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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)
International Thoroughbred Breeders, Inc.
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(Name of Issuer)
Common Stock, $2.00 par value
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(Title of Class of Securities)
460491 80 6
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(CUSIP Number)
Sarah Hewitt, Esq.
Brown Raysman Millstein Felder & Steiner LLP
120 West 45th Street
New York, New York 10036
(212) 944-1515
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 23, 1997
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
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CUSIP NO. 460491 80 6 13D Page 2 of 7 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Credit Suisse First Boston Mortgage Capital LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER
OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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NUMBER 7 SOLE VOTING POWER 2,419,509 Shares*
OF --------------------------------------------------------
SHARES
BENEFICIALLY 8 SHARED VOTING POWER None
OWNED --------------------------------------------------------
BY
EACH 9 SOLE DISPOSITIVE POWER 2,419,509 Shares*
REPORTING --------------------------------------------------------
PERSON
WITH 10 SHARED DISPOSITIVE POWER None
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 2,419,509 Shares*
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ]
CERTAIN SHARES
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 17.2%*
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14 TYPE OF REPORTING PERSON OO
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* See Item 5 hereof
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CUSIP NO. 460491 80 6 13D Page 3 of 7 Pages
Item 1 Security of Issuer
This statement on Schedule 13D relates to shares of Common Stock, par
value $2.00 per share (the "Shares"), of International Thoroughbred Breeders,
Inc., a Delaware corporation (the "Company"). The principal executive offices of
the Company are located at P.O. Box 1232, Cherry Hill, New Jersey 08034.
Item 2 Identity and Background
This statement on Schedule 13D is being filed by Credit Suisse First
Boston Mortgage Capital LLC ("CSFB"). CSFB is a Delaware limited liability
company with its principal address at 11 Madison Avenue, New York, New York
10010.
The members of CSFB are Credit Suisse First Boston Management Corp., a
Delaware corporation, and Credit Suisse First Boston, Inc., a Delaware
corporation, which is the managing member of CSFB. The address of both members
is 11 Madison Avenue, New York, New York 10010.
The chief executive officer of CSFB is Andrew D. Stone. Mr. Stone's
address is c/o CSFB, 11 Madison Avenue, New York, New York 10010. Mr. Stone is a
citizen of the United States.
During the last five years, none of the persons listed above (i) has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he, she or it
is subject to a judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violations with respect to such laws.
Item 3 Source and Amount of Funds or Other Consideration
On May 23, 1997, CSFB agreed to loan the Company $55,000,000
represented by a convertible promissory note (the "Note"). Under the terms of
the Note, $10 million aggregate principal amount of the Note can be converted
under certain conditions, at the option of CSFB, at a conversion price per Share
of $8.75 for an aggregate of 1,142,857 Shares (subject to adjustment in certain
events).
In addition, pursuant to a loan agreement dated May 23, 1997 (the "Loan
Agreement") by and among CSFB, the Company and certain of the Company's
subsidiaries, on May 23, 1997, CSFB acquired warrants (the "Warrants") to
purchase 546,847 Shares and 497,153 Shares at an exercise price of $4.375 per
Share (subject to adjustment in certain events) for no additional consideration.
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CUSIP NO. 460491 80 6 13D Page 4 of 7 Pages
The warrant for 546,847 Shares is immediately exercisable. The warrant for
497,153 Shares becomes exercisable at such time as CSFB shall deliver to the
Company a commitment for a construction loan or a permanent take-out loan to
provide certain additional funding to the Company.
In connection with the Loan Agreement, CSFB also obtained the right to
receive 232,652 Shares upon the conversion of a promissory note issued by the
Company and its wholly owned subsidiary, Orion, to a third party in
consideration of CSFB's consent to such transaction. Such conversion is
anticipated to take place on or before August 30, 1997.
Item 4 Purpose of Transaction
The purpose of the transaction was to provide loans to the Company to
provide the Company with necessary working capital. CSFB received the Warrants
as compensation under the Loan Agreement. Other than the transactions listed
above, CSFB has not acquired or disposed of any Shares.
Except as indicted in this Schedule 13D, CSFB currently has no specific
plans or proposals that relate or would result in any of the matters described
in subparagraphs (b) - (j) of item 4 of Schedule 13D.
Item 5 Interest in the Securities of the Issuer
The Company had a total of 11,651,528 shares of Common Stock
outstanding on May 19, 1997, as disclosed by the Company in its quarterly report
on Form 10Q for the period ended March 31, 1997.
Pursuant to Rule 13d-3, CSFB may be deemed to beneficially own an
aggregate of 2,419,509 Shares issuable upon exercise or conversion of other
securities as contemplated by Rule 13d- 3(d)(1)(i). Such 2,419,509 Shares
constitute an aggregate of 17.2% of the outstanding Common Stock, assuming the
exercise or conversion of the aforementioned securities. For purposes of Section
13d, CSFB may be deemed to have sole power to vote or to direct the vote, and to
dispose or to direct the disposition, of all of such Shares.
Except as set forth herein, CSFB does not beneficially own any
shares of Common Stock of the Issuer or has not engaged in any transaction in
any such Shares during the sixty day period immediately preceding the date
hereof.
(d) & (e) Not applicable.
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CUSIP NO. 460491 80 6 13D Page 5 of 7 Pages
Item 6 Contracts, Arrangements, Understandings or
Relationships With Respect to the Issuer
In addition to the arrangements discussed in Item 3 above, CSFB and the
Company have agreed that upon the consummation of a proposed acquisition by the
Company (the "Acquisition"), CSFB will receive Shares equal to ten percent (10%)
of the consideration paid by the Company for the Acquisition. Such Acquisition
is anticipated to be completed on or before August 30, 1997. CSFB reserves the
right to enter into other contracts, arrangements, understandings or
relationships with respect to the securities of the Company in the future.
Item 7 Materials to be filed as Exhibits
Exhibit A - Warrant dated May 23, 1997 to purchase 546,847
Shares.
Exhibit B - Warrant dated May 23, 1997 to purchase 497,153
Shares.
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CUSIP NO. 460491 80 6 13D Page 6 of 7 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information with respect to CSFB set forth in this
statement is true, complete and correct.
CREDIT SUISSE FIRST BOSTON MORTGAGE
CAPITAL LLC
By: /s/ Lawrence A. Shelley
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Name: Lawrence A. Shelley
Title: Vice-President
Dated: June 2, 1997
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CUSIP NO. 460491 80 6 13D Page 7 of 7 Pages
EXHIBIT INDEX
Exhibit Number Description of Document
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Exhibit A Warrant dated May 23, 1997 to purchase 546,847
Shares.
Exhibit B Warrant dated May 23, 1997 to purchase 497,153
Shares.
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THE TRANSFER OF THIS WARRANT IS SUBJECT TO RESTRICTIONS CONTAINED HEREIN. THIS
WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF THE HOLDER THAT
IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS THE
RESALE OR OTHER DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
Common Stock Subscription Warrant
Warrant to Subscribe Warrant No. 1
for 546,847 shares of Common Stock
dated May 23, 1997
Void After May 23, 2002
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THIS CERTIFIES that, for value received, CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC, a Delaware limited liability company ("CSFB"), or its
assigns, is entitled to subscribe for and purchase from International
Thoroughbred Breeders, Inc., a Delaware corporation (the "Corporation"), at the
price of $4.375 per share (such price, as from time to time to be adjusted as
hereinafter provided, being hereinafter called the "Warrant Price"), at any time
on or after the date of this Warrant, but prior to May 23, 2002 (the "Expiration
Date"), up to Five Hundred Forty-Six Thousand Eight Hundred Forty-Seven
(546,847) (subject to adjustment as hereinafter provided) fully paid and
nonassessable shares of common stock, par value $2.00 per share, of the
Corporation (hereinafter called the "Common Stock"), subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. This Warrant
and any Warrant or Warrants subsequently issued upon exchange or transfer are
hereinafter collectively called the "Warrants".
Section 1. Exercise of Warrant. (a) The rights represented by this
Warrant may be exercised by the holder hereof, in whole at any time or from time
to time in part, but not as to a fractional share of Common Stock, by the
surrender of this Warrant (properly endorsed) and delivery of a duly executed
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Notice of Exercise, substantially in the form of Annex A hereto, at the office
of the Corporation as it may designate by notice in writing to the holder hereof
at the address of such holder appearing on the books of the Corporation, and,
unless the holder is exercising the conversion right set forth in paragraph 1(b)
below, by payment to the Corporation of the Warrant Price in cash or by
certified or official bank check, for each share being purchased.
(b) In lieu of exercising the Warrant as specified in paragraph 1(a)
above, the holder of this Warrant may from time to time convert this Warrant, in
whole or in part, into a number of shares of Common Stock equal to the quotient
of (x) the aggregate market value of the Common Stock minus the aggregate
Warrant Price of such shares of Common Stock, divided by (y) the fair market
value of the Common Stock. For purposes of this paragraph, if the shares of
Common Stock are traded in a public market, the fair market value of the Common
Stock shall be the closing price of the Common Stock reported for the business
day immediately before the holder of this Warrant delivers its Notice of
Exercise to the Corporation. If the Common Stock is not traded in a public
market, the Board of Directors of the Corporation shall determine fair market
value in its reasonable good faith judgment. The foregoing notwithstanding, if
the holder of the Warrant advises the Board of Directors in writing that the
holder disagrees with such determination, then the Corporation and the holder of
this Warrant shall promptly agree upon a reputable investment banking firm to
undertake such valuation. If the valuation of such investment banking firm is
greater than that determined by the Board of Directors, then all fees and
expenses of such investment banking firm shall be paid by the Corporation. In
other circumstances, such fees and expenses shall be paid by the holder of this
Warrant.
(c) In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the shares of Common Stock so
purchased, registered in the name of the holder, shall be delivered to the
holder hereof within a reasonable time, not exceeding ten days, after the rights
represented by this Warrant shall have been so exercised; and, unless this
Warrant has expired, a new Warrant representing the number of shares (except a
remaining fractional share), if any, with respect to which this Warrant shall
not then have been exercised shall also be issued to the holder hereof within
such time. The person in whose name any certificate for shares of Common Stock
is issued upon exercise of this Warrant shall for all purposes be deemed to have
become the holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price, if applicable, and any applicable
taxes was made, except
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that, if the date of such surrender and payment is a date on which the stock
transfer books of the Corporation are closed, such person shall be deemed to
have become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open.
Section 2. Adjustment of Number of Shares. Upon each adjustment of the
Warrant Price as provided in Section 3, the holder of this Warrant shall
thereafter be entitled to purchase, at the Warrant Price resulting from such
adjustment, the number of shares (calculated to the nearest tenth of a share)
obtained by multiplying the Warrant Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the Warrant Price
resulting from such adjustment.
Section 3. Certain Adjustments.
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(a) Stock Dividends, Issuances, Subdivisions or Combinations of Stock.
In case the Corporation shall at any time declare or pay a dividend on its
Common Stock payable in Common Stock, or shall issue shares of Common Stock in
exchange for the conversion or cancellation of debt or the receipt of assets or
stock in a transaction with Las Vegas Entertainment Network, Inc. and/or any of
its subsidiaries or affiliates during the term of the Loan Agreement dated as of
the date hereof between CSFB and the Corporation and certain of its
subsidiaries, or subdivide its outstanding shares of Common Stock into a greater
number of shares, the Warrant Price in effect immediately prior to any such
event shall be proportionately reduced (by multiplying such Warrant Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after such
event), and conversely, in case the outstanding shares of Common Stock of the
Corporation shall be combined into a smaller number of shares, the Warrant Price
in effect immediately prior to such combination shall be proportionately
increased (by multiplying such Warrant Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such combination and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such combination).
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. If
any capital reorganization or reclassification of the capital stock of the
Corporation or any consolidation or merger of the Corporation with another
corporation, or the sale
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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,
merger or sale, lawful and adequate provisions shall be made whereby each holder
of the Warrants 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 Corporation immediately theretofore receivable upon the
exercise of such Warrant or Warrants, such shares of stock, securities or assets
(including cash) 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 so receivable had such
reorganization, 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 Warrant 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
exercise rights. In the event of a merger or consolidation of the 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 Corporation
outstanding immediately prior to such merger or consolidation, the 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 Corporation. The Corporation will not
effect any such consolidation, merger or sale, unless prior to the consummation
thereof the successor corporation (if other than the Corporation) resulting from
such consolidation or merger or the corporation purchasing such assets shall
assume by written instrument, executed and mailed or delivered to each holder of
the Warrants at the last address of such holder appearing on the books of the
Corporation, 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.
(c) Price Protection. If at any time while the Warrants are outstanding,
the Corporation shall issue shares of Common Stock, or rights, options,
warrants, or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (excluding (i) shares, rights,
options, warrants, or convertible or exchangeable securities issued as of the
date of issuance of this Warrant or issued in
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any of the transactions described in Paragraphs (a) or (b) above, (ii) shares
issued upon the exercise of such rights, options or warrants or upon conversion
or exchange of such convertible or exchangeable securities, and (iii) the
Warrants and any shares issued upon exercise thereof), at a price per share of
Common Stock (determined in the case of such rights, options, warrants, or
convertible or exchangeable securities by dividing (x) the total amount
receivable by the Corporation in consideration of the sale and issuance of such
rights, options, warrants, or convertible or exchangeable securities, plus the
total minimum consideration payable to the Corporation upon exercise,
conversion, or exchange thereof by (y) the total maximum number of shares of
Common Stock covered by such rights, options, warrants, or convertible or
exchangeable securities) lower than the fair market value per share of Common
Stock on the date the Corporation fixes the offering price of such shares,
rights, options, warrants, or convertible or exchangeable securities, then the
Warrant Price shall be adjusted so that it shall equal the price determined by
multiplying the Warrant Price in effect immediately prior thereto by a fraction
(i) the numerator of which shall be the sum of (A) the number of shares of
Common Stock outstanding immediately prior to such sale and issuance plus (B)
the number of shares of Common Stock which the aggregate consideration received
(determined as provided below) for such sale or issuance would purchase at such
fair market value per share, and (ii) the denominator of which shall be the
total number of shares of Common Stock outstanding immediately after such sale
and issuance. Such adjustment shall be made successively whenever such an
issuance is made. For the purposes of such adjustment, the maximum number of
shares of Common Stock which the holder of any such rights, options, warrants or
convertible or exchangeable securities shall be entitled to subscribe for or
purchase shall be deemed to be issued and outstanding as of the date of such
sale and issuance and the consideration received by the Corporation therefor
shall be deemed to be the consideration received by the Corporation for such
rights, options, warrants, or convertible or exchangeable securities, plus the
minimum consideration or premium stated in such rights, options, warrants, or
convertible or exchangeable securities to be paid for the shares of Common Stock
covered thereby. In case the Corporation shall sell and issue shares of Common
Stock, or rights, options, warrants, or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of Common Stock for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then in determining the price per share of Common Stock and the
consideration received by the Corporation for purposes of the first sentence of
this Paragraph 3(c), the Board of Directors of the Corporation shall determine,
in good faith,
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the fair value of said property, and such determination shall be
described in a duly adopted board resolution certified by the Corporation's
Secretary or Assistant Secretary. In case the Corporation shall sell and issue
rights, options, warrants, or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock together with one
or more other securities as a part of a unit at a price per unit, then in
determining the price per share of Common Stock and the consideration received
by the Corporation for purposes of the first sentence of this Paragraph 3(c),
the Board of Directors of the Corporation shall determine, in good faith,
which determination shall be described in a duly adopted board resolution
certified by the Corporation's Secretary or Assistant Secretary, the fair value
of the rights, options, warrants, or convertible or exchangeable securities then
being sold as part of such unit. Such adjustment shall be made successively
whenever such an issuance occurs, and in the event that such rights, options,
warrants, or convertible or exchangeable securities expire or cease to be
convertible or exchangeable before they are exercised, converted, or exchanged
(as the case may be), then the Warrant Price shall again be adjusted to the
Warrant Price that would then be in effect if such sale and issuance had not
occurred, but such subsequent adjustment shall not affect the number of Warrant
Shares issued upon any exercise of Warrants prior to the date such subsequent
adjustment is made.
(d) Notice of Adjustment. Upon any adjustment of the Warrant Price, then
and in each such case, the Corporation shall give written notice thereof, by
first class mail, postage prepaid, addressed to each holder of the Warrants at
the address of such holder as shown on the books of the Corporation, which
notice shall state 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.
(e) Certain Events. If any event occurs as to which, in the reasonable
opinion of CSFB, the other provisions of this Section 3 are not strictly
applicable or if strictly applicable would not, in the reasonable opinion of
CSFB, fairly protect the exercise rights of this Warrant, in accordance with the
essential intent and principles of such provisions, then the Corporation shall
in good faith make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
exercise rights as aforesaid, but in no event shall any such adjustment have the
effect of increasing the Warrant Price as otherwise determined pursuant to this
Section 3 except in the event of a combination of shares of the type
contemplated in paragraphs (a)or (b) of this Section 3
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and then in no event to an amount greater than the Warrant Price as adjusted
pursuant to paragraphs (a) or (b) of this Section 3.
(f) Stock to Be Reserved. The Corporation will at all times reserve and
keep available out of its authorized Common Stock or its treasury shares, solely
for the purpose of issue upon the exercise of this Warrant as herein provided,
such number of shares of Common Stock as shall then be issuable upon the
exercise of this Warrant. The Corporation covenants that all shares of Common
Stock which shall be so issued shall be duly and validly issued and fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the effective Warrant Price. The Corporation
will take all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirements of any national securities exchange upon
which the Common Stock of the Corporation may be listed. The Corporation will
not take any action which results in any adjustment of the Warrant Price if the
total number of shares of Common Stock issued and issuable after such action
upon exercise of this Warrant would exceed the total number of shares of Common
Stock then authorized by the Corporation's Certificate of Incorporation. The
Corporation has not granted and will not grant any right of first refusal with
respect to shares issuable upon exercise of this Warrant, and there are no
preemptive rights associated with such shares.
(g) Issue Tax. The issuance of certificates for shares of Common Stock
upon exercise of the Warrants shall be made without charge to the holders of
such Warrants for any issuance tax in respect thereof provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of any holder of the Warrants.
(h) Closing of Books. The Corporation will at no time close its transfer
books against the transfer of the shares of Common Stock issued or issuable upon
the exercise of this warrant in any manner which interferes with the timely
exercise of this Warrant.
(i) Definition of Common Stock. As used herein the term "Common Stock"
shall mean and include the Common Stock, par value $2.00 per share, of the
Corporation as authorized on the date of issuance of this Warrant, and also any
capital stock of any class
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of the Corporation hereinafter authorized which shall not be limited to a fixed
sum or percentage in respect of the rights of the holders thereof to participate
in dividends or in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation; provided, however,
that the shares purchasable pursuant to this Warrant shall include only shares
designated as Common Stock, par value $2.00 per share, of the Corporation on the
date of this Warrant, or shares of any class or classes resulting from any
reclassification or reclassifications thereof which are not limited to any such
fixed sum or percentage and are not subject to redemption by the Corporation and
in case at any time there shall be more than one such resulting class, the
shares of each class then so issuable shall be substantially in the proportion
which the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
Section 4. Notices of Record Date. In the event of (1) any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution (other than cash dividends out of earned
surplus), or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, or (2) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation or
any transfer of all or substantially all the assets of the Corporation to or
consolidation or merger of the Corporation with or into any other corporation,
or (3) any voluntary or involuntary dissolution, liquidation or winding-up of
the Corporation, then and in each such event the Corporation will give notice to
the holder of this Warrant specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right and stating
the amount and character of such dividend, distribution or right, and (ii) the
date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock will be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be given at least 20
days and not more than 90 days prior to the date therein specified, and such
notice shall state that the action in question or the record date is subject to
the effectiveness of a registration statement under
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the Securities Act of 1933, as amended (the "Securities Act") or to a favorable
vote of stockholders, if either is required.
Section 5. Registration Rights. The rights of the holder hereof with
respect to the registration under the Securities Act of the shares of Common
Stock issuable upon the exercise of this Warrant are set forth in the
Registration Rights Agreement, dated as of May 23, 1997, among the Corporation
and CFSB.
Section 6. No Stockholder Rights or Liabilities. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Corporation. No provision hereof, in the absence of affirmative action by
the holder hereof to purchase shares of Common Stock, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Warrant Price or as a stockholder of the
Corporation, whether such liability is asserted by the Corporation or by
creditors of the Corporation.
Section 7. Notices of Proposed Transfers. Prior to any transfer, sale
or assignment (each a "Transfer") of this Warrant or any shares of Common Stock
issuable hereunder, the holder of this Warrant shall give ten days' prior
written notice (a "Transfer Notice") to the Company of such holder's intention
to effect such transfer, describing the manner and circumstances of the proposed
Transfer, and obtain from counsel to such holder who shall be reasonably
satisfactory to the Corporation (it being agreed that the firm of Brown Raysman
Millstein Felder & Steiner LLP shall be reasonably satisfactory) an opinion that
the proposed Transfer of such Warrants or such Common Stock may be effected
without registration under the Securities Act or applicable state securities
law. After receipt of the Transfer Notice and opinion by the Corporation, such
holder shall thereupon be entitled to Transfer such Warrants or such Common
Stock in accordance with the terms of the Transfer Notice. Each Warrant issued
upon such Transfer and each certificate representing shares of Common Stock
issued upon such Transfer shall bear the restrictive legend set forth in Section
8 below, unless in the opinion of such counsel such legend is not required in
order to ensure compliance with the Securities Act. Notwithstanding the
foregoing provisions of Section 7, the restrictions imposed by this Section upon
the transferability of the Warrants or the Common Stock issuable upon exercise
of the Warrants and the legend requirements of Section 8 below shall terminate
as to this Warrant or the shares of Common Stock issuable upon exercise hereof
(i) when and so long as such security shall have been effectively registered
under the
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Securities Act and disposed of pursuant thereto, or (ii) when the Corporation
shall have delivered to the holder of this Warrant or shares of Common Stock
issuable upon exercise hereof the written opinion of counsel to the Corporation,
which opinion and counsel shall each be reasonably satisfactory to such holder,
stating that the transferability portion of such legend is not required to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Section 7 shall terminate as to this Warrant as hereinabove provided, the
holder of this Warrant shall be entitled to receive from the Corporation, at the
Corporation's expense, a new Warrant bearing the following legend in place of
the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT CONTAINED
IN SECTION 7 HEREOF TERMINATED ON __________, 19__, AND ARE OF NO FURTHER FORCE
AND EFFECT."
All Warrants issued upon registration of transfer, division or
combination of, or in substitution for, this Warrant, if this Warrant shall be
entitled to bear such legend, shall have a similar legend endorsed thereon.
Whenever the restrictions imposed by this Section 7 shall terminate as
to any Common Stock issuable upon exercise of this Warrant, the holder thereof
shall be entitled to receive from the Corporation, at the Corporation's expense,
a new share certificate representing such Common Stock not bearing the legend
set forth in Section 8 below.
Section 8. Investment Representation and Legend. The holder, by
acceptance of the Warrant, represents and warrants to the Corporation that it is
acquiring the Warrant and the shares of Common Stock (or other securities)
issuable upon the exercise hereof for investment purposes only and not with a
view towards the resale or other distribution thereof. Subject to the provisions
of Section 7 above, the holder, by acceptance of this Warrant, further agrees
that the Corporation may affix the following legend to certificates for shares
of Common Stock issued upon exercise of this Warrant:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN
RELIANCE UPON THE REPRESENTATION OF THE HOLDER THAT THEY HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TOWARD THE RESALE OR OTHER DISTRIBUTION THEREOF,
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NEITHER THE SECURITIES EVIDENCED HEREBY, NOR ANY INTEREST THEREIN, MAY BE
OFFERED, SOLD, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS EITHER
(I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT RELATING THERETO
OR (II) THE CORPORATION HAS
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RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO
THE CORPORATION, STATING THAT SUCH REGISTRATION IS NOT REQUIRED."
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Corporation may, on such terms as
to indemnity or otherwise as it may in its discretion reasonably impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed. Any such new Warrant shall constitute an original
contractual obligation of the Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
Section 10. Notices. All notices, requests and other communications
required or permitted to be given or delivered hereunder shall be in writing,
and shall be delivered, or shall be sent by certified or registered mail,
postage prepaid and addressed, if to the holder, to such holder at the address
shown on such holder's Warrant or Warrant Shares or at such other address as
shall have been furnished to the Corporation by notice from such holder. All
notices, requests and other communications required or permitted to be given or
delivered hereunder shall be in writing, and shall be delivered, or shall be
sent by certified or registered mail, postage prepaid and addressed to the
Corporation at such address as shall have been furnished to the holder by notice
from the Corporation.
Section 11. Notice of Expiration. The Corporation shall give the holder
of this Warrant written notice of such holder's right to exercise this Warrant
in the form attached as Annex B hereto not more than 90 days and not less than
30 days before the Expiration Date. If the notice is not so given, the
Expiration Date shall automatically be extended until 30 days after the date the
Corporation delivers the notice to such holder.
Section 12. Governing Law. This Warrant shall be
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governed by and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Corporation has executed this Warrant on and as
of the day and year first above written.
INTERNATIONAL THOROUGHBRED
BREEDERS, INC.
By: /s/ Nunzio DeSantis
____________________________________
Name: Nunzio DeSantis
Title: Chief Executive Officer
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ANNEX A
NOTICE OF EXERCISE
------------------
1. The undersigned hereby elects to purchase _______ shares of the
Common Stock of International Thoroughbred Breeders, Inc. pursuant to the
provisions of Paragraph 1(a) of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full.
[or]
1. The undersigned hereby elects to convert the attached Warrant into
shares of Common Stock of International Thoroughbred Breeders, Inc. in the
manner specified in Paragraph 1(b) of the Warrant. This conversion is exercised
with respect to ____________________ of the shares of Common Stock covered by
the attached Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:
---------------------
(Name)
---------------------
---------------------
(Address)
3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.
--------------------------------
(Signature)
- -----------------
(Date)
<PAGE>
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ANNEX B
Notice that Warrant is About to Expire
-------------, -------
[Name and Address of Holder]
Dear _______:
This is to advise you that the Warrant issued to you described below will expire
on ______________,_______.
Issuer: International Thoroughbred Breeders,
Inc.
Issue Date: May 23, 1997
Class of Security Issuable: Common Stock
Exercise Price per Share: $[ ]
Number of Shares: 546,847
Please contact [name of contact person at (phone number)] with any
questions you may have concerning the exercise of the Warrant. This is your only
notice of pending expiration.
INTERNATIONAL THOROUGHBRED
BREEDERS, INC.
By:___________________________
Name:
Title:
<PAGE>
<PAGE>
THE TRANSFER OF THIS WARRANT IS SUBJECT TO RESTRICTIONS CONTAINED
HEREIN. THIS WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE
REPRESENTATION OF THE HOLDER THAT IT HAS BEEN ACQUIRED FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS THE RESALE OR
OTHER DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
Common Stock Subscription Warrant
Warrant to Subscribe Warrant No. 2
for 497,153 shares of Common Stock
dated May 23, 1997
Void After May 23, 2002
-------------------
THIS CERTIFIES that, for value received, CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC, a Delaware limited liability company ("CSFB"), or its
assigns, is entitled to subscribe for and purchase from International
Thoroughbred Breeders, Inc., a Delaware corporation (the "Corporation"), at the
price of $4.375 per share (such price, as from time to time to be adjusted as
hereinafter provided, being hereinafter called the "Warrant Price"), at any time
on or after the date (the "Effective Date") on which CSFB shall deliver to the
Corporation a commitment for a construction loan or a permanent take-out loan to
provide additional funding of no less than $50 million to the Corporation and/or
its subsidiaries in connection with the El Rancho Property (as such term is
defined in that certain Loan Agreement of even date herewith by and between the
Corporation, CSFB and the other entities named therein), but prior to May 23,
2002 (the "Expiration Date"), up to Four Hundred Ninety-Seven Thousand One
Hundred Fifty-Three (497,153) (subject to adjustment as hereinafter provided)
fully paid and nonassessable shares of common stock, par value $2.00 per share,
of the Corporation (hereinafter called the "Common Stock"), subject, however, to
the provisions and upon the terms and conditions hereinafter set forth. This
Warrant and any Warrant or Warrants subsequently
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issued upon exchange or transfer are hereinafter collectively called the
"Warrants".
Section 1. Exercise of Warrant. (a) The rights represented by this
Warrant may be exercised by the holder hereof, in whole at any time or from time
to time in part, but not as to a fractional share of Common Stock, by the
surrender of this Warrant (properly endorsed) and delivery of a duly executed
Notice of Exercise, substantially in the form of Annex A hereto, at the office
of the Corporation as it may designate by notice in writing to the holder hereof
at the address of such holder appearing on the books of the Corporation, and,
unless the holder is exercising the conversion right set forth in paragraph 1(b)
below, by payment to the Corporation of the Warrant Price in cash or by
certified or official bank check, for each share being purchased.
(b) In lieu of exercising the Warrant as specified in paragraph 1(a)
above, the holder of this Warrant may from time to time convert this Warrant, in
whole or in part, into a number of shares of Common Stock equal to the quotient
of (x) the aggregate market value of the Common Stock minus the aggregate
Warrant Price of such shares of Common Stock, divided by (y) the fair market
value of the Common Stock. For purposes of this paragraph, if the shares of
Common Stock are traded in a public market, the fair market value of the Common
Stock shall be the closing price of the Common Stock reported for the business
day immediately before the holder of this Warrant delivers its Notice of
Exercise to the Corporation. If the Common Stock is not traded in a public
market, the Board of Directors of the Corporation shall determine fair market
value in its reasonable good faith judgment. The foregoing notwithstanding, if
the holder of the Warrant advises the Board of Directors in writing that the
holder disagrees with such determination, then the Corporation and the holder of
this Warrant shall promptly agree upon a reputable investment banking firm to
undertake such valuation. If the valuation of such investment banking firm is
greater than that determined by the Board of Directors, then all fees and
expenses of such investment banking firm shall be paid by the Corporation. In
other circumstances, such fees and expenses shall be paid by the holder of this
Warrant.
(c) In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the shares of Common Stock so
purchased, registered in the name of the holder, shall be delivered to the
holder hereof within a reasonable time, not exceeding ten days, after the rights
represented by this Warrant shall have been so exercised; and, unless this
Warrant has expired, a new Warrant representing the number of shares (except a
remaining fractional share), if any, with respect to
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which this Warrant shall not then have been exercised shall also be issued to
the holder hereof within such time. The person in whose name any certificate for
shares of Common Stock is issued upon exercise of this Warrant shall for all
purposes be deemed to have become the holder of record of such shares on the
date on which the Warrant was surrendered and payment of the Warrant Price, if
applicable, and any applicable taxes was made, except that, if the date of such
surrender and payment is a date on which the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
Section 2. Adjustment of Number of Shares. Upon each adjustment of the
Warrant Price as provided in Section 3, the holder of this Warrant shall
thereafter be entitled to purchase, at the Warrant Price resulting from such
adjustment, the number of shares (calculated to the nearest tenth of a share)
obtained by multiplying the Warrant Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the Warrant Price
resulting from such adjustment.
Section 3. Certain Adjustments.
(a) Stock Dividends, Issuances, Subdivisions or Combinations of Stock.
In case the Corporation shall at any time declare or pay a dividend on its
Common Stock payable in Common Stock, or shall issue shares of Common Stock in
exchange for the conversion or cancellation of debt or the receipt of assets or
stock in a transaction with Las Vegas Entertainment Network, Inc. and/or any of
its subsidiaries or affiliates during the term of the Loan Agreement dated as of
the date hereof between CSFB and the Corporation and certain of its
subsidiaries, or subdivide its outstanding shares of Common Stock into a greater
number of shares, the Warrant Price in effect immediately prior to any such
event shall be proportionately reduced (by multiplying such Warrant Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after such
event), and conversely, in case the outstanding shares of Common Stock of the
Corporation shall be combined into a smaller number of shares, the Warrant Price
in effect immediately prior to such combination shall be proportionately
increased (by multiplying such Warrant Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such combination and the denominator of which shall be
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the number of shares of Common Stock outstanding immediately after such
combination).
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. If
any capital reorganization or reclassification of the capital stock of the
Corporation or any consolidation or merger of the Corporation 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, merger or sale, lawful and adequate provisions
shall be made whereby each holder of the Warrants 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 Corporation immediately
theretofore receivable upon the exercise of such Warrant or Warrants, such
shares of stock, securities or assets (including cash) 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 so receivable had such reorganization, 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 Warrant 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 exercise rights. In the event of a merger
or consolidation of the 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 Corporation outstanding immediately prior to such
merger or consolidation, the 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 Corporation. The Corporation will not effect any such consolidation, merger
or sale, unless prior to the consummation thereof the successor corporation (if
other than the Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument, executed
and mailed or delivered to each holder of the Warrants at the last address of
such holder appearing on the books of the Corporation, 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.
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(c) Price Protection. If at any time while the Warrants are outstanding,
the Corporation shall issue shares of Common Stock, or rights, options,
warrants, or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (excluding (i) shares, rights,
options, warrants, or convertible or exchangeable securities issued as of the
date of issuance of this Warrant or issued in any of the transactions described
in Paragraphs (a) or (b) above, (ii) shares issued upon the exercise of such
rights, options or warrants or upon conversion or exchange of such convertible
or exchangeable securities, and (iii) the Warrants and any shares issued upon
exercise thereof), at a price per share of Common Stock (determined in the case
of such rights, options, warrants, or convertible or exchangeable securities by
dividing (x) the total amount receivable by the Corporation in consideration of
the sale and issuance of such rights, options, warrants, or convertible or
exchangeable securities, plus the total minimum consideration payable to the
Corporation upon exercise, conversion, or exchange thereof by (y) the total
maximum number of shares of Common Stock covered by such rights, options,
warrants, or convertible or exchangeable securities) lower than the fair market
value per share of Common Stock on the date the Corporation fixes the offering
price of such shares, rights, options, warrants, or convertible or exchangeable
securities, then the Warrant Price shall be adjusted so that it shall equal the
price determined by multiplying the Warrant Price in effect immediately prior
thereto by a fraction (i) the numerator of which shall be the sum of (A) the
number of shares of Common Stock outstanding immediately prior to such sale and
issuance plus (B) the number of shares of Common Stock which the aggregate
consideration received (determined as provided below) for such sale or issuance
would purchase at such fair market value per share, and (ii) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such sale and issuance. Such adjustment shall be made
successively whenever such an issuance is made. For the purposes of such
adjustment, the maximum number of shares of Common Stock which the holder of any
such rights, options, warrants or convertible or exchangeable securities shall
be entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such sale and issuance and the consideration
received by the Corporation therefor shall be deemed to be the consideration
received by the Corporation for such rights, options, warrants, or convertible
or exchangeable securities, plus the minimum consideration or premium stated in
such rights, options, warrants, or convertible or exchangeable securities to be
paid for the shares of Common Stock covered thereby. In case the Corporation
shall sell and issue shares of Common Stock, or rights, options, warrants, or
convertible or exchangeable securities containing the right to subscribe for or
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purchase shares of Common Stock for a consideration consisting, in whole or in
part, of property other than cash or its equivalent, then in determining the
price per share of Common Stock and the consideration received by the
Corporation for purposes of the first sentence of this Paragraph 3(c), the Board
of Directors of the Corporation shall determine, in good faith, the fair value
of said property, and such determination shall be described in a duly adopted
board resolution certified by the Corporation's Secretary or Assistant
Secretary. In case the Corporation shall sell and issue rights, options,
warrants, or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock together with one or more other
securities as a part of a unit at a price per unit, then in determining the
price per share of Common Stock and the consideration received by the
Corporation for purposes of the first sentence of this Paragraph 3(c), the Board
of Directors of the Corporation shall determine, in good faith, which
determination shall be described in a duly adopted board resolution certified by
the Corporation's Secretary or Assistant Secretary, the fair value of the
rights, options, warrants, or convertible or exchangeable securities then being
sold as part of such unit. Such adjustment shall be made successively whenever
such an issuance occurs, and in the event that such rights, options, warrants,
or convertible or exchangeable securities expire or cease to be convertible or
exchangeable before they are exercised, converted, or exchanged (as the case may
be), then the Warrant Price shall again be adjusted to the Warrant Price that
would then be in effect if such sale and issuance had not occurred, but such
subsequent adjustment shall not affect the number of Warrant Shares issued upon
any exercise of Warrants prior to the date such subsequent adjustment is made.
(d) Notice of Adjustment. Upon any adjustment of the Warrant Price, then
and in each such case, the Corporation shall give written notice thereof, by
first class mail, postage prepaid, addressed to each holder of the Warrants at
the address of such holder as shown on the books of the Corporation, which
notice shall state 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.
(e) Certain Events. If any event occurs as to which, in the reasonable
opinion of CSFB, the other provisions of this Section 3 are not strictly
applicable or if strictly applicable would not, in the reasonable opinion of
CSFB, fairly protect the exercise rights of this Warrant, in accordance with the
essential intent and principles of such provisions, then the Corporation shall
in good faith make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
exercise rights as aforesaid,
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but in no event shall any such adjustment have the effect of increasing the
Warrant Price as otherwise determined pursuant to this Section 3 except in the
event of a combination of shares of the type contemplated in paragraphs (a)or
(b) of this Section 3 and then in no event to an amount greater than the Warrant
Price as adjusted pursuant to paragraphs (a) or (b) of this Section 3.
(f) Stock to Be Reserved. The Corporation will at all times reserve and
keep available out of its authorized Common Stock or its treasury shares, solely
for the purpose of issue upon the exercise of this Warrant as herein provided,
such number of shares of Common Stock as shall then be issuable upon the
exercise of this Warrant. The Corporation covenants that all shares of Common
Stock which shall be so issued shall be duly and validly issued and fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the effective Warrant Price. The Corporation
will take all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirements of any national securities exchange upon
which the Common Stock of the Corporation may be listed. The Corporation will
not take any action which results in any adjustment of the Warrant Price if the
total number of shares of Common Stock issued and issuable after such action
upon exercise of this Warrant would exceed the total number of shares of Common
Stock then authorized by the Corporation's Certificate of Incorporation. The
Corporation has not granted and will not grant any right of first refusal with
respect to shares issuable upon exercise of this Warrant, and there are no
preemptive rights associated with such shares.
(g) Issue Tax. The issuance of certificates for shares of Common Stock
upon exercise of the Warrants shall be made without charge to the holders of
such Warrants for any issuance tax in respect thereof provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of any holder of the Warrants.
(h) Closing of Books. The Corporation will at no time close its transfer
books against the transfer of the shares of Common Stock issued or issuable upon
the exercise of this warrant in any manner which interferes with the timely
exercise of this Warrant.
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(i) Definition of Common Stock. As used herein the term "Common Stock"
shall mean and include the Common Stock, par value $2.00 per share, of the
Corporation as authorized on the date of issuance of this Warrant, and also any
capital stock of any class of the Corporation hereinafter authorized which shall
not be limited to a fixed sum or percentage in respect of the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; provided, however, that the shares purchasable pursuant to this
Warrant shall include only shares designated as Common Stock, par value $2.00
per share, of the Corporation on the date of this Warrant, or shares of any
class or classes resulting from any reclassification or reclassifications
thereof which are not limited to any such fixed sum or percentage and are not
subject to redemption by the Corporation and in case at any time there shall be
more than one such resulting class, the shares of each class then so issuable
shall be substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
Section 4. Notices of Record Date. In the event of (1) any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution (other than cash dividends out of earned
surplus), or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, or (2) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation or
any transfer of all or substantially all the assets of the Corporation to or
consolidation or merger of the Corporation with or into any other corporation,
or (3) any voluntary or involuntary dissolution, liquidation or winding-up of
the Corporation, then and in each such event the Corporation will give notice to
the holder of this Warrant specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right and stating
the amount and character of such dividend, distribution or right, and (ii) the
date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock will be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be given at least 20
days and not more than 90 days prior to the date therein specified, and such
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notice shall state that the action in question or the record date is subject to
the effectiveness of a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") or to a favorable vote of stockholders, if
either is required.
Section 5. Registration Rights. The rights of the holder hereof with
respect to the registration under the Securities Act of the shares of Common
Stock issuable upon the exercise of this Warrant are set forth in the
Registration Rights Agreement, dated as of May 23, 1997, among the Corporation
and CFSB.
Section 6. No Stockholder Rights or Liabilities. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Corporation. No provision hereof, in the absence of affirmative action by
the holder hereof to purchase shares of Common Stock, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Warrant Price or as a stockholder of the
Corporation, whether such liability is asserted by the Corporation or by
creditors of the Corporation.
Section 7. Notices of Proposed Transfers. Prior to any transfer, sale
or assignment (each a "Transfer") of this Warrant or any shares of Common Stock
issuable hereunder, the holder of this Warrant shall give ten days' prior
written notice (a "Transfer Notice") to the Company of such holder's intention
to effect such transfer, describing the manner and circumstances of the proposed
Transfer, and obtain from counsel to such holder who shall be reasonably
satisfactory to the Corporation (it being agreed that the firm of Brown Raysman
Millstein Felder & Steiner LLP shall be reasonably satisfactory) an opinion that
the proposed Transfer of such Warrants or such Common Stock may be effected
without registration under the Securities Act or applicable state securities
law. After receipt of the Transfer Notice and opinion by the Corporation, such
holder shall thereupon be entitled to Transfer such Warrants or such Common
Stock in accordance with the terms of the Transfer Notice. Each Warrant issued
upon such Transfer and each certificate representing shares of Common Stock
issued upon such Transfer shall bear the restrictive legend set forth in Section
8 below, unless in the opinion of such counsel such legend is not required in
order to ensure compliance with the Securities Act. Notwithstanding the
foregoing provisions of Section 7, the restrictions imposed by this Section upon
the transferability of the Warrants or the Common Stock issuable upon exercise
of the Warrants and the legend requirements of Section 8 below shall terminate
as to this Warrant or the shares of Common Stock issuable upon exercise hereof
(i) when and so long as such
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security shall have been effectively registered under the Securities Act and
disposed of pursuant thereto, or (ii) when the Corporation shall have delivered
to the holder of this Warrant or shares of Common Stock issuable upon exercise
hereof the written opinion of counsel to the Corporation, which opinion and
counsel shall each be reasonably satisfactory to such holder, stating that the
transferability portion of such legend is not required to ensure compliance with
the Securities Act. Whenever the restrictions imposed by this Section 7 shall
terminate as to this Warrant as hereinabove provided, the holder of this Warrant
shall be entitled to receive from the Corporation, at the Corporation's expense,
a new Warrant bearing the following legend in place of the restrictive legend
set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT CONTAINED IN
SECTION 7 HEREOF TERMINATED ON __________, 19__, AND ARE OF NO FURTHER FORCE AND
EFFECT."
All Warrants issued upon registration of transfer, division or
combination of, or in substitution for, this Warrant, if this Warrant shall be
entitled to bear such legend, shall have a similar legend endorsed thereon.
Whenever the restrictions imposed by this Section 7 shall terminate as
to any Common Stock issuable upon exercise of this Warrant, the holder thereof
shall be entitled to receive from the Corporation, at the Corporation's expense,
a new share certificate representing such Common Stock not bearing the legend
set forth in Section 8 below.
Section 8. Investment Representation and Legend. The holder, by
acceptance of the Warrant, represents and warrants to the Corporation that it is
acquiring the Warrant and the shares of Common Stock (or other securities)
issuable upon the exercise hereof for investment purposes only and not with a
view towards the resale or other distribution thereof. Subject to the provisions
of Section 7 above, the holder, by acceptance of this Warrant, further agrees
that the Corporation may affix the following legend to certificates for shares
of Common Stock issued upon exercise of this Warrant:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN
RELIANCE UPON THE REPRESENTATION OF THE HOLDER THAT THEY HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TOWARD THE RESALE OR OTHER DISTRIBUTION THEREOF,
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NEITHER THE SECURITIES EVIDENCED HEREBY, NOR ANY INTEREST THEREIN, MAY BE
OFFERED, SOLD, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS EITHER
(I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT RELATING THERETO
OR (II) THE CORPORATION HAS
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RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO
THE CORPORATION, STATING THAT SUCH REGISTRATION IS NOT REQUIRED."
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Corporation may, on such terms as
to indemnity or otherwise as it may in its discretion reasonably impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed. Any such new Warrant shall constitute an original
contractual obligation of the Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
Section 10. Notices. All notices, requests and other communications
required or permitted to be given or delivered hereunder shall be in writing,
and shall be delivered, or shall be sent by certified or registered mail,
postage prepaid and addressed, if to the holder, to such holder at the address
shown on such holder's Warrant or Warrant Shares or at such other address as
shall have been furnished to the Corporation by notice from such holder. All
notices, requests and other communications required or permitted to be given or
delivered hereunder shall be in writing, and shall be delivered, or shall be
sent by certified or registered mail, postage prepaid and addressed to the
Corporation at such address as shall have been furnished to the holder by notice
from the Corporation.
Section 11. Notice of Expiration. The Corporation shall give the holder
of this Warrant written notice of such holder's right to exercise this Warrant
in the form attached as Annex B hereto not more than 90 days and not less than
30 days before the Expiration Date. If the notice is not so given, the
Expiration Date shall automatically be extended until 30 days after the date the
Corporation delivers the notice to such holder.
Section 12. Governing Law. This Warrant shall be
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governed by and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Corporation has executed this Warrant on and as
of the day and year first above written.
INTERNATIONAL THOROUGHBRED
BREEDERS, INC.
By: /s/ Nunzio DeSantis
________________________________________
Name: Nunzio DeSantis
Title: Chief Executive Officer
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ANNEX A
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase _______ shares of the
Common Stock of International Thoroughbred Breeders, Inc. pursuant to the
provisions of Paragraph 1(a) of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full.
[or]
1. The undersigned hereby elects to convert the attached Warrant into
shares of Common Stock of International Thoroughbred Breeders, Inc. in the
manner specified in Paragraph 1(b) of the Warrant. This conversion is exercised
with respect to ____________________ of the shares of Common Stock covered by
the attached Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:
----------------
(Name)
================
(Address)
3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.
--------------------------------
(Signature)
--------------------------------
(Date)
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ANNEX B
Notice that Warrant is About to Expire
-------------, -------
[Name and Address of Holder]
Dear _______:
This is to advise you that the Warrant issued to you described below
will expire on _______________, _______.
Issuer: International Thoroughbred Breeders,
Inc.
Issue Date: May 23, 1997
Class of Security Issuable: Common Stock
Exercise Price per Share: $[ ]
Number of Shares: 497,153
Please contact [name of contact person at (phone number)] with any
questions you may have concerning the exercise of the Warrant. This is your only
notice of pending expiration.
INTERNATIONAL THOROUGHBRED
BREEDERS, INC.
By:___________________________
Name:
Title:
2
