect that compliance with such restrictions is
not necessary in order to comply with the Securities Act and any
applicable state securities laws with respect to the transfer of the
Warrants and/or the Warrant Shares. Whenever such restrictions shall
so terminate the holder of such Warrants and/or Warrant Shares shall
be entitled to receive from the Corporation, without expense (other
than transfer taxes, if any), Warrant Certificates or certificates for
such Warrant Shares not bearing the legend set forth in section~14(b)
hereof and the Corporation will rescind any transfer restrictions
relating thereto.
e It is the intention of the parties hereto that each Warrant Holder who
acquires Warrants by transfer be a third party beneficiary, to the
extent of Warrants acquired and held by such Warrant Holder, of the
provisions of this Warrant Agreement that bestow rights on Warrant
Holders.
15 Covenants. Holdings covenants to include in any filings made with any
taxing authority the issuance of these warrants as being pursuant to the
plan of reorganization (with respect to the distribution of the Corporation
by IFG).
16 Amendments and Waivers. Any provision of this Warrant Agreement may be
amended, supplemented, waived, discharged or terminated by a written
instrument signed by the Corporation and the holders of not less than a
majority of the outstanding Warrants, provided that the Exercise Price per
Share may not be increased by amendment, the number of Warrant Shares
issuable upon exercise of the Warrants may not be reduced by amendment and
this section~15 may not be changed by amendment except with the unanimous
consent of the holders of outstanding Warrants.
17 Specific Performance. The holders of the Warrants shall have the right to
specific performance by the Corporation of the provisions of this Warrant
Agreement. The Corporation hereby irrevocably waives, to the extent that it
may do so under applicable law, any defense based on the adequacy of a
remedy at law which may be asserted as a bar to the remedy of specific
performance in any action brought against the Corporation for specific
performance of this Warrant Agreement by the holders of the Warrants.
18 Notices.
a Any notice or demand to be given or made by the Warrant Holders or the
holders of Warrant Shares to or on the Corporation pursuant to this
Warrant Agreement shall be sufficiently given or made if sent by
registered mail, return receipt requested, postage prepaid, addressed
to the Corporation at the Warrant Office.
b Any notice to be given by the Corporation to the Warrant Holders or
the holders of Warrant Shares shall be sufficiently given or made if
sent by registered mail, return receipt requested, postage prepaid,
addressed to such holder as such holder's name and address shall
appear on the Warrant Register or the Common Stock registry of the
Corporation, as the case may be.
19 Binding Effect. This Warrant Agreement shall be binding upon and inure to
the sole and exclusive benefit of the Corporation and the Warrant Holder,
and their respective successors and assigns.
20 Continued Validity. A holder of Warrant Shares shall continue to be
entitled with respect to such Warrant Shares to all rights and subject to
all obligations to which it would have been entitled or subject as a holder
under sections~14 through 22 hereof.
21 Counterparts. This Warrant Agreement may be executed in one or more
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
22 New York Law. THIS WARRANT AGREEMENT AND EACH WARRANT CERTIFICATE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
23 Benefits of This Agreement. Nothing in this Warrant Agreement shall be
construed to give any Person other than the Corporation and the Warrant
Holder any legal or equitable right, remedy or claim under this Warrant
Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Warrant Agreement to
be duly executed and delivered by their proper and duly authorized officers, as
of the date and year first above written.
INSIGNIA/ESG HOLDINGS, INC.
By:/s/ Xxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
APTS V, L.L.C.
By: APTS Partners, L.P., the managing member
By: APTS GP Partners, L.P., its general partner
By: APTS Acquisition Corporation, its general partner
By:/s/ Xxxx X. X. Xxxxxxxxx
---------------------------
Name: Xxxx X. X. Xxxxxxxxx
Title: Vice President
EXHIBIT A
FORM OF WARRANT CERTIFICATE
THE WARRANTS, AND THE SHARES ISSUABLE ON EXERCISE OF THE WARRANTS, REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAWS.
EXERCISABLE ONLY ON OR BEFORE
JANUARY 1, 1999
[Date] Warrant Certificate Warrant No. [ ]
This Warrant Certificate is one of the Warrant Certificates referred to in
the Warrant Agreement dated as of September 15, 1998 (the "Warrant Agreement")
between the Corporation and APTS V, L.L.C., a Delaware limited liability
company. The Warrant Agreement is hereby incorporated by reference in and made a
part of this instrument and is hereby referred to for a description of the
rights, limitations, obligations, duties and immunities thereunder of the
Corporation and the holders of Warrants. Terms defined in the Warrant Agreement
and used herein have the same meanings herein as therein.
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of _____ Warrants to purchase shares of Common Stock of
INSIGNIA/ESG HOLDINGS, INC., a Delaware corporation (the "Corporation"). Each
Warrant entitles the holder, but only subject to the conditions set forth herein
and in the Warrant Agreement, to purchase from the Corporation before 5:00~PM,
New York City time, on the Expiration Date, one fully paid and nonassessable
share of Common Stock (subject to adjustment as described below) at a price
equal to the Exercise Price per Share.
The Exercise Price per Share shall be payable in lawful money of the United
States of America. The Warrants represented by this certificate may be exercised
by surrender of this Warrant Certificate, along with an executed copy of the
annexed Form of Election to Purchase and payment of the applicable Exercise
Price at the office of the Corporation at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or such other address as the Corporation may specify in writing to the
registered holder of the Warrants evidenced hereby. The Exercise Price per Share
and the number of shares of Common Stock purchasable upon exercise of the
Warrants is subject to adjustment prior to the Expiration Date as set forth in
the Warrant Agreement.
No Warrant may be exercised after 5:00~PM, New York City time, on the
Expiration Date and (except as otherwise provided in the Warrant Agreement) all
rights of the registered holders of the Warrants shall cease after 5:00~PM, New
York City time, on the Expiration Date.
The Corporation may deem and treat the registered holders of the Warrants
evidenced hereby as the absolute owners thereof (notwithstanding any notation of
ownership or other writing hereon made by anyone) for the purpose of any
exercise hereof and of any distribution to the holders hereof and for all other
purposes, and the Corporation shall not be affected by any notice to the
contrary.
This Warrant Certificate, when surrendered at the Warrant Office by the
registered holder hereof in person or by a legal representative duly authorized
in writing, may be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any service charge,
for another Warrant Certificate or Warrant Certificates of like tenor registered
in the name of the holder and representing in the aggregate a like number of
Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate at the Warrant Office, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued in exchange for this Warrant Certificate to the
transferee(s) and, if less than all the Warrants evidenced hereby are to be
transferred, to the registered holder hereof, subject to the limitations
provided in the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to
be signed by its duly authorized officers and has caused its corporate seal to
be affixed hereunto.
INSIGNIA/ ESG HOLDINGS, INC.
By:__________________________
Name:
Title:
(CORPORATE SEAL)
ATTEST
____________________________
Secretary
ANNEX TO FORM OF WARRANT CERTIFICATE
FORM OF ELECTION TO PURCHASE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise, in accordance with
section 6(b) of the Warrant Agreement, Warrants, representing the right to
purchase shares of Common Stock, and herewith tenders payment for such shares of
Common Stock to the order of the Corporation in the amount of $ as payment of
the exercise price in accordance with the terms hereof.
The undersigned requests that a certificate for such shares of Common Stock
be registered in the name of whose address is and that such certificate be
delivered to whose address is . If said number of shares of Common Stock is less
than all of the shares of Common Stock purchasable hereunder, the undersigned
hereby requests that a new Warrant Certificate representing the remaining
balance of the Warrants be registered in the name of whose address is and that
such Warrant Certificate be delivered to whose address is .
Signature:
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date:
