EXHIBIT 4.2
Warrant No. 1
THIS WARRANT AND THE WARRANT SHARES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, HYPOTHECATED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR AN EXCEPTION
THEREFROM IS AVAILABLE
THIS WARRANT AND THE WARRANT SHARES REPRESENTED BY THIS WARRANT ARE SUBJECT TO
TRANSFER RESTRICTIONS AND PURCHASE RIGHTS SET FORTH IN A STOCKHOLDERS AGREEMENT
DATED AS OF OCTOBER 2, 1996. A COPY OF SUCH AGREEMENT IS MAINTAINED ON FILE IN
THE PRINCIPAL OFFICE OF THE COMPANY IN THE STATE OF CALIFORNIA
WARRANT TO PURCHASE COMMON STOCK
OF T.A.R. PREFERRED MORTGAGE CORPORATION
THIS CERTIFIES THAT, for value received, T.A.R. Preferred Mortgage
Corporation, a California corporation (the "Company"), promises to issue to CS
First Boston Mortgage Capital Corp. ("CSFB"), the holder of this Warrant (the
"Holder"), its nominees, successors or assigns nonassessable shares of Common
Stock, $.01 par value, of the Company ("Common Stock") equal to fourteen percent
(14%) of the sum of (i) all shares of Common Stock outstanding as of the date
hereof and (ii) all shares of Common Stock issuable upon (a) exercise of any
rights outstanding as of the date hereof to subscribe for or to purchase, or any
options outstanding as of the date hereof for the purchase of, Common Stock or
Convertible Securities (as defined herein) and (b) conversion of any Convertible
Securities outstanding as of the date hereof, upon the payment by the Holder to
the Company of the Warrant Price set forth herein and to deliver to the Holder a
certificate or certificates representing the Common Stock purchased. The number
of shares of Common Stock purchasable upon exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time as provided
herein. The initial Warrant Price per share of Common Stock shall equal the
quotient obtained by dividing $4,200,000.00 (the "Initial Aggregate Warrant
Price") by the aggregate number of shares of Common Stock issuable upon exercise
in full of this Warrant prior to any adjustment thereto.
For the purpose of this Warrant, the term "Common Stock" shall mean
(i) the class of stock designated as the Common Stock of the Company at the date
of this Warrant, or (ii) any other class or classes of stock resulting from
successive changes or reclassifications of such class of stock.
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Section 1. Term of Warrant, Restrictions on Transfer, Exercise of
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Warrant.
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1.1. Term of Warrant. Subject to the terms of this Warrant, the
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Holder shall have the right, at its option, which may be exercised in whole or
in part, at any time commencing at the time of the issuance of this Warrant and
until 5:00 p.m. Eastern Time on September 27, 2011 ("Warrant Expiration Date"),
to purchase from the Company the number of fully paid and nonassessable shares
of Common Stock which the Holder may at the time be entitled to purchase on
exercise of this Warrant ("Warrant Shares"). After such time, this Warrant will
be void.
1.2. Restrictions on Transfer. This Warrant and the Warrant Shares
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will not be registered or qualified under the Securities Act of 1933, as amended
(the "Act"), or the securities laws of any state or other jurisdiction and
therefore will not be transferable except pursuant to an exemption under or in
accordance with the Act, including Rule 144A adopted under the Act, in
compliance with applicable state securities laws and pursuant to the provisions
of this Warrant. Unless the Warrant or Warrant Shares shall have been duly
registered under the Act pursuant to Section 10 hereof, (a) the certificates
representing the Warrant Shares shall bear a legend comparable to the legend on
the first page of this Warrant regarding restrictions on transfer and (b) no
sale, pledge or other disposition of this Warrant or any Warrant Shares may be
made by any person unless either (i) such sale, pledge or other disposition is
made to a "qualified institutional buyer" that executes a certificate in the
form of Exhibit A attached hereto to the effect that (A) it is a "qualified
institutional buyer" as defined under Rule 144A of the Act, acting for its own
account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A and (B) it is aware that the transferor of this Warrant or any
Warrant Shares intends to rely on the exemption from the registration
requirements under the Act provided by Rule 144A, or (ii) such sale, pledge or
other disposition is otherwise made in a transaction exempt from the
registration requirements under the Act and (A) the prospective transferor and
transferee certify in writing to the Company the facts surrounding such
disposition, which certifications shall be in the form of Exhibits B-1 and B-2
attached hereto and (B) if the disposition is not a transfer under Rule 144A or
a disposition between or among affiliates, the Company may request a written
opinion of counsel reasonably satisfactory to the Company to the effect that
such disposition will not violate the Act. In connection with a sale or other
disposition of the Warrant or the underlying Warrant Shares, the subsequent
holder or holders shall be bound by the provisions of this Agreement.
1.3. Exercise of Warrant. Unless a Termination Event (as defined in
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Section 8) has occurred, the Holder may exercise this Warrant by delivering to
the Company (i) a written notice specifying the number of shares of Common Stock
to be purchased, of such Holder's election to exercise this Warrant, and (ii)
payment in cash or by a certified or cashier's check. Upon receipt of written
notice, the Company shall as promptly as practicable execute or cause to be
executed and deliver to such Holder a certificate or certificates representing
the aggregate number of shares of Common Stock purchased. Such certificate or
certificates shall be deemed to have been issued to the Holder which shall be
deemed to have become a holder
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of record of such Warrant Shares as of the date of payment of the Warrant Price.
If this Warrant shall have been exercised only in part, the Company shall also
deliver a new Warrant of like tenor evidencing the rights of such Holder to
purchase the remaining shares of Common Stock called for by this Warrant;
provided that the new Warrant shall set forth the new Warrant Price which shall
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equal (A) the Initial Aggregate Warrant Price, as adjusted to that date pursuant
to this Warrant minus the aggregate consideration paid to that date upon
exercise of the Warrant divided by (B) the aggregate number of shares of Common
Stock issuable upon exercise in full of the Warrant then remaining, prior to any
subsequent adjustment thereof.
This Warrant does not entitle the Holder to any voting rights or other
rights as a shareholder of the Company prior to exercise and payment of the
Warrant Price in accordance with this Section 1.3.
Section 2. Exchange of Warrant. Subject to Section 1.2 and Section 3
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hereof, the Warrant may be exchanged for another Warrant or Warrants entitling
the Holder to purchase a like aggregate number of Warrant Shares as this Warrant
then entitles such Holder to purchase. Any Holder desiring to exchange this
Warrant shall make such request in writing delivered to the Company, and shall
surrender this Warrant, properly endorsed. Thereupon the Company shall execute
and deliver to the person entitled thereto a new Warrant or Warrants, as the
case may be, as so requested.
Section 3. Payment of Taxes. The Company shall pay all documentary
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stamp taxes, if any, attributable to the initial issuance of any Warrant Shares
upon the exercise of this Warrant; provided, however, that the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any Warrant or certificate for
Warrant Shares in a name other than that of the Holder of this Warrant as such
name is then shown on the books of the Company.
Section 4. Mutilated or Missing Warrant. In case this Warrant shall
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be mutilated, lost, stolen or destroyed, the Company shall issue in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and representing an equivalent right or interests, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction of this Warrant (provided that an affidavit, containing
appropriate indemnities, of the Holder as to a loss, theft or destruction of the
Warrant shall be deemed to be evidence reasonably satisfactory to the Company of
such loss, theft or destruction for purposes of this Section 4) and indemnity
(which may include a bond), if requested, also reasonably satisfactory to the
Company.
Section 5. Certain Covenants.
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5.1. Reservation of Warrant Shares. There have been reserved
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and the Company shall at all times keep reserved, out of its authorized Common
Stock, a number of
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shares of Common Stock sufficient to provide for the exercise of the rights of
purchase represented by this Warrant. The transfer agent, if any, for the Common
Stock, and every subsequent transfer agent for any shares of the Company's
Common Stock issuable upon the exercise of any of the rights of purchase as set
out in this Warrant, shall be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be requisite for such
purpose. The Company shall keep a copy of this Warrant on file with any transfer
agent for the Common Stock and with every subsequent transfer agent for any
shares of the Company's Common Stock issuable upon the exercise of the rights of
purchase represented by this Warrant. Any transfer agent for the Common Stock
and any successor transfer agent for the Common Stock is hereby irrevocably
authorized to cause to be issued from time to time the share certificates
required to honor this Warrant upon its exercise in accordance with the terms
hereof. The Company shall supply any such transfer agent with duly executed
share certificates for such purpose.
5.2. No Impairment. The Company shall not by any action including,
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without limitation, amending its articles of incorporation, any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but shall at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action, as may be necessary or appropriate to protect the rights of the
Holder against impairment. Without limiting the generality of the foregoing,
the Company shall (a) take all such action as may be necessary or appropriate in
order that the Company may validly issue fully paid and nonassessable Common
Stock upon the exercise of this Warrant, and (b) obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant; provided, that under no circumstances shall the Company be
obligated hereunder to qualify to do business or consent to service of process
in a particular jurisdiction in order to perform its duties hereunder.
Upon the request of the Holder, the Company shall at any time during the
period this Warrant is outstanding acknowledge in writing, in form satisfactory
to the Holder, the continued validity of this Warrant and the Company's
obligations hereunder.
5.3. Listing. If the Company shall list any of its Common Stock on
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any securities exchange or automated quotation system, it will, at its expense,
list thereon, maintain and, when necessary, increase such listing of, all of its
Common Stock issued or, to the extent permissible under the applicable
securities exchange or quotation system rules, issuable upon the exercise of
this Warrant so long as any of its Common Stock shall be so listed.
5.4. Notice of Certain Corporate Action. In case the Company shall
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propose (a) to pay any dividend or to make any other distribution to the holders
of its Common Stock, or (b) to offer to the holders of its Common Stock rights
to subscribe for or to purchase any shares of Common Stock or shares of stock of
any class or any other securities, rights or
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options, or (c) to effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision, or combination, of outstanding
shares of Common Stock), or (d) to effect any capital reorganization, or (e) to
effect any consolidation, merger or sale, transfer or other disposition of all
or substantially all of its property, assets or business, or (f) to effect the
liquidation, dissolution or winding up of the Company, then in each such case
(but without limiting the provisions of Section 6), the Company shall give to
each Holder of a Warrant, in accordance with Section 4, a notice of such
proposed action, which shall specify the date on which a record is to be taken
for purposes of such dividend, distribution of offer of rights, or the date on
which such reclassification, reorganization, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of Common Stock, if any
such date is to be fixed and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Common Stock. Such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least ten (10) calendar days prior to the
record date for determining holders of the Common Stock for purposes of such
action, and in the case of any other such action, at least ten (10) calendar
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Common Stock, whichever shall be the
earlier. No such notice shall be given if (a) any stock of the Company shall
have been registered and (b) the Company reasonably determines that the giving
of such notice would require disclosure of material information which the
Company has a bona fide purpose for preserving as confidential or the disclosure
of which would not be in the best interests of the Company.
Section 6. Adjustment of Warrant Price.
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6.1. Adjustment Price. Except as provided in Section 6.8, if and
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whenever the Company shall issue or sell any shares of its Common Stock for a
consideration per share less than the Adjustment Price (as hereinafter defined)
in effect immediately prior to the time of such issue or sale, then, forthwith
upon such issue or sale, the Adjustment Price shall be reduced to the price
(calculated to the nearest cent) determined by dividing (i) an amount equal to
the sum of (a) the number of shares of all classes of Common Stock outstanding
immediately prior to such issue or sale multiplied by the then existing
Adjustment Price, and (b) the consideration, if any, received by the Company
upon such issue or sale, by (ii) the total number of shares of Common Stock
outstanding immediately after such issue or sale. The Adjustment Price shall be
the Warrant Price or, in the case an adjustment of such price has taken place
pursuant to the provisions of this Section 6, then the Adjustment Price shall be
the price as last adjusted and in effect at the date this Warrant (or any part
thereof) is surrendered for exercise (such price or such price as last adjusted,
if such price shall have been adjusted, being referred to herein as the
"Adjustment Price").
If and whenever the Adjustment Price shall have been adjusted, the Warrant
Price shall be forthwith adjusted to the price (calculated to the nearest cent)
determined by multiplying the Warrant Price as then in effect by a fraction, the
numerator of which shall be the Adjustment Price as so adjusted and the
denominator of which shall be the Adjustment Price as in effect
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immediately prior to such adjustment.
No adjustment of the Adjustment Price, however, shall be made in an amount
less than $.10 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which together with any adjustments so carried forward shall amount
to $.10 per share or more.
For the purposes of this Section 6.1, the following Sections 6.2 to 6.7,
inclusive, shall also be applicable: except that this Warrant shall be deemed
exercised and outstanding for all purposes and computations under this Section
6.1 and the then current Adjustment Price shall be deemed the Warrant Price per
share.
6.2. Issuance of Rights or Options. In case at any time the Company
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shall in any manner grant (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such convertible or exchangeable stock or
securities being herein called "Convertible Securities") whether or not such
rights or options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such rights or options or upon conversion
or exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for the
granting of such rights or options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of all such
rights or options, plus, in the case of such rights or options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of such
rights or options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options) shall be less
than the Adjustment Price in effect immediately prior to the time of the
granting of such rights or options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such rights or options shall be (as of
the date of granting of such rights or options) deemed to be outstanding and to
have been issued for such price per share. Except as otherwise provided in
Section 6.4, no adjustment of the Adjustment Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise of
such rights or options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
6.3. Issuance of Convertible Securities. In case the Company shall
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in any manner issue (whether directly or by assumption in a merger or otherwise)
or sell any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined by
dividing (i) the total amount received or receivable by
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the Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Adjustment
Price in effect immediately prior to the time of such issue or sale determined
as of the date of such issue or sale of such Convertible Securities, as the case
may be, then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall (as of the date
of the issue or sale of such Convertible Securities) be deemed to be outstanding
and to have been issued for such price per share, provided that (a) except as
otherwise provided in Section 6.4 below, no adjustment of the Adjustment Price
shall be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (b) if any such issue or sale of
such Convertible Securities is made upon exercise of any rights to subscribe for
or to purchase or any option to purchase any such Convertible Securities for
which adjustments of the Adjustment Price have been or are to be made pursuant
to other provisions of this Section 6, no further adjustment of the Adjustment
Price shall be made by reason of such issue or sale.
6.4. Change in Option Price or Conversion Rate. Upon the happening
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of any of the following events, namely, if the purchase price provided for in
any right or option referred to in Section 6.2, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities
referred to in Section 6.2 or Section 6.3, or the rate at which any Convertible
Securities referred to in Section 6.2 or Section 6.3 are convertible into or
exchangeable for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution), the Adjustment Price
in effect at the time of such event shall forthwith be readjusted to the
Adjustment Price which would have been in effect at such time had such rights,
options or Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the case may be,
at the time initially granted, issued or sold; and on the expiration of any such
option or right or the termination of any such right to convert or exchange such
Convertible Securities, the Adjustment Price then in effect hereunder shall
forthwith be increased to the Adjustment Price which would have been in effect
at the time of such expiration or termination had such right, option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the Common Stock issuable
thereunder shall no longer be deemed outstanding. If the purchase price
provided for in any such right or option referred to in Section 6.2 or if the
rate at which any Convertible Securities referred to in Section 6.2 or Section
6.3 are convertible into or exchangeable for Common Stock shall be reduced at
any time under or by reason of provisions with respect thereto designed to
protect against dilution, then in case of the delivery of Common Stock upon the
exercise of any such right or option or upon conversion or exchange of any such
right or option or upon conversion or exchange of any such Convertible
Securities, the Adjustment Price then in effect hereunder shall forthwith be
adjusted to such respective amount as would have obtained had such right, option
or Convertible Security never been issued as to such Common Stock and had
adjustment been made upon the issuance of the shares of Common Stock delivered
as aforesaid, but only if as a result of such adjustment the
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Adjustment Price then in effect hereunder is thereby reduced.
6.5. Stock Dividends. In case the Company shall declare a dividend
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or make any other distribution upon any stock of the Company payable in Common
Stock or Convertible Securities, any Common Stock or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration, subject to Section 6.
6.6. Consideration for Stock. In case any shares of Common Stock or
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Convertible Securities or any rights or options to purchase any such Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Company therefor, after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Company in
connection therewith. In case any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration as determined in good
faith by the Board of Directors of the Company, after deduction of any expenses
incurred or any underwriting commissions or concessions paid or allowed by the
Company in connection therewith. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase such Common Stock or
Convertible Securities shall be issued in connection with any merger in which
the Company is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value as determined in good faith by the Board of
Directors of the Company of such portion of the assets business of the non-
surviving corporation as such Board shall determine to be attributable to such
Common Stock, Convertible Securities, rights or options, as the case may be. In
case any rights or options to purchase any shares of Common Stock or Convertible
Securities shall be issued in connection with the issue and sale of other
securities of the Company, together comprising one integral transaction in which
no specific consideration is allocated to such rights or options by the parties
thereto, such rights or options shall be deemed to have been issued without
consideration. In the event of any consolidation or merger of the Company in
which the Company is not the surviving corporation or in the event of any sale
of all or substantially all of the assets of the Company for stock or other
securities of any corporations, the Company shall be deemed to have issued a
number of shares of its Common Stock for stock or securities of the other
corporation computed on the basis of the actual exchange ratio on which the
transaction was predicated and for a consideration equal to the fair market
value on the date of such transaction of such stock or securities of the other
corporation, and if any such calculation results in adjustment of the Adjustment
Price, the determination of the number of shares of Common Stock receivable upon
exercise of this warrant immediately prior to such merger, consolidation or
sale, for purposes of Section 6.9, shall be made after giving effect to such
adjustment of the Adjustment Price.
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6.7. Record Date. In case the Company shall take a record of the
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holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock or in Convertible
Securities, or (ii) to subscribe for or purchase Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
6.8. Treasury Shares. The number of shares of Common Stock
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outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock for the purposes of this Section 6.
6.9. Subdivision or Combination of Stock. In case the Company shall
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at any time (i) issue a dividend payable in Common Stock or Convertible
Securities or any rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or Convertible Securities or (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares or combine
its outstanding shares of Common Stock into a smaller number of shares, the
Adjustment Price and the Warrant Price in effect immediately prior to such
subdivision or combination shall be adjusted to an amount that bears the same
relationship to the Adjustment Price and Warrant Price respectively in effect
immediately prior to such action as the total amount of shares of Common Stock
outstanding immediately prior to such action bears to the total number of shares
of Common Stock outstanding immediately after such action, and the number of
shares of Common Stock purchasable upon the exercise of any Warrant shall be
that mumber of shares of Common Stock obtained by multiplying the number of
shares of Common Stock purchasable immediately prior to such adjustment upon the
exercise of such Warrant by the Warrant Price in effect immediately prior to
such adjustment and dividing the product so obtained by the Warrant Price in
effect after such adjustment.
6.10. Reorganization, Reclassification Consolidation, Merger or Sale.
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If any capital reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization, reclassification,
consolidation, exercise, merger or sale, lawful and adequate provisions shall be
made whereby the holder of this Warrant shall thereafter have the right to
receive upon the basis and upon the terms and conditions specified herein and in
lieu of the shares of Common Stock of the Company immediately theretofore
receivable upon the exercise of this Warrant, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of shares
of such stock immediately theretofore receivable upon the exercise of this
Warrant had such reorganization, reclassification, consolidation, merger or sale
not taken place, and in any such
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case appropriate provision shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Adjustment Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
conversion rights (including an immediate adjustment, by reason of such
consolidation or merger, of the Adjustment Price to the value for the Common
Stock reflected by the terms of such consolidation or merger if the value so
reflected is less than the Adjustment Price in effect immediately prior to such
consolidation or merger). In the event of a merger or consolidation of the
Company with or into another corporation as a result of which a greater or
lesser number of shares of common stock of the surviving corporation are
issuable to holders of Common Stock of the Company outstanding immediately prior
to such merger or consolidation, then the Adjustment Price and Warrant Price in
effect immediately prior to such merger or consolidation shall be adjusted in
the same manner as though there were a subdivision or combination of the
outstanding shares of Common Stock of the Company. The Company will not effect
any such consolidation, merger or sale, unless prior to the consummation thereof
the successor cor poration (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume,
by written instrument executed and mailed or delivered to the registered holder
hereof at the last address of such holder appearing on the books of the Company,
the obligation to deliver to such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to receive. If a purchase, tender or exchange offer is made to and
accepted by the holders of more than 50% of the outstanding shares of Common
Stock of the Company, the Company shall not effect any consolidation or merger
and the Company shall not consent to or register any transfer or sale with or to
the Person having made such offer or with any affiliate of such Person, unless
prior to the consummation of such consolidation, merger, transfer or sale the
holder hereof shall have been given a reasonable opportunity to then elect to
receive, upon exercise of this Warrant, either the proportionate share of the
stock, securities or assets then issuable with respect to the Common Stock of
the Company or the stock, securities or assets, or the equivalent, issued to
previous holders of the Common Stock, or the consideration paid to such holders,
in the case of a purchase offer, in accordance with such offer.
6.11. Distributions. If at any time after the date hereof the
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Company shall distribute to all holders of its Common Stock evidences of its
indebtedness or assets, the Warrant Price shall be decreased to an amount
determined by multiplying such Warrant Price by a fraction, the numerator of
which is the fair market value, as determined in good faith by the board of
directors of the Company, of each share of Common Stock outstanding (the "Fair
Market Value") prior to giving effect to such distribution less the Fair Market
Value of each share of Common Stock outstanding at the date of distribution of
the assets or evidences of indebtedness so distributed and the denominator of
which is the Fair Market Value of each share of Common Stock outstanding prior
to giving effect to such distribution.
6.12. Notice of Adjustment. Upon any adjustment of the Adjustment
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Price and the Warrant Price, then and in each such case the Company shall give
written notice thereof,
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which notice shall state the Adjustment Price and the Warrant Price resulting
from such adjustment, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
Section 7. [RESERVED].
Section 8. Certain Buy-Sell Rights.
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(a) Upon the occurrence of a Warrant Call Event, as defined in the
letter agreement dated October 2, 1996 among the Company, CSFB and CS First
Boston Corporation, and the termination of such letter agreement as a result
thereof (the "Termination Event") the Company shall have the right to call for
the purchase of such portion of the outstanding Warrant, Warrants or Warrant
Shares (the "Warrant Call") equal to the product of (i) the amount of Warrant
Shares issuable upon the exercise in whole of the outstanding Warrant and (ii)
the Call Percentage. The Call Percentage with respect to any Warrant Call shall
equal 100% minus the percentage equivalent of the fraction the numerator of
which is equal to the number of days elapsed from September 27, 1996 to the date
of the occurrence of the Warrant Call Event (calculated by including September
27, 1996 as the initial date of the term of the Warrant but excluding the date
of such Warrant Call Event) and the denominator of which is equal to 460. The
Company, if it elects to exercise the Warrant Call, must exercise such Warrant
Call in whole and not in part.
(b) In the event the Company intends to exercise the Warrant Call, the
Company shall deliver to the Holder a notice (the "Warrant Call Notice") within
five days following the date of the Termination Event specifying the date on
which the buyout will close (the "Warrant Call Closing Date"), which shall be no
less than twenty (20) days and no more than thirty (30) days after the date of
the Warrant Call Notice.
(c) On the Warrant Call Closing Date, the Holder shall deliver the
Call Percentage of certificates representing the Warrants as to which CSFB is
the Holder to the Company for cancellation. If the Warrant has been exercised,
and the Holder is obligated to turn over any portion of the Call Percentage in
Warrant Shares, the Company shall pay the holder of such shares the Warrant
Price for such shares.
(d) Notwithstanding the foregoing, the Company may not exercise its
right to repurchase any portion of the Warrant or Warrant Shares from the Holder
pursuant to a Warrant Call other than upon a Termination Event as provided in
Section 8(a).
Section 9. Registration.
------------
9.1. Incidental Registration.
-----------------------
(a) General. If the Company at any time proposes to register on its
-------
11
own behalf or behalf of any of its security holders any of its securities (other
than by a Registration on Form X-0, X-0 or any successor or similar short-form
registration statement), whether or not pursuant to registration rights granted
to other holders of its securities, it will each such time give prompt written
notice to all Holders of its intention to do so and of such Holders' rights
under this Section, provided that in any event, such notice shall be given to
all such Holders at least thirty (30) days prior to such proposed registration
(or such shorter period if thirty (30) days notice is not practicable under the
circumstances but in no event not less than fifteen (15) days or, in the case of
a shelf registration on Form S-3, five (5) business days). Such notice shall
set forth the intended method of disposition of the securities proposed to be
registered by the Company. The notice shall offer to include in such filing
such number of shares of Warrant Shares as such Holder may request.
(b) Included Securities. Securities will be included in any such
-------------------
filing upon the written request of any such Holder made within fifteen (15) days
after receipt of any such notice, or five (5) business days in the case of a
shelf registration on Form S-3 (which request shall specify the Warrant Shares
intended to be disposed of by such holder and the intended method of disposition
thereof). The Company shall use its best efforts to effect the registration of
all Warrants and Warrant Shares which the Company has been so requested to
register by the Holders thereof, to the extent necessary to permit the
disposition of the Warrants and Warrant Shares so to be registered; provided
that the Holder shall pay its proportionate share of the underwriting discounts
or commissions.
(c) Priority in Underwritten Offerings. If the Company at any time
----------------------------------
proposes to register any of its securities as contemplated by this Section and
such securities are to be distributed by or through one or more underwriters,
the Company shall, if requested by the Holder or as provided in this Section
9.1, use its best efforts to arrange for such underwriters to include all the
Warrants and Warrant Shares to be offered and sold by such Holder among the
securities to be distributed by such underwriters, provided that if the managing
underwriter of such underwritten offering shall advise the Company in writing
(with a copy to each holder of Warrant Shares or Warrants requesting such
registration) that the number of Warrants and Warrant Shares requested to be
included in such Registration concurrently with the securities by the Company or
any other Person would adversely affect the price, timing or distribution of
such shares or would exceed the number of shares it is advisable to offer to
sell at such time (the "Sales Limit"), then the Company will include in such
registration, to the extent of the number of securities which the Company is so
advised can be sold in such offering, in priority order, first, the securities
that the Company proposes to issue and sell for its own account and, second,
such number of shares of Warrants and Warrants Shares requested to be registered
by the Holders thereof pursuant to this Section 9.1 or on behalf of any other
Person pro rata on the basis of the total number of shares of such securities
requested to be registered by each such Person so that the aggregate number of
Warrants and Warrant Shares and other shares being listed by or on behalf of
another Person does not exceed the difference between the aggregate Sales Limit
and the securities that the Company proposes to issue and sell for its own
account. Any Holder of Warrant Shares to be included in such
12
Registration may withdraw its request to have its securities so included by
notice to the Company within ten (10) Business Days after receipt of a copy of a
notice from the managing underwriter pursuant to this Section. Any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall be conditions precedent to the obligations of such
Holders of Warrant Shares. Except as set forth in this Section 9.1, no Holder of
Warrant Shares shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than customary
representations, warranties or agreements regarding such Holder, such Holder's
Warrant Shares and such Holder's intended method of distribution and any other
representation required by law.
(d) Abandonment or Suspension. The Company may abandon or suspend any
-------------------------
registration effected pursuant to the provisions of this Section 9.1 at any time
and without any liability to any Holder hereof other than its obligations, to
the extent permitted by applicable law, to pay the expenses of the Company and
the selling security holders in connection therewith; provided, that the Company
--------
does not hereunder undertake to pay any expenses if abandonment or suspension
results, in its good faith judgment, from information or statements provided in
writing by the Holder hereof.
9.2. Demand Registration.
-------------------
(a) General. The Requisite Holders (as defined herein) shall have a
-------
one time right (exclusive of any demand for Registration that the Company
withdraws under Section 9.2(h)) to request that the Company effect the
registration of the Warrant Shares under the Act in a manner which permits the
Holder and holders of the Warrant Shares to sell without restriction all Warrant
Shares in the United States (the "Registration"), specifying the intended method
of disposition thereof, and the Company will promptly give written notice of
such requested Registration to all holders of Common Stock, Convertible
Securities or other interests in the Company that can be converted into Common
Stock, and thereupon the Company shall use its best efforts to effect, as
expeditiously as practicable but, if such request follows the registration of
any Common Stock of the Company, no earlier than any date specified in writing
by the managing underwriter of the offering of such stock as the earliest date
that such Registration shall not adversely affect the Company, the Registration
of
(i) the Warrant Shares which the Company has been so requested by
the Requisite Holders, for disposition in accordance with the intended
method or methods of disposition stated in such request, and
(ii) all other Warrant Shares the holders of which shall have made a
written request to the Company for Registration within twenty (20) days
after the giving of such written notice by the Company (which request shall
specify the intended method or methods of disposition thereof),
all to the extent necessary to permit the disposition (in accordance with the
intended methods
13
thereof as aforesaid) of the Warrant Shares so to be registered; provided,
--------
however, that any holder of Warrant Shares to be included in any such
-------
Registration, by written notice to the Company within ten (10) Business Days
after its receipt of a copy of a notice from the managing underwriter delivered
pursuant to Section 9.2(d), may withdraw such request for Registration and, on
receipt of notices from the Holder or the holders of a majority (by number of
shares) of the Warrant Shares (together the "Requisite Holders") requested to be
included in such Registration withdrawing their requests, the Company may elect
not to effect such Registration. The Requisite Holders shall not request a
Registration under this Section 9.2(b) while a notice of Registration pursuant
to Section 9.1 is outstanding. Upon the Company's reasonable request, the
Holder shall execute any reasonable lock-up agreement in connection with a
Registration. The Company and the Holder or holders shall each pay their pro
rata share (based on the proportionate numbers of shares each sells in the
Registration) of all securities registration fees, underwriting discounts and
commissions in connection with a Registration pursuant to this Section 9.2.
(b) Registration Statement Form. Registrations pursuant to this
---------------------------
Section 9.2 shall be on the appropriate registration form or form of prospectus
of the Securities and Exchange Commission (the "Commission") and the securities
covered by the Registration shall be registered or qualified under securities
laws other than the Act or blue sky laws of such jurisdictions (i) as shall be
reasonably selected by the Requisite Holders and as such be reasonably
acceptable to the Company; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it is not at the time of the Registration qualified,
or to file any general consent to service of process and (ii) as shall permit
the disposition of such Warrant Shares in accordance with the intended method or
methods of disposition specified in the request for their Registration. The
Company agrees to include in any such registration statement or prospectus all
information which any holder of Warrant Shares being registered, upon advice of
counsel, shall reasonably request. Such holder shall furnish to the Company all
information reasonably requested by the Company relating to such holder.
(c) Effective Registration Statement or Prospectus. A Registration
----------------------------------------------
requested pursuant to this Section 9.2 shall not be deemed to have been effected
unless a registration statement with respect thereto has become effective;
provided that a Registration which does not become effective after the Company
--------
has filed a registration statement or prospectus with respect thereto solely by
reason of the refusal to proceed by the Requisite Holders (other than a refusal
to proceed based upon the advice of counsel relating to a matter with respect to
the Company or the withdrawal of a request for Registration pursuant to the
final proviso of Section 9.2(a)) then the Holders of the Warrant Shares that
were to have been registered shall pay all expenses of Registration in
connection with such Registration. Notwithstanding the foregoing, a
Registration requested pursuant to this Section 9.2 shall not be deemed to have
been effected if either (i) after a registration statement has become effective,
such Registration is interfered with by any stop order, injunction or other
order or requirement of the Commission in the appropriate jurisdiction or other
governmental agency or court for any
14
reason; or (ii) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such Registration are not
satisfied, other than by reason of some act or omission by the Holders of the
Warrant Shares that were to have been registered.
(d) Priority in Requested Registrations. If a requested Registration
-----------------------------------
pursuant to this Section 9.2 involves an underwritten offering and the managing
underwriter shall advise the Company in writing (with a copy to each holder of
Warrant Shares requesting Registration) that the number of shares of Warrant
Shares requested to be included in such Registration concurrently with
securities being registered by the Company or any other person or entity would
adversely affect the price, timing or the distribution of such Warrant Shares or
would exceed the number of shares it is advisable to offer to sell at such time,
in the reasonable and good faith judgment of such managing underwriter, the
Company will include in such Registration, to the extent of the number of
securities which the Company is so advised can be sold in such offering, first,
such number of shares of Warrants and Warrant Shares requested to be registered
by the holders thereof pursuant to clauses (i) and (ii) of Section 9.2(a), pro
rata among such holders on the basis of the total number of shares of such
securities requested to be registered by all such holders, and, second, all
other securities of the Company proposed to be included in such Registration, in
accordance with the priorities, if any, then existing among the Company and the
holders of such securities. No provision hereof shall be construed to limit the
Company's discretion in selection of an underwriter.
(e) Demand Underwritten Offerings. Unless otherwise directed by the
-----------------------------
Majority Holders of Warrant Shares pursuant to a Registration requested under
this Section 9.2, the Company shall use reasonable efforts to enter into a firm
commitment underwriting agreement with the underwriters for such offering, such
agreement to be satisfactory in substance and form to the Company, each such
Holder and the underwriters and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in such
agreements, including, without limitation, conditions precedent to the closing
contemplated by such agreement and customary indemnities. Except as set forth
in this Section 9.2(e), any such Holder of Warrant Shares shall not be required
to make any representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties, customary indemnities
and agreements regarding such Holder, such Holder's Warrant Shares and such
Holder's intended method of distribution and any other representation required
by law.
(f) Amendments and Supplements to Registration Statement and
--------------------------------------------------------
Prospectus. The Company shall prepare and file with the Commission such
----------
amendments and supplements to the Company's registration statement and the
prospectus used in connection therewith as may be necessary to keep the
Company's registration statement effective and to comply with the provisions of
the Act with respect to the sale or other disposition of all securities covered
by such registration statement until the earlier of such time as all of such
securities have been disposed of in a public offering or the expiration of 180
days;
15
(g) Priority of Other Registration Rights. The Company shall not,
-------------------------------------
without the prior written consent of the Requisite Holders, grant to any Person
the right to request or require the Company to register any share of Common
Stock or Convertible Securities, or any rights to subscribe for or to purchase,
or any options for the purchase of, Common Stock or Convertible Securities,
which rights would be senior to the rights of the Holders to request
Registration hereunder pursuant to Sections 9.1 or 9.2.
(h) Refusal, Abandonment or Suspension. If the Company reasonably
----------------------------------
determines that a Registration would require disclosure of confidential
information of the Company and such disclosure would not be in the best
interests of the Company, the Company may refuse to conduct such Registration or
abandon or suspend any Registration effected pursuant to the provisions of this
Section 9.2 at any time and without any liability to any holder hereof other
than its obligations, to the extent permitted by applicable law, to pay the
expenses, if any, of the Company and the selling security holders in connection
therewith.
Section 10. Termination of Restrictions. The restrictions imposed by
---------------------------
Section 1.2 hereof upon the transferability of any Warrant Shares shall cease
and terminate as to any Warrant Shares (a) when such securities shall have been
effectively registered under the Act and disposed of in accordance with the
registration statement covering such securities, (b) when such restrictions are
no longer required pursuant to Rule 144 under the Act or (c) when, in the
opinions of both counsel for the Holder and counsel for the Company, such
restrictions are otherwise no longer required in order to insure compliance with
the Act. Whenever such restrictions shall terminate as to any Warrant Shares,
the Holder shall be entitled to receive from the Company, without expense (other
than transfer taxes, if any), new securities of like tenor not bearing a legend
as to restrictions on transfer.
Section 11. No Rights as a Shareholder; Notice to Holder. Nothing
--------------------------------------------
contained in this Warrant shall be construed as conferring upon the Holder or
its transferees the right to vote or to consent or to receive notice as a
shareholder in respect of any meeting of shareholders for the election of
directors of the Company or any other matter, or any rights whatsoever as a
shareholder of the Company.
Section 12. Representations and Warranties. The Company hereby represents
------------------------------
and warrants to Holder as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of California and has full power
and lawful authority to carry on its business;
(b) The Company has the full power to execute, deliver and issue this
Warrant and to carry out its obligations hereunder, the execution, delivery and
issuance of this Warrant, and delivery and issuance of Warrant Shares upon
exercise of this Warrant, have been duly and validly authorized by the Company,
no other acts or proceedings on the part of the
16
Company are necessary to authorize this Warrant or the Warrant Shares; and this
Warrant constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms;
(c) The Warrant Shares will, when issued pursuant to this Warrant, be
duly authorized and validly issued, fully paid and nonassessable, and not
subject to preemptive rights;
(d) No consent or approval by, or filing with, any governmental
authority is required in connection with the execution, delivery and issuance by
the Company of this Warrant or the delivery and issuance of the Warrant Shares
other than such as have been obtained or made (or as may he required in the
future under applicable securities laws in connection with the transfer or
exercise of this Warrant or the resale of the Warrant Shares);
(e) The execution, delivery, issuance of this Warrant and the delivery
and issuance of the Warrant Shares will not result in the violation of any term
or provision of the charter or bylaws of the Company, or any loan agreement,
indentured note or other instrument, or decree, order, statute, rule or
regulation applicable to the Company (subject, however, to compliance with
applicable securities laws in connection with the transfer or exercise of this
Warrant or the resale of the Warrant Shares);
(f) The entire authorized capital stock of the Company is one million
shares of common stock and no shares of preferred stock. As of the date of this
Warrant, the Company has issued and outstanding (i) 1,999 shares of Common
Stock, (ii) excluding the Warrant Shares, 9.995 shares of Common Stock issuable
upon the exercise of any rights outstanding as of the date hereof including any
right to subscribe for or to purchase, or any options for the purchase of Common
Stock or Convertible Securities and (iii) no shares of preferred stock; and
(g) Other than this Warrant, the Company is not a party to any
agreement regarding registration rights.
Section 13. Delivery Upon Execution of this Warrant. This Warrant shall
---------------------------------------
not be effective until the Holder has executed and delivered to the Company a
certificate in the form of Exhibit B-1 hereto.
Section 14. Notices. Any notice pursuant to this Warrant by the Company
-------
or by the Holder shall be in writing and shall be mailed by certified mail,
return receipt requested, (a) to the Company, at its principal office at 00000
XxxXxxxxx Xxxx., Xxxxxx, XX 00000. Attention: Xxxx Xxxxxxxxx; or (b) to the
Holder, to CS First Boston Mortgage Capital Corp., 00 Xxxx 00xx Xx., Xxx Xxxx,
X.X. 00000-0000, Attention: Xxxxxxx Xxxxxxxxx. Either party may from time to
time change the address to which notices to it are to be delivered or mailed
under this
17
Warrant by notice in writing to the other party.
Section 15. Applicable Law. This Warrant shall be governed by and
--------------
construed in accordance with the laws of the State of New York, without giving
effect to principles of conflict of laws.
Section 16. Captions. The captions of the Sections and subsections of
--------
this Warrant have been inserted for convenience only and shall have no
substantive effect.
IN WITNESS WHEREOF, the undersigned have executed this Warrant this
2nd day of October, 1996.
T.A.R. PREFERRED CORPORATION
By: s/Xxxx Xxxxxxxxx
----------------
Name: Xxxx Xxxxxxxxx
Title: C.E.O.
Attest: s/
----------------
Secretary
18
T.A.R. PREFERRED MORTGAGE CORPORATION
PURCHASE FORM
The undersigned irrevocably elects to exercise the right of purchase under
the enclosed Warrant, all of the Warrant Shares provided for in the enclosed
Warrant, and requires that certificates for such shares be issued in the name
of:
________________________________________________________________________
(Please Print Name and Social Security No.)
________________________________________________________________________
(Street Address)
________________________________________________________________________
(City, State and Zip Code)
Dated: __________________, 199_
Name of Warrantholder or Assignee: _____________________________________
(Please Print)
Address: _______________________________________________________________
________________________________________________________________________
Signature: ______________________________________________________
19
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
________________________________________________________________________
(Name of Assignee Must be Printed or Typewritten)
________________________________________________________________________
(Xxxxxx Xxxxxxx)
________________________________________________________________________
(City, State and Zip Code)
the within Warrant, irrevocably constituting and appointing______________
__________________________________________________________________________
Attorney to transfer such Warrant on the books of the Company, with full power
of substitution in the premises.
Dated: _________________________, 199_
___________________________________
Signature of Registered Holder
20
