THIS WARRANT AND THE CLASS A SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAW, AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THEY HAVE BEEN
REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THIS WARRANT AND THE CLASS A SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
ARE SUBJECT TO CERTAIN RESTRICTIONS AGAINST TRANSFER CONTAINED IN THIS
CERTIFICATE, THE INVESTOR RIGHTS AGREEMENT TO WHICH THE WARRANTHOLDER IS A PARTY
AND THE ISSUER'S DECLARATION OF TRUST, AS IN EFFECT FROM TIME TO TIME. A COPY OF
SAID INVESTOR RIGHTS AGREEMENT AND DECLARATION OF TRUST IS AVAILABLE FOR
INSPECTION, WITHOUT CHARGE, AT THE OFFICES OF THE ISSUER.
December 15, 1998
WARRANT CERTIFICATE TO PURCHASE
CLASS A SHARES OF
STARWOOD FINANCIAL TRUST
This Warrant Certificate (the "Warrant Certificate") is to certify that
______________ and its permitted assignees (the "Warrantholder") is entitled, at
any time on or after the first anniversary of the Original Issue Date (as
defined in Section 5.1) but prior to the Expiration Date, to purchase, at the
Exercise Price (as hereinafter defined), _________ Class A Shares (the "Initial
Exercise Amount") of Starwood Financial Trust (the "Company"). Unless earlier
exercised in full and subject to the conditions set forth herein, this warrant
shall expire at 5:00 P.M., New York City time, on December 15, 2005 (the
"Expiration Date").
1. Exercise of Warrant.
1.1 This Warrant Certificate is exercisable by the
Warrantholder at the Exercise Price per Class A Share issuable hereunder,
payable in cash, by certified or official bank check. In lieu of payment of the
Exercise Price as provided above, the Warrantholder may elect a cashless net
exercise; provided that with regard to transactions pursuant to Section 4 or
Section 11.4 of the Investor Rights Agreement, dated the date hereof, among the
Company, Starwood Mezzanine Investors, L.P., SOFI-IV SMT Holdings, L.L.C., B
Holdings, L.L.C., the Warrantholder, Lazard Freres Real Estate Fund II L.P.,
Lazard Freres Real Estate Offshore Fund II L.P. and LF Mortgage REIT (the
"Investor Rights Agreement"), the cashless net exercise method may not be used.
In the
case of such cashless net exercise, the Warrantholder shall surrender this
Warrant Certificate for cancellation and receive in exchange therefor (i) the
full number of duly authorized, validly issued, fully paid and nonassessable
Class A Shares specified, subject to adjustment in accordance with Section 5,
less (ii) the number of Class A Shares with an aggregate Fair Market Value (as
defined below) as of the Business Day (as defined below) on which the
Warrantholder surrenders this Warrant to the Company (the "Exercise Date") equal
to the aggregate Exercise Price that would have been payable upon such exercise
absent election of the cashless net exercise alternative. Upon surrender of this
Warrant Certificate with the Subscription Form (attached hereto) duly completed
and executed, together with any required payment of the Exercise Price for the
Class A Shares being purchased, at the Company's principal executive offices
presently located at 1114 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, the Warrantholder shall be entitled to receive a certificate or
certificates for the Class A Shares so purchased. "Business Day" means any day
other than a Saturday, Sunday or a day on which all United States securities
exchanges on which securities issued by the Company are listed, are authorized
or required to be closed. "Fair Market Value" as of any date on which the same
is being calculated shall mean the average closing price of the Class A Shares
on the American Stock Exchange or the exchange or national quotation system on
which the Class A Shares are primarily traded for the twenty Business Days
preceding the calculation date.
1.2 The purchase rights represented by this Warrant
Certificate are exercisable at the option of the Warrantholder, in whole or in
part (but not as to fractional Class A Shares), at any time and from time to
time on or after the first anniversary of the Original Issue Date and prior to
the Expiration Date.
1.3 In the case of the purchase of less than all the Class A
Shares purchasable under this Warrant Certificate, the Company shall cancel this
Warrant Certificate upon the surrender hereof and shall execute and deliver a
new Warrant Certificate as soon as practicable to the Warrantholder of like
tenor for the balance of the Class A Shares purchasable hereunder.
2. Issuance of Share Certificates.
2.1 The issuance of certificates for Class A Shares upon the
exercise of this Warrant Certificate shall be made as soon as practicable
thereafter and in any event within thirty (30) days of such exercise without
charge to the Warrantholder, including, without limitation, any tax that may be
payable in respect thereof, and such certificates shall (subject to the
provisions of this Section 2) be issued in the name of, or (subject to
restrictions on transfer contained herein) in such names as may be directed by,
the Warrantholder; provided, however, that the Company shall not be required to
pay any income tax to which the Warrantholder may be subject in connection with
the issuance of this Warrant Certificate or of Class A Shares upon the exercise
of this Warrant Certificate; provided, further, that the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate in a name other than that
of the
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Warrantholder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
2.2 Each person in whose name any such certificate for Class A
Shares is issued shall for all purposes be deemed to have become the holder of
record of such shares on the date on which the Warrant Certificate was
surrendered and payment of the Exercise Price (if applicable) and any applicable
taxes was made, irrespective of the date of delivery of such certificate, except
that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such person shall be deemed to have
become the holder of such shares at the close of business on the next succeeding
date on which the stock transfer books are open.
3. Restrictions on Transfer.
3.1 Investment Representation and Transfer Restriction Legend.
Except as permitted by the Investor Rights Agreement, this Warrant Certificate
may not be sold, assigned, transferred or otherwise disposed, by the
Warrantholder until the first anniversary of the Original Issue Date. The
Warrantholder, by acceptance of this Warrant Certificate, represents and
warrants to the Company that it is acquiring this Warrant Certificate and the
Class A Shares issued or issuable upon exercise hereof (the "Warrant Shares")
for investment purposes only and not with a view towards the resale or other
distribution hereof or thereof except in compliance with applicable securities
laws. Each certificate representing Warrant Shares, unless at the same time of
exercise such Warrant Shares are registered under the Act and no longer subject
to the applicable restrictions, shall bear a legend in substantially the
following form on the face thereof:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAW, AND MAY
NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THEY HAVE BEEN
REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. THIS WARRANT AND THE CLASS A SHARES ISSUABLE UPON THE
EXERCISE OF THIS WARRANT ARE SUBJECT TO CERTAIN RESTRICTIONS AGAINST
TRANSFER CONTAINED IN THE INVESTOR RIGHTS AGREEMENT TO WHICH HOLDER IS
A PARTY AND THE ISSUER'S DECLARATION OF TRUST, AS IN EFFECT FROM TIME
TO TIME. A COPY OF SAID INVESTOR RIGHTS AGREEMENT AND DECLARATION OF
TRUST IS AVAILABLE FOR INSPECTION, WITHOUT CHARGE, AT THE OFFICES OF
THE ISSUER.
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Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a distribution under a registration statement covering the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel to the Company, the securities represented thereby may be transferred as
contemplated by such Warrantholder without violation of the registration
requirements of the Act and are no longer subject to the applicable restriction.
4. Exercise Price and Exercise Amount.
4.1 Initial and Adjusted Exercise Price. The initial exercise
price of this Warrant Certificate shall be $35.00 per Class A Share. The
Exercise Price shall be adjusted from time to time pursuant to the provisions of
Section 5 hereof.
4.2 Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price depending upon
the context.
4.3 Exercise Amount. The term "Exercise Amount" shall mean the
Initial Exercise Amount or the adjusted Exercise Amount determined pursuant to
Section 5 depending upon the context.
5. Adjustment of Exercise Amount and Number of Shares.
5.1 For purposes of this Warrant Certificate, "Original Issue
Date" shall mean December 15, 1998.
5.2 The Exercise Amount shall be subject to adjustment from
time to time as follows:
(a) Adjustment for Stock Splits and Combinations. If the
Company shall at any time or from time to time after the Original Issue
Date effect a subdivision of the outstanding Class A Shares, the
Exercise Amount then in effect immediately before the subdivision shall
be proportionately increased and the Exercise Price shall be
proportionately decreased. If the Company shall at any time or from
time to time after the Original Issue Date combine the outstanding
Class A Shares, the Exercise Amount then in effect immediately before
the combination shall be proportionately decreased and the Exercise
Price shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date
the subdivision or combination becomes effective.
(b) Adjustment for Certain Dividends and Distributions. In the
event the Company at any time, or from time to time, after the Original
Issue Date shall make or issue, or fix a record date for the
determination of holders of Class A Shares entitled to receive, a
dividend or other distribution payable in additional Class A Shares,
then in each such event the Exercise Amount then in effect shall be
increased
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as of the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record date,
to an amount equal to the amount determined by multiplying the Exercise
Amount then in effect by a fraction:
(i) the numerator of which shall be the total number
of Class A Shares issued and outstanding immediately prior to
the time of such issuance or the close of business on such
record date plus the number of Class A Shares issuable in
payment of such dividend or distribution; and
(ii) the denominator of which shall be the total
number of Class A Shares issued and outstanding immediately
prior to the time of such issuance or the close of business on
such record date;
provided, however, if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Exercise Amount shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Exercise Amount shall be adjusted pursuant to this
paragraph as of the time of actual payment of such dividends or
distributions.
(c) Adjustments for Other Dividends and Distributions. In the
event the Company at any time or from time to time after the Original
Issue Date shall make or issue, or fix a record date for the
determination of holders of Class A Shares entitled to receive, a
dividend or other distribution payable in Securities of the Company
other than Class A Shares, then and in each such event provision shall
be made so that the Warrantholder shall receive upon exercise hereof,
in addition to the number of Class A Shares receivable thereupon, the
amount and type of securities that it would have received had its
Warrant Certificate been exercised for Class A Shares on the date of
such event and had it thereafter, during the period from the date of
such event to and including the actual exercise date, retained such
securities receivable by it as aforesaid during such period giving
application to all adjustments called for during such period.
(d) Adjustment for Reclassification, Exchange, or
Substitution. If the Class A Shares issuable upon exercise of this
Warrant Certificate shall be changed into the same or a different
number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or share dividend provided for
above, or a reorganization, merger, consolidation, or sale of assets
provided for below), then and in each such event the Warrantholder
shall have the right thereafter to exercise this Warrant Certificate
for the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or
other change, by holders of the number of Class A Shares into which
this Warrant Certificate was exercisable immediately prior to such
reorganization, reclassification, or change, all subject to further
adjustment as provided herein.
-5-
(e) Adjustment for Merger or Reorganization, etc. In case of
any consolidation or merger of the Company with or into another Person
or the sale of all or substantially all of the assets of the Company to
another Person, this Warrant Certificate shall thereafter be
exercisable for the kind and amount of shares of stock or other
securities or property to which a holder of the number of Class A
Shares of the Company deliverable upon exercise of this Warrant
Certificate would have been entitled upon such consolidation, merger or
sale; and, in such case, appropriate adjustment (as determined in good
faith by the Board in form and substance reasonably satisfactory to the
Warrantholder as to compliance with the terms of this paragraph) shall
be made in the application of the provisions in this Section 5 with
respect to the rights and interest thereafter of the Warrantholder, to
the end that the provisions set forth in this Section 5 (including
provisions with respect to changes in and other adjustments of the
Exercise Amount) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon exercise of this Warrant Certificate.
(f) Exercise Price Adjustment. In the event of any adjustment
to the Exercise Amount, the Exercise Price shall be adjusted as
necessary so that the aggregate Exercise Amount multiplied by the
Exercise Price before any adjustment is equal to the aggregate Exercise
Amount multiplied by the Exercise Price after the adjustment (assuming
no exercise of the Warrant Certificate).
(g) Certificate as to Amendments. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this
Section 5, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms thereof and
furnish to each Warrantholder a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, upon the
written request at any time of any Warrantholder, furnish or cause to
be furnished to such holder the most recent certificate setting forth
(i) such adjustment or readjustment, (ii) the Exercise Amount and
Exercise Price then in effect, and (iii) the number of Class A Shares
and the amount, if any, of other property which then would be received
upon exercise of this Warrant Certificate.
6. Exchange and Replacement of Warrant Certificate.
6.1 On surrender for exchange of this Warrant Certificate, or
any Warrant Certificate or Warrant Certificates issued upon subdivision,
exercise, or transfer in whole or in part of this Warrant Certificate, properly
endorsed, to the Company, the Company at its expense will issue and deliver to
or on the order of the holder thereof a new Warrant Certificate or Warrant
Certificates of like tenor, in the name of such holder or as such holder (on
payment by such holder of any applicable transfer taxes) may direct representing
the right to purchase in the aggregate on the face or faces thereof the number
of Class A Shares set forth on the face or faces of the Warrant Certificate or
Warrant Certificates so surrendered.
-6-
6.2 In the event this or any subsequently issued Warrant
Certificate is lost, stolen, mutilated or destroyed, the Company may, upon
receipt of a proper affidavit (and surrender of any mutilated Warrant
Certificate), and with respect to a lost or stolen certificate, an indemnity
agreement or security reasonably satisfactory in form and amount to the Company,
in each instance protecting the Company, issue a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so lost, stolen,
mutilated or destroyed. Any such new Warrant Certificate shall constitute an
original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
7. Elimination of Fractional Interests.
7.1 The Company shall not issue any fraction of a share in
connection with the exercise of this Warrant Certificate, but in any case where
the Warrantholder would, except for the provisions of this Section 7, be
entitled under the terms of this Warrant Certificate to receive a fraction of a
share upon the exercise of this Warrant Certificate, the Company shall, upon the
exercise of the Warrant Certificate for the largest number of full shares then
called for thereby and receipt of the Exercise Price thereof, pay a sum in cash
equal to the Fair Market Value of such fraction of a share on the day preceding
such exercise. The Warrantholder expressly waives its rights to receive any
fraction of a share or a Warrant Certificate representing a fractional share
upon exercise thereof.
7.2 If the taking of any action would cause an adjustment in
the Exercise Price so that the exercise of this Warrant Certificate while such
Exercise Price is in effect would cause shares to be issued at a price below
their then par value, the Company will take such action as may, in the opinion
of its counsel, be necessary in order that it may validly and legally issue
fully paid and nonassessable Class A Shares upon the exercise of this Warrant
Certificate.
8. Reservation and Listing of Shares. The Company will cause to be
reserved and kept available out of its authorized and unissued Class A Shares
solely for the purpose of issuance upon exercise of this Warrant Certificate the
number of Class A Shares sufficient to permit the exercise in full of this
Warrant Certificate. The Company will take all necessary actions to assure that
such Class A Shares are duly listed upon all exchanges or quoted in all markets,
if any, where other Class A Shares are then currently listed or quoted. The
Company will also take all necessary action, if any, to assure that such Class A
Shares are issued without violation of any law or governmental regulation
applicable to the Company or requirement of any securities exchange on which the
Class A Shares are then listed; provided that the Company shall have no
obligation to effect any registration of such Class A Shares except as required
by the Investor Rights Agreement and provided further that the Company shall
have received all necessary representations (which shall be true) and
cooperation from the holder of the Warrant Certificate to the extent required
for the Company to comply with securities laws applicable to such issuance or
requirements of any exchange or markets on which the Class A Shares are then
listed. Assuming payment in full of the Exercise Price
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(including for this purpose, through a cashless net exercise), all Class A
Shares issued upon exercise of this Warrant shall be duly issued, fully paid and
nonassessable and free and clear of all liens, charges and encumbrances imposed
upon the Class A Shares by or through the Company except for such liens, charges
or other encumbrances created by or on behalf of the holder thereof or such
restrictions as set forth in the Investor Rights Agreement or the Company's
Declaration of Trust, as amended from time to time.
9. Rights of Warrantholder. The Company may deem and treat the person
in whose name this Warrant Certificate is registered with it as the absolute
owner for all purposes whatever (notwithstanding any notation of ownership or
other writing thereon made by anyone other than the Company) and the Company
shall not be affected by any notice to the contrary. The terms "Warrantholder"
and "holder of the Warrant Certificate" and all other similar terms used herein
shall mean only such person(s) in whose name(s) this Warrant Certificate is
properly registered on the Company's books. However, notwithstanding the
foregoing, no person, entity or group may become a Warrantholder other than the
Warrantholder unless and until (a) the provisions of Section 3.1 hereof have
been complied with, (b) the Company has received an assignment transferring all
right, title and interest in and to this Warrant Certificate, (c) such person,
entity or group represents and warrants in writing that it will be the sole
legal and beneficial owner thereof and (d) if such consent is required by
Section 16, the Company has consented in writing to such person becoming a
Warrantholder.
10. No Voting Rights; Limitations of Liability. No Warrant Certificate
shall entitle the holder thereof to any voting rights or, except as otherwise
provided herein, other rights of a shareholder of the Company, as such.
11. Amendments and Waivers. Any provision of this Warrant Certificate
may be amended or waived, but only pursuant to a written agreement signed by the
Company and the Warrantholder.
12. Severability. Any provision of this Warrant Certificate which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Warrant
Certificate affecting the validity or enforceability of such provision in any
other jurisdiction.
13. Counterparts. This Warrant Certificate may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Warrant Certificate shall become effective when counterparts
hereof executed on behalf of the Company and the Warrantholder shall have been
received.
-8-
14. Entire Agreement. This Warrant Certificate constitutes the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
15. Notices. Any notice or demand authorized by this Warrant
Certificate to be given or made by the Warrantholder to or on the Company or to
be given or made by the Company to or on the Warrantholder shall be sufficiently
given or made if sent in writing by first-class mail, postage prepaid or by
overnight courier, addressed as follows:
(a) If to the Warrantholder, to the address for such
holder as shown on the books of the Company.
(b) If to the Company, to:
Starwood Financial Trust
1114 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
with copies to:
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
and:
Katten, Muchin & Zavis
000 Xxxx Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
or at such other address as the registered holder or the Company may hereafter
have advised the other.
16. Successors. All the covenants, agreements, representations and
warranties contained in this Warrant Certificate shall bind the parties hereto
and their respective heirs, executors, administrators, distributees, successors
and assigns; provided that the Warrant Certificate may not be assigned by the
original Warrantholder (i) prior to the first anniversary of the date hereof or
(ii) to any Competitor (as defined in the Investor Rights Agreement) without the
prior written consent of the Company.
-9-
17. Headings. The Section headings in this Warrant Certificate have
been inserted for purposes of convenience only and shall have no substantive
effect.
18. Law Governing. This Warrant Certificate is delivered in the State
of New York and shall be construed and enforced in accordance with, and governed
by, the laws of the State of New York (without giving effect to the choice of
law principle of such state), regardless of the jurisdiction of creation or
domicile of the Company or its successors or of the holder at any time hereof.
19. The Trust. Each of the parties hereto acknowledges and agrees that
the name AStarwood Financial Trust@ is a designation of the Company and its
Trustees (as Trustees but not personally) under the Company's Declaration of
Trust, and all persons dealing with the Company shall look solely to the
Company's assets for the enforcement of any claims against the Company, and the
Trustees, officers, agents and security holders of the Company assume no
personal liability for obligations entered into on behalf of the Company, and
their respective individual assets shall not be subject to the claims of any
person relating to such obligations.
-10-
IN WITNESS WHEREOF, the Company has executed this Warrant Certificate
by its duly authorized officer as of the day and year first above written.
STARWOOD FINANCIAL TRUST
a Maryland real estate investment trust
By:___________________________________
Name: Xxx Xxxxxxxx
Title: CEO and President
HOLDER
By:___________________________________
Name:
Title:
ASSIGNMENT FORM
(To Be Executed By The Holder of This Warrant
In Order to Assign This Warrant Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________ this Warrant and all rights evidenced thereby
and does irrevocably constitute and appoint __________________, attorney, to
transfer the said Warrant on the books of STARWOOD FINANCIAL TRUST.
-----------------------------
Signature
-----------------------------
-----------------------------
Address
Dated: _________________________
SUBSCRIPTION FORM
(To Be Executed By The Warrantholder
In Order to Exercise The Warrant Certificate)
The undersigned, pursuant to the provisions set forth in the within
Warrant Certificate, hereby irrevocably elects to exercise the right to purchase
________ Class A Shares of Starwood Financial Trust covered by such Warrant
Certificate, and herewith tenders _________ having a fair market value of
$________ in full payment of the Exercise Price for such shares (which may
include foregoing receipt of ___ Class A Shares as per Section 1.1 of the
Warrant Certificate).
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Signature
-----------------------------
-----------------------------
Address
Dated: _____________________
