EXHIBIT 4.3
Warrant No. M-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 DECEMBER 6, 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 Xxxxxxx Xxxxx
Mortgage Capital Inc., the holder of this Warrant (the "Holder"), its nominees,
successors or assigns 27.483 nonassessable shares of Common Stock, $0.1 par
value, of the Company ("Common Stock") (equal to one and two-tenths of one
percent (1.2%) 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 (as defined below) shall be subject to
adjustment from time to time as provided herein. The initial Warrant Price (the
"Warrant Price") per share of Common Stock shall equal $13,099.01 per share,
subject to adjustment as provided herein.
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 Warrant.
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1.1 Term of Warrant. Subject to the terms of this Warrant, the Holder
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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 December 6, 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 will not
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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 provision of this Warrant.
Unless the Warrant or Warrant Shares shall have been duly registered under the
Act pursuant to Section 7 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. The Holder may exercise this Warrant in whole
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only by delivering to the Company (i) a written notice of such Holder's election
to exercise this Warrant, and (ii) payment in cash or by a certified or
cashier's check of the applicable Warrant Price. Upon receipt of written
notice, the Company shall as promptly as practicable
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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 of record of such
Warrant Shares as of the date of payment of the Warrant Price.
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 stamp
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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 be
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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 and the
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Company shall at all times keep reserved, out of its authorized Common Stock, a
number of 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
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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, without
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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 any
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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 propose
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(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 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
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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 under the Act 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 whenever
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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 immediately
prior to such adjustment.
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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 shall
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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 in any
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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 which conversion or exchange (determined by
dividing (i) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
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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 of any
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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
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made upon the issuance of the shares of Common Stock delivered as aforesaid, but
only if as a result of such adjustment the Adjustment Price then in effect
hereunder is thereby reduced.
6.5 Stock Dividends. In case the Company shall declare a dividend or make
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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 this 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 and 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 corporation, 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 holders of
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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 outstanding at
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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 at any
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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 number
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. If
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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,
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reclassification, consolidation, merger or sale not taken place, and in any such
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 corporation (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 of 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 Company shall
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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.
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6.12 Notice of Adjustment. Upon any adjustment of the Adjustment Price and
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the Warrant Price, then and in each such case the Company shall give written
notice thereof, 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. Registration.
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7.1 Incidental Registration.
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(a) General. If the Company at any time proposes to register on its own
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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
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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
7.1, use its best efforts so 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
11
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 7.1 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 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 7.1, 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 7.1 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.
Section 8. 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 9. 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
12
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 10. 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 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 be 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,
indenture, 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 and the Warrant Shares issuable to
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated pursuant to the Warrant
issued concurrently herewith, 291.20 shares of Common Stock issuable upon the
exercise of any rights outstanding as of the date hereof including any warrant
or other right to subscribe for or to purchase, or any options for the
13
purchase of Common Stock or Convertible Securities and (iii) no shares of
preferred stock; and
(g) Other than this Warrant, and the Warrant issued to Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated concurrently herewith, an Option granted to
an employee of the Company to purchase 9.95 shares of Common Stock, and the
Warrant dated October 2, 1996 relating to 281.25 shares of Common Stock, the
Company is not a party to any agreement regarding registration rights.
Section 11. 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 12. Notices. Any notice pursuant to this Warrant by the Company or
--------
by the Holder shall be in writing and shall be mailed by certified mall, 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 Xxxxxxx Xxxxx Mortgage Capital Inc., World Xxxxxxxxx Xxxxxx, Xxxxx
Xxxxx, Xxx Xxxx, XX 00000-0000; Attention: Xx. X. X. XxXxxxxx. Either party may
from time to time change the address to which notices to it are to be delivered
or mailed under this Warrant by notice in writing to the other party.
Section 13. 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 14. Captions. The captions of the Sections and subsections of this
---------
Warrant have been inserted for convenience only and shall have no substantive
effect.
14
IN WITNESS WHEREOF, the undersigned have executed this Warrant as of the
6th day of December, 1996.
T.A.R. PREFERRED MORTGAGE
CORPORATION
By: _____________________________
Name: Xxxx Xxxxxxxxx
Title: C.E.O.
Attest:____________________
Secretary
15
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 or Taxpayer ID No.
-----------------------------------------------
(Street Address)
-----------------------------------------------
City, State and Zip Code
-----------------------------------------------
Dated: ____________________, 199____
Name of Warrantholder or Assignee:
(Please Print) ----------------------------------------
Address:
------------------------------------------------------------------
--------------------------------------------------------------------------
Signature:
------------------------------
16
EXHIBIT A
FORM OF RULE 144A INVESTMENT REPRESENTATIONS
Description of Rule 144A Securities, including numbers:
[Warrant] [Warrant Shares] of
T.A.R. Preferred Mortgage Corporation
Issued Pursuant to a Warrant Agreement
by T.A.R. Preferred Mortgage Corporation
The undersigned seller, as registered holder (the "Transferor"), intends to
transfer the Rule 144A Securities described above to the undersigned buyer (the
"Buyer").
1. In connection with such transfer and in accordance with the agreements
pursuant to which the Rule 144A Securities were issued, the Transferor hereby
certifies the following facts: Neither the Transferor nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise disposed of the Rule
144A Securities, any interest in the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Rule 144A Securities, or otherwise approached or negotiated
with respect to the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security with, any person in any manner, or made
any general solicitation by means of general advertising or in any other manner,
or taken any other action, which would constitute a distribution of the Rule
144A Securities under the Securities Act of 1933, as amended (the "1933 Act"),
or which would render the disposition of the Rule 144A Securities a violation of
Section 5 of the 1933 Act or require registration pursuant thereto, and that the
Transferor has not offered the Rule 144A Securities to any person other than the
Buyer or another "qualified institutional buyer" as defined in Rule 144A under
the 1933 Act.
Terms not defined herein shall have the meanings assigned thereto in
the Warrant dated as of December 6, 1996 by T.A.R. Preferred Mortgage
Corporation.
2. The Buyer warrants and represents to, and covenants with, the
Transferor and the Company pursuant to Section 1.2 of the Warrant as follows:
a. The Buyer understands that the Rule 144A Securities have not been
registered under the 1933 Act or the securities laws of any state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Rule 144A
17
Securities.
c. The Buyer has been furnished with all information regarding the
Rule 144A Securities that it has requested from the Company.
d. Neither the Buyer nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or
other disposition of the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security from, or otherwise approached
or negotiated with respect to the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security with, any person in any
manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, which would constitute a
distribution of the Rule 144A Securities under the 1933 Act or which would
render the disposition of the Rule 144A Securities a violation of Section 5
of the 1933 Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as the term is
defined in Rule 144A under the 1933 Act and has completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex
2. The Buyer is aware that the sale to it is being made in reliance on
Rule 144A. The Buyer is acquiring the Rule 144A Securities for its own
account or the account of other qualified institutional buyers and
understands that such Rule 144A Securities may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account
of a qualified institutional buyer to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, or (ii) pursuant
to another exemption from registration under the 1933 Act.
3. The Buyer is not an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), nor a Person acting,
directly or indirectly, on behalf of any such plan, and understands that
registration of transfer of any of the Rule 144A Securities to any such employee
benefit plan, or to any person acting on behalf of such plan, will not be made
unless such employee benefit plan delivers a certification of facts and an
opinion of its counsel, addressed and satisfactory to the Company to the effect
that such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or subject the Company to any obligation in addition to
those undertaken in the Warrant or result in the imposition of an excise tax
under Section 4975 of the Code.
4. This document may be executed in one or more counterparts and by the
18
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this document as of
the date set forth below.
--------------------------------- -----------------------------------
Print Name of Transferor Print Name of Buyer
By:_____________________________ By:_______________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No._________________________ No._________________________
Date:_______________________ Date:_______________________
19
ANNEX 1
-------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A ("Rule 144A") under
the Securities Act of 1933, as amended (the "Act") because (i) the Buyer owned
and/or invested on a discretionary basis $___________________ in securities
(except for the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in accordance with
Rule 144A) and (ii) the Buyer satisfies the criteria in the category marked
below.
--- Corpoporation, etc. The Buyer is a corporation (other than a
------------------
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
organization described in Section 501(c)(3) of the Internal
Revenue Code.
--- Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
----------------------------------
--- Savings and Loan. The Buyer (a) is a savings and loan
----------------
association, building
------------------------
/1/ Buyer must own and invest on a discretionary basis acting for its own
account or the account of other qualified institutional investors at least
$100,000,000 in securities unless Buyer is a dealer, in which case, Buyer must
own and invest on a discretionary basis at least $10,000,000 in securities,
except in the case of a buyer who is a dealer acting in a riskless principal
transaction on behalf of a qualified institutional buyer.
20
and loan association, cooperative bank, homestead association or
similar institution, which is supervised and examined by a State
or Federal authority having supervision over any such
institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
----------------------------------
--- Dealer. The Buyer is a dealer registered pursuant to Section 15
-------
of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx").
--- Insurance Company. The Buyer is an insurance company as defined
------------------
in Section 2(13) of the Act whose primary and predominant
business activity is the writing of insurance or the reinsuring
of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a
similar official or agency of a State, territory or the District
of Columbia.
--- State or Local Plan. The Buyer is a plan established and
--------------------
maintained by a State, its political subdivisions, or any agency
or instrumentality of the State or its political subdivisions,
for the benefit of its employees.
--- ERISA Plan. The Buyer is an employee benefit plan within the
-----------
meaning of Title I of the Employee Retirement Income Security
Act of 1974.
--- Investment Adviser. The Buyer is an investment adviser
-------------------
registered under the Investment Advisors Act of 1940.
--- SBIC. The Buyer is a Small Business Investment Company licensed
-----
by the U.S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958.
--- Business Development Company. The Buyer is a business
-----------------------------
development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
--- Trust Fund. The Buyer is a trust fund whose trustee is a bank
-----------
or trust company and whose participants are exclusively (a)
plans established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the State or
its political subdivisions, for the benefit of its employees, or
(b) employee benefit plans within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, but is not a
trust fund that includes as participants individual retirement
accounts or H.R. 10 plans.
21
3. The term "securities" as used herein does not include (i) securities
------------ -----------------
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer as a participant in a public
offering if the Buyer is a dealer, (iii) bank deposit notes and certificates of
deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities
owned but subject to a repurchase agreement and (vii) currency, interest rate
and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and invested on a discretionary basis by the Buyer, the Buyer used the cost of
such securities to the Buyer, except where the Buyer reports its securities
holdings in its financial statements on the basis of their market value and
current information with respect to the cost of those securities has been
published, and did not include any of the securities referred to in the
preceding paragraph. Further, in determining such aggregate amount, the Buyer
may have included securities owned by subsidiaries of the Buyer, but only if
such subsidiaries are consolidated with the Buyer in its financial statements
prepared in accordance with generally accepted accounting principles and if the
--
investments of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under Section 13 or 15(d) of the Exchange Act.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that each of the parties to which this certification is made is
relying and will continue to rely on the statements made herein because one or
more sales to the Buyer may be in reliance on Rule 144A.
6. Will the Buyer be purchasing the Rule 144A Securities only for the
Buyer's own account?
Yes ____ No ____
If the answer to the foregoing question is "no", the Buyer agrees that, in
connection with any purchase of securities sold to the Buyer for the account of
a third party (including any separate account) in reliance on Rule 144A, the
Buyer will only purchase for the account of a third party that at the time is a
"qualified institutional buyer" within the meaning of Rule 144A. In addition,
the Buyer agrees that the Buyer will not purchase securities for a third party
unless the Buyer has obtained a current representation letter from such third
party or taken other appropriate steps contemplated by Rule 144A to conclude
that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
22
7. The Buyer will notify each of the parties to which this certification
is made of any changes in the information and conclusions herein during the
period between the date of this certification and the date the Buyer purchases
the Rule 144A Securities. Unless such notice is given, the Buyer's purchase of
the Rule 144A Securities will constitute a reaffirmation of this certification
as of the date of such purchase.
------------------------------
Print Name of Buyer
By:
---------------------
Name:
---------------------
Title:
---------------------
Date:
--------------------
23
ANNEX 2
-------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because Buyer is part of a Family of Investment
Companies (as defined below), is such an executive officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SBC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and (ii)
as marked below, the Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year. For
purposes of determining the amount of securities owned by the Buyer or the
Buyer's Family of Investment Companies, the cost of such securities was used.
--- The Buyer owned $_______________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A).
--- The Buyer is part of a Family of Investment Companies which owned in
the aggregate $________________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
--------------------------------
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other registered investment
company adviser).
4. The term "securities" as used herein does not include (i) securities
------------
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) bank deposit notes and certificates of deposit,
(iii) loan participations, (iv) repurchase agreements, (v) securities owned but
subject to a repurchase agreement and (vi) currency, interest rate and commodity
swaps.
24
5. The Buyer is familiar with Rule 144A and understands that each of the
parties to which this certification is made is relying and will continue to rely
on the statements made herein because one or more sales to the Buyer will be in
reliance on Rule 144A. In addition, the Buyer will only purchase for the
Buyer's own account.
6. The Buyer will notify each of the parties to which this certification
is made of any changes in the information and conclusions herein during the
period between the date of this certification and the date the Buyer purchases
the Rule 144A Securities. Unless such notice is given, the Buyer's purchase of
the Rule 144A Securities will constitute a reaffirmation of this certification
as of the date of such purchase.
-----------------------------------
Print Name of Buyer
By:
---------------------------
Name:
Title:
Date:
---------------------------
IF AN ADVISER:
-----------------------------------
Print Name of Buyer Date:
25
EXHIBIT B-1
FORM OF INVESTOR REPRESENTATION LETTER
_______________, 19 ____
T.A.R. Preferred Mortgage Corporation
Re: Warrant to Purchase Common Stock of
T.A.R. Preferred Mortgage Corporation
-------------------------------------
Ladies and Gentlemen:
________________________________________ (the "Transferee") intends to
acquire from ________________________________________ (the "Transferor")
_______________________________ [Warrant Shares of T.A.R. Preferred Mortgage
Corporation (the "Securities") issued pursuant to the Warrant] [the Transferor's
right (the "Securities") pursuant to the Warrant] (the "Warrant") dated as of
December 6, 1996 by T.A.R. Preferred Mortgage Corporation. Capitalized terms
used herein and not otherwise defined shall have the meanings assigned thereto
in the Warrant.
In connection with such acquisition, the Transferee hereby certifies and
agrees:
1. The Transferee is acquiring the Securities either (a) for its own
account or for accounts for which it exercises sole investment discretion and
not with a view to or for sale in connection with any distribution thereof,
subject nevertheless to any requirement of law that the disposition of the
Transferee's property shall at all times be and remain within its control, or
(b) for resale to "Qualified Institutional Buyers" within the meaning of Rule
144A under the Securities Act of 1933, as amended (the "1933 Act"), and in
accordance with the provisions of the Warrant.
2. The Transferee has received, and has had an opportunity to review,
such information concerning the Securities and the Company as has been requested
by the Transferee and is relevant to the Transferee's decision to purchase the
Securities. The Transferee has had any questions arising from such review
answered by the Company to the satisfaction of the Transferee.
3. The Transferee has such expertise, knowledge and sophistication in
financial and business matters generally, and in financial and business matters
related to securities similar to the Securities in particular, as to be capable
of evaluating the merits and risks of
26
an investment in the Securities. The Transferee (or any account referred to
above) is able to bear the economic risks of such an investment.
4. The Transferee will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Securities by
the Transferee.
5. The Transferee understands that (a) the Securities have not been and
will not be registered under the Securities Act of 1933, as amended (the "1933
Act"), (b) the Company is not required to so register the Securities, (c) the
Securities may be resold only if registered pursuant to the provisions of the
1933 Act, or if an exemption from such registration is available, (d) the
Warrant contains restrictions regarding the transfer of the Securities and (e)
the Securities will bear a legend to the foregoing effect.
6. The Transferee is not an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the Internal
Revenue Code of 1986, as amended (the "Code"), nor a Person acting, directly or
indirectly, on behalf of any such plan, and understands that registration of
transfer of any Securities to any such employee benefit plan, or to any person
acting on behalf of such plan, will not be made unless such employee benefit
plan delivers a certification of facts and an opinion of its counsel, addressed
and satisfactory to the Company and to the effect that such transfer will not
result in a violation of Section 406 of ERISA or Section 4975 of the Code or
subject the Company to any obligation in addition to those undertaken in the
Warrant or result in the imposition of an excise tax under Section 4975 of the
Code.
7. The Transferee will not nor has it authorized or will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Securities, any interest in any Securities or any other similar security to any
person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Securities, any interest in any Securities
or any other similar security from any person in any manner, (c) otherwise
approach or negotiate with respect to any Securities, any interest in any
Securities or any other similar security with any person in any manner, (d) make
any general solicitation by means of general advertising or in any other manner,
or (e) take any other action, that (as to any of (a) through (c) above) would
constitute a distribution of any Securities under the 1933 Act, that would
render the disposition of any Securities a violation of Section 5 of the 1933
Act or any state securities law, or that would require registration or
qualification pursuant thereto. The Transferee will not sell or otherwise
transfer any of the Securities, except in compliance with the provisions of the
Warrant. Without limiting the generality of the foregoing sentence, if the
Transferee sells any of the Securities, the Transferee will comply with any
applicable requirements set forth in Section 1.2 of the Warrant, and if the
Transferee sells any of the Securities, the Transferee will obtain from any
purchaser any representations required pursuant to Section 1.2 of the Warrant.
27
Very truly yours,
--------------------------
(Transferee)
By:
------------------------
Name:
----------------------
Title:
---------------------
28
EXHIBIT B-2
FORM OF TRANSFEROR REPRESENTATION LETTER
T.A.R. Preferred Mortgage Corporation
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Re: Warrant to Purchase Common Stock of
T.A.R. Preferred Mortgage Corporation
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Ladies and Gentlemen:
In connection with the transfer by _____________________________ (the
"Transferor") to ___________________________ (the "Transferee") of [the Warrant
Shares issued pursuant to] [all of the Transferor's rights and obligations
under] the Warrant (the "Securities") dated as of December 6, 1996 by T.A.R.
Preferred Mortgage Corporation (the "Warrant"), the Transferor hereby certifies,
represents and warrants to, and covenants with, the Company that neither the
Transferor nor anyone acting on its behalf has (a) offered, pledged, sold,
disposed of or otherwise transferred any Securities, any interest in any
Securities or any other similar security to any person in any manner, (b)
solicited any offer to buy or to accept a pledge disposition or other transfer
of any Securities, any interest in any Security or any other similar security
from any person in any manner, (c) otherwise approached or negotiated with
respect to any Securities any interest in any Securities or any other similar
security with any person in any manner, (d) made any general solicitation by
means of general advertising or in any other manner, or (e) has taken any other
action, that (as to any of (a) through (e) above) would constitute a
distribution of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), that would render the disposition of any Securities a violation of
Section 5 of the 1933 Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Transferor will not act in
any manner set forth in the foregoing sentence with respect to any Securities.
The Transferor has not and will not sell or otherwise transfer any of the
Securities, except in compliance with the provisions of the Warrant.
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Capitalized terms used herein and not otherwise defined shall have the
meanings assigned thereto in the Warrant.
Very truly yours,
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By:
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Name:
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Title:
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