SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
Under the Securities Exchange Act of 1934
Hawthorne Financial Corporation
- ---------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- ---------------------------------------------------------------------------
(Title of Class of Securities)
420542102
- ---------------------------------------------------------------------------
(CUSIP Number)
Timothy G. Ewing
Value Partners, Ltd.
c/o Ewing & Partners
Suite 4660 West
2200 Ross Avenue
Dallas, Texas 75201
(214) 999-1900
- ---------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 8, 1998
- ---------------------------------------------------------------------------
(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 that is the subject of this Schedule 13D, and is
filing this Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g) check
the following box [ ].
CUSIP NO. 420542102 13D
(1) Name of Reporting Person Value Partners, Ltd.
S.S. or I.R.S. Identification 75-2291866
No. of Above Person (Not Required To Be Reported)
(2) Check the Appropriate Box if a (a)
Member of a Group (See instructions) (b) X
(3) SEC Use Only
(4) Source of Funds (See instructions) WC
(5) Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Texas
Number of Shares (7) Sole Voting Power 1,241,100*
Beneficially Owned
by Each Reporting (8) Shared Voting -0-
Person with: Power
(9) Sole Dispositive 1,241,100*
Power
(10) Shared Dispositive -0-
Power
(11) Aggregate Amount Beneficially
Owned by Each Reporting Person 1,241,100*
(12) Check if the Aggregate Amount in
Row (11) Excludes Certain Shares
(See instructions)
(13) Percent of Class Represented by 20.8%
Amount in Row (11)
(14) Type of Reporting Person (See PN
Instructions)
- ------------
*But see Item 5
CUSIP NO. 420542102 13D
(1) Name of Reporting Person Ewing & Partners
S.S. or I.R.S. Identification 75-2741747
No. of Above Person (Not Required To Be Reported)
(2) Check the Appropriate Box if a (a)
Member of a Group (See instructions) (b) X
(3) SEC Use Only
(4) Source of Funds (See instructions) 00
(5) Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Texas
Number of Shares (7) Sole Voting Power -0-
Beneficially Owned
by Each Reporting (8) Shared Voting -0-*
Person with: Power
(9) Sole Dispositive -0-
Power
(10) Shared Dispositive -0-*
Power
(11) Aggregate Amount Beneficially
Owned by Each Reporting Person -0-*
(12) Check if the Aggregate Amount in
Row (11) Excludes Certain Shares
(See instructions)
(13) Percent of Class Represented by -0-%*
Amount in Row (11)
(14) Type of Reporting Person (See PN
Instructions)
- ------------
*But see Item 5
CUSIP NO. 420542102 13D
(1) Name of Reporting Person Timothy G. Ewing
S.S. or I.R.S. Identification ###-##-####
No. of Above Person (Not Required To Be Reported)
(2) Check the Appropriate Box if a (a)
Member of a Group (See instructions) (b) X
(3) SEC Use Only
(4) Source of Funds (See instructions) 00
(5) Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization United States of
America
Number of Shares (7) Sole Voting Power -0-
Beneficially Owned
by Each Reporting (8) Shared Voting -0-*
Person with: Power
(9) Sole Dispositive -0-
Power
(10) Shared Dispositive -0-*
Power
(11) Aggregate Amount Beneficially
Owned by Each Reporting Person -0-*
(12) Check if the Aggregate Amount in
Row (11) Excludes Certain Shares
(See instructions)
(13) Percent of Class Represented by -0-%*
Amount in Row (11)
(14) Type of Reporting Person (See IN
Instructions)
- ------------
*But see Item 5
CUSIP NO. 420542102 13D
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the common stock, par value $.01 per
share (the "Common Stock"), of Hawthorne Financial Corporation, a Delaware
corporation ("Hawthorne" or the "Issuer"), whose principal executive
offices are located at 2381 Rosecrans Avenue, El Segundo, California 90245.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c) This Schedule 13D is filed by Value Partners, Ltd., a Texas
limited partnership ("Value Partners"), Ewing & Partners, a Texas general
partnership (formerly known as Fisher Ewing Partners) ("Ewing & Partners"),
and Timothy G. Ewing ("Ewing"). Ewing & Partners is the general partner of
Value Partners. Ewing and Ewing Asset Management, Inc., a Texas limited
liability company ("EAM"), are the general partners of Ewing & Partners,
and Ewing is the managing general partner of Ewing & Partners. EAM is
controlled by Ewing. The principal place of business for Value Partners,
Ewing & Partners, EAM and Ewing is Suite 4660 West, 2200 Ross Avenue,
Dallas, Texas 75201.
The present principal occupation or employment of Ewing is managing
general partner of Ewing & Partners. The principal business of EAM is
acting as a general partner of Ewing & Partners. The principal business of
Ewing & Partners is the management of Value Partners. The principal
business of Value Partners is the investment in and trading of capital
stocks, warrants, bonds, notes, debentures and other securities.
(d) None of Value Partners, Ewing & Partners, EAM or Ewing, during
the last five years, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) None of Value Partners, Ewing & Partners, EAM or Ewing has,
during the last five years, been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or 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 violation with
respect to such laws.
(f) Ewing is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to a Unit Purchase Agreement (the "Agreement"), dated as of
October 10, 1995, by and among Hawthorne and the other signatories thereto
(the "Purchasers"), Value Partners purchased 17 (the "Units") units from
Hawthorne for $8.5 million. All of such funds came from the working
capital of Value Partners. Each Unit consisted of a package of the
following securities: $250,000 principal amount of senior notes, five
shares of Series A preferred stock, par value $.01 per share, of Hawthorne
(the "Preferred Stock"), and a common stock purchase warrant (each, a
"Warrant") representing the right to purchase 44,000 shares of Common Stock
at a price of $2.25 per share. Each such note and share of Preferred Stock
acquired by Value Partners was redeemed by Hawthorne on December 31, 1997.
In connection with a public offering of Common Stock that was effective on
July 7, 1998, each Warrant owned by Value Partners was adjusted to
represent the right to purchase 46,522 shares of Common Stock at a price of
$2.139 per share. Such Warrants may be exercised at any time during the
period beginning December 11, 1998 through December 11, 2005. As of the
date hereof, Value Partners owns 17 Warrants, and if such Warrants are
exercised in full, Value Partners would acquire 790,874 shares of Common
Stock. All of the funds utilized in this exercise, if Value Partners
should decide to exercise such Warrants, are expected to come from the
working capital of Value Partners. Although Value Partners does not
beneficially own the shares of Common Stock underlying such Warrants as of
the date hereof, it has chosen to report such shares as beneficially owned
as of the date hereof rather than file a amendment to this Schedule 13D
sixty (60) days prior to when such Warrants become exercisable, which is
when such shares shall become beneficially owned by Value Partners.
On June 14, 1997, Value Partners received 122,757 shares of Common
Stock as a dividend declared and paid on its Preferred Stock. These shares
were obtained without consideration from Value Partners. An additional
dividend of Common Stock was received by Value Partners on September 15,
1997 in the amount of 12,969 shares. These shares were also received
without consideration from Value Partners.
On July 8, 1998, Value Partners purchased 314,500 shares of Common
Stock in a public offering by the Issuer that went effective on July 7,
1998 for $4.7 million. All of such funds came from the working capital of
Value Partners.
ITEM 4. PURPOSE OF TRANSACTION
Value Partners has acquired the Common Stock and the Warrants solely
for investment purposes. Depending on its evaluation of the Issuer, other
investment opportunities, market conditions, and such other factors as it
may deem material, Value Partners may seek to acquire additional shares of
Common Stock in the open market, in private transactions, or otherwise, or
may dispose of all or a portion of such Warrants or the shares of Common
Stock owned by it. As of the date hereof, such Warrants are not
exercisable. Value Partners may exercise such Warrants and acquire the
underlying shares of Common Stock at any time during the period beginning
December 11, 1998 through December 11, 2005.
Except as set forth above, none of Value Partners, Ewing & Partners,
EAM or Ewing has any plans or proposals of the type referred to in clauses
(a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date hereof, Value Partners owns 450,226 shares of
Common Stock, which represents 8.7% of the 5,182,792 shares of Common Stock
outstanding (as reported on Hawthorne's Rule 424(b)(1) Prospectus filed
with the Securities and Exchange Commission on July 7, 1998 (the
"Prospectus").
Each Warrant owned by Value Partners entitles Value Partners to
purchase 46,522 shares of Common Stock. Consequently, Value Partners may
acquire an additional 790,874 shares of Common Stock pursuant to the
exercise of such Warrants. Although Value Partners does not beneficially
own the 790,874 shares of Common Stock underlying such Warrants as of the
date hereof, it has chosen to report such shares as beneficially owned as
of the date hereof rather than file an amendment to this Schedule 13D sixty
(60) days prior to when such Warrants become exercisable, which is when
such shares shall become beneficially owned by Value Partners.
Thus, in so reporting, Value Partners beneficially owns 20.8% of the
shares of Common Stock outstanding, which such percentage was calculated by
dividing (i) 1,241,100 shares of Common Stock, which equals the sum of (a)
450,226 shares of Common Stock beneficially owned by Value Partners as of
the date hereof plus (b) 790,874 shares of Common Stock underlying such
Warrants and reported as beneficially owned as of the date hereof, by (ii)
5,973,666 shares of Common Stock, which equals the sum of (x) 5,182,792
shares of Common Stock as reported in the Prospectus and (y) 790,874 shares
of Common Stock underlying such Warrants and reported as beneficially owned
as of the date hereof.
Thus, Value Partners, Ewing & Partners and Ewing (the "Reporting
Persons") beneficially own a total of 1,241,100 shares of Common Stock as
follows:
Shares of % of Common
Name Common Stock Stock Outstanding
---- ------------ -----------------
Value Partners 1,241,100 20.8%
Ewing & Partners -0- -0-
Ewing -0- -0-
Ewing & Partners and Ewing are deemed to have beneficial ownership of
the shares of Common Stock beneficially owned by Value Partners.
(b) Value Partners has the sole power to vote and dispose of the
1,241,100 shares of Common Stock beneficially owned by it. Value Partners
does not share the power to vote or to direct the vote of, or the power to
dispose or to direct the disposition of, the Common Stock owned by it.
However, Ewing & Partners, as general partner of Value Partners, may be
deemed, for purposes of determining beneficial ownership pursuant to Rule
13d-3, to have the shared power with Value Partners to vote or direct the
vote of, and the shared power with Value Partners to dispose or direct the
disposition of, the 1,241,100 shares of Common Stock owned by Value
Partners. Ewing, as managing general partner of Ewing & Partners, may be
deemed, for purposes of determining beneficial ownership pursuant to Rule
13d-3, to have the shared power with Value Partners to vote or to direct
the vote of, and the shared power to dispose or to direct the disposition
of, the 1,241,100 shares of Common Stock owned by Value Partners.
The filing of this statement on Schedule 13D shall not be construed as
an admission that Ewing or Ewing & Partners is for the purposes of Section
13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, the
beneficial owner of any of the 1,241,100 shares of Common Stock
beneficially owned by Value Partners. Pursuant to Rule 13d-4, Ewing and
Ewing & Partners disclaim all such beneficial ownership.
(c) No other transactions in Common Stock were effected by any of the
Reporting Persons during the 60 days prior to July 8, 1998 or the date
hereof.
(d) Ewing and Ewing & Partners may be deemed to have the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
Common Stock beneficially owned by Value Partners.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Value Partners, Ewing & Partners and Ewing have no contracts,
arrangements, understandings or relationships (legal or otherwise) between
themselves and any person with respect to any securities of the Issuer
other than those described below:
(a) Joint Filing Agreement, dated as of the date hereof, between
Value Partners, Ewing & Partners, and Ewing, which was entered into to
enable more than one person to report on this Schedule 13D.
(b) Unit Purchase Agreement, dated as of October 10, 1995, pursuant
to which Value Partners acquired the Units from Hawthorne.
(c) Warrant to purchase shares of Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following are filed as exhibits to this Statement on Schedule 13D:
Exhibit 1 Joint Filing Agreement, dated as of July 16, 1998.
Exhibit 2 Unit Purchase Agreement, dated as of October 10, 1995.
Exhibit 3 Form of Warrant to purchase shares of Common Stock.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
DATED: July 16, 1998
VALUE PARTNERS, LTD.
By: EWING & PARTNERS
as General Partner
By: /S/TIMOTHY G. EWING
---------------------
Timothy G. Ewing
as Managing Partner
EWING & PARTNERS
By: /S/TIMOTHY G. EWING
---------------------
Timothy G. Ewing
as Managing Partner
/S/TIMOTHY G. EWING
---------------------
Timothy G. Ewing
EXHIBIT INDEX
Page No.
Exhibit 1 Joint Filing Agreement, dated as of July 16, 1998.
Exhibit 2 Note Purchase Agreement, dated as of
October 10, 1995.
Exhibit 3 Form of Warrant to purchase shares of Common Stock
EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) under the Securities Exchange Act of
1934, as amended, the undersigned agree to the joint filing on behalf of
each of them of a Statement on Schedule 13D (including any and all
amendments thereto) with respect to the common stock, par value $.01 per
share, of Hawthorne Financial Corporation, and further agree that this
Joint Filing Agreement shall be included as an Exhibit to such joint
filings.
The undersigned further agree that each party hereto is responsible
for timely filing of such Statement on Schedule 13D and any amendments
thereto, and for the accuracy and completeness of the information
concerning such party contained therein; provided, however, that no party
is responsible for the accuracy or completeness of the information
concerning any other party, unless such party knows or has reason to
believe that such information is inaccurate.
This Joint Filing Agreement may be signed in counterparts with the
same effect as if the signature on each counterpart were upon the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
July 16, 1998.
VALUE PARTNERS, LTD.
By: EWING & PARTNERS
as General Partner
By: /S/TIMOTHY G. EWING
---------------------
Timothy G. Ewing
as Managing Partner
EWING & PARTNERS
By: /S/TIMOTHY G. EWING
---------------------
Timothy G. Ewing
as Managing Partner
/S/TIMOTHY G. EWING
---------------------
Timothy G. Ewing
EXHIBIT 2
UNIT PURCHASE AGREEMENT
BY AND AMONG
HAWTHORNE FINANCIAL CORPORATION
AND
EACH OF THE PURCHASERS REFERRED TO HEREIN
DATED AS OF OCTOBER 10, 1995
TABLE OF CONTENTS
Page
----
Article I. Definitions 1
Section 1.1 Definitions 1
Article II. Purchase and Sale of Units 6
Section 2.1 Purchase and Sale of Units 6
Section 2.2 Closing 6
Section 2.3 Price Allocation 6
Article III. Representations and Warranties 7
Section 3.1 Representations and Warranties of the
Company 7
Section 3.2 Representations and Warranties of the
Purchasers 14
Article IV. Conditions Precedent to Closing 19
Section 4.1 Conditions to Obligations of the Parties 19
Section 4.2 Conditions to Obligations of the
Purchasers 20
Section 4.3 Conditions to Obligations of the Company 22
Article V. Covenants 23
Section 5.1 Shareholder Meeting; Exemption 23
Section 5.2 Applications 24
Section 5.3 Investigation and Confidentiality 24
Section 5.4 Press Releases 25
Section 5.5 No Solicitation 25
Section 5.6 Use of Proceeds 26
Section 5.7 Current Information 26
Section 5.8 Listing of Additional Shares of Common
Stock 26
Section 5.9 Rights of First Refusal 27
Section 5.10 Rule 144 and Rule 144A Reporting 31
Section 5.11 Purchases of Securities 31
Section 5.12 Stock Options 32
Section 5.13 Exchange of Securities 32
Section 5.14 Acquisition of Common Stock 32
Article VI. Miscellaneous 33
Section 6.1 Survival of Provisions 33
Section 6.2 Termination 33
Section 6.3 Waiver; Amendments 33
Section 6.4 Communications 34
Section 6.5 Costs, Expenses and Taxes 34
Section 6.6 Execution in Counterparts 35
Section 6.7 Binding Effect; Assignment 35
Section 6.8 Governing Law 35
Section 6.9 Severability of Provisions 35
Section 6.10 Headings and Gender 36
Section 6.11 Integration 36
Exhibit A List of Purchasers
Exhibit B Form of Senior Note
Exhibit C Form of Certificate of Designations
Exhibit D Form of Warrant
Exhibit E Form of Security Agreement
Exhibit F Form of Director Agreement
Exhibit G Form of Registration Rights Agreement
Exhibit H Matters to be covered by Opinion of Counsel
to the Company and the Bank
UNIT PURCHASE AGREEMENT
Unit Purchase Agreement, dated as of October 10, 1995 (the
"Agreement"), by and among Hawthorne Financial Corporation, a Delaware
corporation, and the other parties named on the signature pages hereof
(each of which is acting severally and not jointly and as to itself only).
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" means this Unit Purchase Agreement, as amended,
supplemented or modified from time to time.
"Bank" means Hawthorne Savings, F.S.B., a federally-chartered savings
bank, together with its successors.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the city of Los Angeles, California are
authorized by law to close.
"Capital Securities" of any Person means Capital Stock of the Person
and Stock Equivalents of the Person.
"Capital Stock" of any Person means any and all shares or other equity
interest of such Person.
"Certificate of Designations" means the Certificate of Designations
and Preferences relating to the Series A Preferred Stock, substantially in
the form of Exhibit C hereto, as amended, supplemented or otherwise
modified from time to time.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended (or any
successor statute in effect from time to time), and the rules and
regulations promulgated thereunder.
"Commission" means the Securities and Exchange Commission and any
successor thereto.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company.
"Company" means Hawthorne Financial Corporation, a Delaware
corporation, together with its successors.
"Confidential Memorandum" means the Private Placement Memorandum,
dated August 22, 1995, with respect to the Units referred to therein, as
amended or supplemented at any time prior to the Closing.
"Director Agreements" means the Director Agreements to be entered into
by the Company and each of Value Partners, LTD, Lee M. Bass and Fort Pitt
Fund, substantially in the form of Exhibit F hereto, as amended,
supplemented or otherwise modified from time to time.
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including without
limitation potential liability for investigating costs, cleanup costs,
governmental response costs, natural resource damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from
the presence, or release into the environment of any Materials of
Environmental Concern.
"Environmental Laws" means any law, statute, rule or regulation of any
governmental, judicial, legislative, executive, administrative or
regulatory authority of the United States, or of any state, local or
foreign government or any subdivision thereof or of any governmental body
or other regulatory or administrative agency or commission, domestic or
foreign (a "Law"), relating to pollution or protection of the environment
(including ambient air, surface water, groundwater, land surface or
subsurface strata), including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
the Resource Conservation and Recovery Act of 1976, as amended, and other
Laws relating to (i) emissions, discharges or releases of pollutants,
contaminants, chemicals, or industrial toxic or hazardous substances or
wastes (collectively known as "Polluting Substances") or (ii) the handling,
storage, disposal, reclamation, recycling or transportation of Polluting
Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (or any successor statute in effect from time to time).
"Exchange Act" means the Securities Exchange Act of 1934, as amended
and in effect from time to time (or any successor statute in effect from
time to time), and the rules and regulations of the Commission promulgated
thereunder.
"FDIA" means the Federal Deposit Insurance Act, as amended (or any
successor statute in effect from time to time).
"FDIC" means the Federal Deposit Insurance Corporation and any
successor thereto.
"Fractional Unit" shall mean one fifth, two fifths, three fifths or
four fifths of a Unit.
"HOLA" means the Home Owners' Loan Act, as amended (or any successor
statute in effect from time to time).
"HSR" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (or any successor statute in effect from time to time), and the
rules and regulations of the Federal Trade Commission promulgated
thereunder.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in respect of such
asset.
"Management" means the following members of the senior management of
the Company: President and Chief Executive Officer, Chief Financial
Officer and any Executive Vice President.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), business, assets or results of
operations of the Company and the Bank taken as a whole.
"Material Securityholder" means any Person who holds, either directly
or indirectly with any of its Affiliates, any of (i) $1,250,000 principal
amount of Senior Notes, (ii) 25 shares of Series A Preferred Stock or (iii)
Warrants to purchase 220,000 shares of Common Stock or 220,000 shares of
Common Stock acquired through the exercise of such Warrants, or any
combination of such Warrants and shares of Common Stock.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"NASD" means National Association of Securities Dealers, Inc.
"Non-performing Assets" means the following consolidated assets of the
Company: (i) non-performing loans, securities or other assets (i.e., all
assets on which the Company or the Bank has ceased recognizing interest
under generally accepted accounting principles or as to which any payments
of principal or interest are past due 90 days or more as of the applicable
date) and (ii) Real Estate Owned, exclusive of apartment buildings included
in Real Estate Owned; and references herein to the amounts of Non-
performing Assets shall mean and refer to the aggregate carrying value of
such assets as stated in the books and financial statements of the Company
and the Bank under generally accepted accounting principles.
"OTS" means the Office of Thrift Supervision and any successor
thereto.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or a political subdivision or an agency or instrumentality
thereof.
"Placement Agent" means Sandler O'Neill, in its capacity as private
placement agent with respect to the offering of Units described in the
Confidential Memorandum.
"Preferred Stock" means the Preferred Stock, par value $.01 per share,
of the Company.
"Previously Disclosed" means disclosed in a letter dated the date
hereof delivered from the Company to each Purchaser or from a Purchaser to
the Company, as applicable, specifically referring to the appropriate
section of this Agreement and describing in reasonable detail the matters
contained therein.
"Purchaser" means each Person (other than the Company) listed on the
signature pages of this Agreement, and its permitted successors and assigns
as provided herein, including any Person who becomes a party hereto by
executing and delivering a signature page hereto after the date of this
Agreement.
"Real Estate Owned" means the consolidated properties of the Company
acquired by foreclosure on a loan or deed-in-lieu thereof or otherwise
included in the Company's real estate owned for purposes of reporting asset
quality of the Company in its reports filed with the Commission under the
Exchange Act and the asset quality of the Bank in its reports filed with
the OTS.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company and the Purchasers, substantially in the
form of Exhibit G hereto, as amended, supplemented or otherwise modified
from time to time.
"Related Agreements" means the Senior Notes, the Security Agreement,
the Director Agreements and the Registration Rights Agreement.
"SAIF" means the Savings Association Insurance Fund administered by
the FDIC, and any successor thereto.
"Securities" means (i) the Senior Notes, the Series A Preferred Stock
and the Warrants included in the Units to be issued and sold by the Company
and purchased by the Purchasers pursuant to this Agreement and (ii) the
Common Stock issuable by the Company (x) upon exercise of the Warrants and
(y) pursuant to Section 6(b) of the Senior Notes and/or Section 2(b) of the
Certificate of Designations.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor statute thereto as in effect from time to time), and the rules
and regulations of the Commission promulgated thereunder.
"Security Agreement" means the Security Agreement by and among the
Company and the Purchasers, substantially in the form of Exhibit E hereto,
as amended, supplemented or otherwise modified from time to time.
"Senior Notes" means the Senior Notes due 2000 included in the Units
to be issued and sold by the Company and purchased by the Purchasers
pursuant to this Agreement, substantially in the form of Exhibit B hereto,
as amended, supplemented or otherwise modified from time to time.
"Series A Preferred Stock" means the Cumulative Preferred Stock,
Series A, par value $.01 per share, of the Company included in the Units to
be issued and sold by the Company and purchased by the Purchasers pursuant
to this Agreement.
"State" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
"Stock Equivalents" means, with respect to any Person, options,
warrants, calls, contracts or other rights entered into or issued by such
Person which confer upon the holder thereof the right (whether or not
contingent) to acquire any Capital Stock, voting securities or securities
convertible into or exchangeable for Capital Stock or voting securities of
such Person.
"Stock Option Plan" means the Stock Option Plan adopted by the Company
in 1993 and approved by its shareholders in 1994.
"Subsidiary" of any Person means any entity of which securities or
other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are
owned directly or indirectly by such Person.
"Taxes" means all taxes, charges, fees, levies or other governmental
assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, estimated, severance,
stamp, occupation, property or other taxes, customs, dues, fees,
assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
taxing authority (domestic or foreign).
"Tax Returns" means all foreign, federal, State and local returns
relating to Taxes.
"Unit" means a package of the following securities to be issued and
sold by the Company and purchased by Purchasers pursuant to the terms of
this Agreement: (i) $250,000 principal amount of Senior Notes, (ii) five
shares of Series A Preferred Stock and (iii) a Warrant to purchase 44,000
shares of Common Stock.
"Warrants" means the Warrants to purchase shares of Common Stock
included in the Units to be issued and sold by the Company and purchased by
the Purchasers pursuant to this Agreement, substantially in the form of
Exhibit D hereto, as amended, supplemented or otherwise modified from time
to time.
ARTICLE II
PURCHASE AND SALE OF UNITS
SECTION 2.1 PURCHASE AND SALE OF UNITS. Subject to the terms and
conditions herein set forth, the Company agrees that it will issue and sell
to each Purchaser and each such Purchaser agrees, severally and not
jointly, that it will purchase from the Company the number of Units set
forth below such Purchaser's name on Exhibit A hereto at a price equal to
$500,000 per Unit (subject to pro rata adjustment in the case of any
Fractional Unit).
SECTION 2.2 CLOSING. The purchase and sale of the Units will take
place at a closing (the "Closing") to be held at the offices of Mayer,
Brown & Platt, Los Angeles, California, at 10:00 a.m., Pacific Time, on
December 15, 1995, or on such earlier date as all of the conditions to the
parties' obligations hereunder specified in Article IV of this Agreement
(other than the delivery of certificates, opinions and other instruments
and documents to be delivered at the Closing) have been satisfied or
waived, or at such other location, and on such other Business Day and time
as the parties hereto shall mutually agree. The date on which the Closing
is to occur is referred to herein as the "Closing Date."
SECTION 2.3 PRICE ALLOCATION. The Company and the Purchasers each
hereby acknowledge and agree that for United States Federal, State and
local income tax purposes, the "issue price" of the Senior Notes, Series A
Preferred Stock and Warrants included in the Units will be determined by
Deloitte & Touche LLP prior to the Closing and the Company and the
Purchasers each agree to use the issue prices as so determined for all
income tax purposes with respect to this transaction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except
as Previously Disclosed, the Company represents and warrants to, and
covenants and agrees with, each of the Purchasers as follows:
(a) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock and 10,000,000 shares of
Preferred Stock. As of the date hereof, there are (i) 2,599,275 shares of
Common Stock issued and outstanding and 5,400 shares of Common Stock are
held as treasury shares which are issued but not outstanding, and (ii) no
shares of Preferred Stock are issued and outstanding or held as treasury
shares. Immediately prior to the Closing on the Closing Date, the
Company's outstanding Capital Stock will be as set forth in the preceding
sentence, except for any increases in outstanding Common Stock as a result
of the exercise of options referred to in the last sentence of this Section
3.1(a). All outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable and none of the
outstanding shares of Common Stock has been issued in violation of the
preemptive rights of any Person. Except for options to purchase 252,500
shares of Common Stock pursuant to the Stock Option Plan as of the date
hereof and as contemplated by this Agreement, there are no Stock
Equivalents authorized, issued or outstanding with respect to the Capital
Stock of the Company as of the date hereof.
(b) ORGANIZATION, STANDING AND AUTHORITY OF THE COMPANY. The Company
is a corporation duly organized and validly existing under the laws of
Delaware with full corporate power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted and is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such licensing or qualification and where the
failure to be so licensed, qualified or in good standing would have a
Material Adverse Effect. The Company is duly registered as a savings and
loan holding company under the HOLA and the regulations of the OTS
thereunder. The Company has heretofore delivered true and complete copies
of the Certificate of Incorporation and Bylaws of the Company as in effect
as of the date hereof to each Purchaser which has requested the same.
Prior to the Closing, the Certificate of Designations will have been filed
with the Secretary of State of the State of Delaware in accordance with the
Delaware General Corporation Law.
(c) OWNERSHIP OF THE BANK. The Bank is the only Subsidiary of the
Company and except for (i) 15,000 shares of the Bank's common stock, which
constitutes all of the Bank's outstanding Capital Stock, (ii) stock in the
Federal Home Loan Bank of San Francisco, and (iii) securities and other
interests taken in consideration of debts previously contracted, the
Company does not own or have the right to acquire, directly or indirectly,
any outstanding Capital Stock or other voting securities or ownership
interests of any corporation, bank, savings association, partnership, joint
venture or other organization. The outstanding shares of Capital Stock of
the Bank have been duly authorized and validly issued, are fully paid and
nonassessable, and are directly owned by the Company free and clear of all
Liens. No Stock Equivalents are authorized, issued or outstanding with
respect to the Capital Stock of the Bank and there are no agreements,
understandings or commitments relating to the right of the Company to vote
or to dispose of such Capital Stock.
(d) ORGANIZATION, STANDING AND AUTHORITY OF THE BANK. The Bank is a
federally-chartered savings bank duly organized and validly existing under
the laws of the United States. The deposit accounts of the Bank are
insured by the SAIF to the maximum extent permitted by the FDIA, and the
Bank has paid all premiums and assessments required by the FDIA and the
regulations thereunder. The Bank has full power and authority to own or
lease all of its properties and assets and to carry on its business as now
conducted and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which its ownership or leasing of property
or the conduct of its business requires such qualification, except where
the failure to be so licensed, qualified or in good standing would not have
a Material Adverse Effect. The Company has heretofore delivered true and
complete copies of the Charter and Bylaws of the Bank as in effect as of
the date hereof to each Purchaser which has requested the same.
(e) AUTHORITY. Each of the Company and the Bank has full corporate
power and authority to perform its respective obligations under this
Agreement and each of the Related Agreements to which it is or will become
a party, and the execution, delivery and performance by (i) the Company of
this Agreement and (ii) the Company and the Bank of each Related Agreement
to which it is or will become a party have been duly authorized by all
necessary corporate action on the part of the Company or the Bank, as the
case may be.
(f) DUE EXECUTION. This Agreement constitutes, and each of the
Related Agreements to which the Company or the Bank is or will become a
party, when duly authorized, executed and delivered by the Company or the
Bank, as the case may be, will constitute a valid and binding obligation of
the Company or the Bank, as the case may be, enforceable against the
Company or the Bank, as the case may be, in accordance with its terms,
except (i) rights to indemnity and contribution under the Registration
Rights Agreement may be limited by applicable law, (ii) enforceability may
be limited by bankruptcy, insolvency, moratorium and similar laws affecting
creditors' rights generally and (iii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles
of general applicability.
(g) NO CONFLICT. The execution, delivery and performance of this
Agreement and each of the Related Agreements to which the Company or the
Bank, as the case may be, is or will become a party will not conflict with
or constitute a breach of, or a default under (i) the Certificate of
Incorporation or Charter, as the case may be, or the Bylaws of the Company
or the Bank, (ii) any material obligation, agreement, indenture, bond,
debenture, note, instrument or any other evidence of indebtedness to which
the Company or the Bank is a party or the assets of either of which are
subject, or (iii) subject to the approvals and compliance referred to in
the next sentence, any law, ordinance, order, license, rule or other
regulation or demand of any court or governmental agency, arbitration panel
or authority applicable to the Company or the Bank. Except for (i) the
approval of the issuance of the Warrants by the shareholders of the Company
pursuant to Section 6(i)(1)(d) of Part III to Schedule D of the Bylaws of
the NASD (unless exempted therefrom upon application to the NASD), (ii)
compliance with applicable federal and State securities laws in connection
with this Agreement and the performance by the Company of its obligations
under the Registration Rights Agreement and (iii) any required compliance
by the Company with applicable federal and State securities laws and/or HSR
in connection with (x) the issuance of shares of Common Stock upon exercise
of the Warrants in accordance with their terms or (y) any issuance of
Common Stock pursuant to Section 6(b) of the Senior Notes or Section 2(b)
of the Certificate of Designations, no consent, approval, order or other
authorization of any governmental, administrative or regulatory body or
agency is legally required by or on behalf of the Company or the Bank in
connection with the execution, delivery and performance of this Agreement
and each of the Related Agreements to which the Company or the Bank, as the
case may be, is or will become a party. The representations and warranties
contained in this Section 3.1(g), insofar as they relate to federal and
State securities laws requirements, are made in reliance on the
representations and warranties of the Purchasers contained in Section 3.2
of this Agreement.
(h) STATUS OF SECURITIES. Subject to satisfaction of the condition
set forth in Section 4.1(a) hereof, the Units and the shares of Common
Stock issuable upon exercise of the Warrants have been authorized by all
necessary corporate action on the part of the Company. When the Units are
delivered to the Purchasers at the Closing against payment therefor as
provided herein, the Senior Notes, Series A Preferred Stock and Warrants
included therein will be duly authorized, validly issued and, in the case
of the Series A Preferred Stock, fully paid and nonassessable, and in each
case will not be issued in violation of the preemptive rights of any
Person. Subject to the approvals and compliance referred to in the second
sentence of Section 3.1(g) hereof, shares of Common Stock issued by the
Company (i) upon exercise of Warrants in accordance with their terms or
(ii) pursuant to Section 6(b) of the Senior Notes or Section 2(b) of the
Certificate of Designations, will be duly authorized, validly issued and
non-assessable at the time of issuance and will not be issued in violation
of the preemptive rights of any Person. The representations and warranties
contained in this Section 3.1(h), insofar as they relate to federal and
State securities laws requirements, are made in reliance on the
representations and warranties of the Purchasers contained in Section 3.2
of this Agreement.
(i) SECURITIES REPORTS. The Company has filed all reports and other
documents required to be filed by it under the Exchange Act and the
Securities Act on a timely basis or has received a valid extension of such
time of filing, and all such reports and other documents complied in all
material respects with the requirements of the Exchange Act and the
Securities Act, as applicable, and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, at the time
and in light of the circumstances under which they were made, not
misleading.
(j) FINANCIAL STATEMENTS.
(i) The Company has previously delivered to each Purchaser (x)
consolidated balance sheets of the Company as of December 31, 1994 and
1993 and consolidated statements of operations, changes in
shareholders' equity and cash flows of the Company for each of the
years ended December 31, 1994, 1993 and 1992, accompanied by the
related audit report of Deloitte & Touche LLP, and (y) an unaudited
consolidated balance sheet of the Company as of June 30, 1995 and
unaudited consolidated statements of operations, changes in
shareholders' equity and cash flows of the Company for the six months
ended June 30, 1995. The foregoing financial statements, as well as
the financial statements of the Company to be delivered pursuant to
Section 5.7(a) hereof (collectively the "Company Financial
Statements"), fairly present or will fairly present, as the case may
be, the consolidated financial condition of the Company as of the
respective dates set forth therein, and the consolidated results of
operations, changes in shareholders' equity and cash flows of the
Company for the respective periods or as of the respective dates set
forth therein.
(ii) Each of the Company Financial Statements has been or will
be, as the case may be, prepared in accordance with generally accepted
accounting principles consistently applied during the periods
involved, except as stated therein, and except that unaudited Company
Financial Statements need not contain all of the footnote and line
item disclosures that would be required for financial statements
prepared in accordance with generally accepted accounting principles.
The books and records of the Company and the Bank are being maintained
in material compliance with applicable legal and accounting
requirements, and such books and records accurately reflect in all
material respects all dealings and transactions in respect of the
business, assets, liabilities and affairs of the Company and the Bank.
(iii) Except to the extent (x) reflected, disclosed or
provided for in the consolidated statement of financial condition of
the Company as of June 30, 1995 (including related notes) and (y) of
liabilities incurred since such date in the ordinary course of
business, neither the Company nor the Bank has any liabilities,
whether absolute, accrued, contingent or otherwise, which would have a
Material Adverse Effect.
(k) MATERIAL ADVERSE CHANGE. Except as Previously Disclosed, since
June 30, 1995, no events or developments involving the Company or the Bank
have occurred which, individually or in the aggregate, (i) have had, or
would reasonably be likely to have, a Material Adverse Effect, provided
that any special assessment of SAIF-insured institutions to recapitalize
the SAIF shall not be deemed to have such an effect if the condition set
forth in Section 4.1(f)(iii) hereof is satisfied, or (ii) materially impair
the ability of the Company or the Bank to perform its obligations under
this Agreement, any Related Agreement to which it will become a party or
any of the Securities.
(l) ENVIRONMENTAL MATTERS.
(i) To the best of the knowledge of the Company and the Bank,
the Company and the Bank are in compliance with all Environmental
Laws, except for any violations of any Environmental Law which would
not, individually or in the aggregate, have a Material Adverse Effect.
Neither the Company nor the Bank has received any communication
alleging that the Company or any Company Subsidiary is not in such
compliance and, to the best knowledge of the Company, there are no
present circumstances that would prevent or interfere with the
continuation of such compliance.
(ii) To the best of the knowledge of the Company and the Bank,
none of the properties owned, leased or operated by the Company or the
Bank has been or is in violation of or liable under any Environmental
Law, except for any such violations or liabilities which would not
individually or in the aggregate have a Material Adverse Effect.
(iii) To the best of the knowledge of the Company and the
Bank, there are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis
of any Environmental Claim or other claim or action or governmental
investigation that could result in the imposition of any liability
arising under any Environmental Law against the Company or the Bank or
against any Person whose liability for any Environmental Claim the
Company or the Bank has or may have retained or assumed either
contractually or by operation of law, except such as would not have a
Material Adverse Effect.
(m) TAX MATTERS. The Company and the Bank have timely filed all Tax
Returns required by applicable law to be filed by them (including, without
limitation, estimated tax returns, income tax returns, information returns
and withholding and employment tax returns) and have paid, or where payment
is not required to have been made, have set up an adequate reserve or
accrual for the payment of, all Taxes required to be paid in respect of the
periods covered by such Tax Returns, except in all cases where the failure
to do so does not or will not have a Material Adverse Effect. As of the
date hereof, there is no audit examination, assessed deficiency, deficiency
litigation or refund litigation with respect to any Taxes of the Company or
the Bank. All Taxes due with respect to completed and settled examinations
or concluded litigation relating to the Company have been paid in full or
adequate provision has been made for any such Taxes on the Company's
consolidated statement of financial condition in accordance with generally
accepted accounting principles. The Company has not executed an extension
or waiver of any statute of limitations on the assessment or collection of
any material tax due that is currently in effect. Nothing has occurred,
whether by action or by failure to act, which would subject to recapture
the bad debt reserves established by the Bank for federal income tax
purposes under Section 593 of the Code.
(n) ERISA. The Company is in compliance in all material respects
with all presently applicable provisions of ERISA; no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company would have any material liability;
the Company has not incurred and does not expect to incur liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 (whether or not waived) or 4971 of
the Code; and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
(o) LITIGATION. There are no actions, suits, investigations or legal
proceedings pending against, or to the knowledge of the Company threatened
against, or affecting the Company or the Bank or their respective
properties before any court or governmental body or agency which would
reasonably be expected to have a Material Adverse Effect or which in any
manner challenge the legality, validity or enforceability of this
Agreement, any of the Related Agreements or any of the Securities, or which
would reasonably be expected to materially impair the ability or obligation
of the Company or the Bank to perform fully on a timely basis their
respective obligations under this Agreement, any Related Agreement to which
it will become a party or any of the Securities.
(p) COMPLIANCE WITH LAWS. Each of the Company and the Bank has all
permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, federal, State,
local and foreign governmental or regulatory bodies that are necessary in
order to permit it to carry on its business as it is presently being
conducted and the absence of which could have a Material Adverse Effect;
all such permits, licenses, certificates of authority, orders and approvals
are in full force and effect; and to the best knowledge of the Company, no
suspension or cancellation of any of the same is threatened.
(q) NO DEFAULT OR VIOLATION. Neither the Company nor the Bank
currently is in violation of its Certificate of Incorporation and Charter,
respectively, its Bylaws, or of any applicable federal, state or local law
or ordinance or any order, rule or regulation of any federal, state, local
or other governmental agency or body (including, without limitation, all
banking, securities, safety, health, environmental, zoning, anti-
discrimination, antitrust, and wage and hour laws, ordinances, orders,
rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could, individually or in the aggregate, reasonably be deemed (i)
to have a Material Adverse Effect or (ii) materially adversely impair the
ability of the Company or the Bank to perform on a timely basis any
obligation which it has under this Agreement, any Related Agreement to
which it will become a party or any of the Securities and neither the
Company nor the Bank has received any notice or communication from any
federal, state or local governmental authority asserting that the Company
or the Bank is in violation of any of the foregoing which could reasonably
be deemed to have any effect set forth in clauses (i) or (ii) above.
Except for the Capital Directive issued by the OTS to the Bank as of June
30, 1995 and as Previously Disclosed, neither the Company nor the Bank is
subject to any regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written commitment, and
none of them has received any written communication requesting that they
enter into any of the foregoing.
(r) CERTAIN FEES. Except for fees and expenses payable by the
Company to the Placement Agent, as Previously Disclosed, no fees or
commissions will be payable by the Company or the Bank to brokers, finders,
investment bankers or banks pursuant to any agreement entered into by the
Company or the Bank with respect to the offer and sale of the Units or any
of the other transactions contemplated hereby.
(s) USURY LAWS. The Senior Notes will not be subject to a defense
that the interest rate is in violation of the usury laws of the State of
California, as currently in effect. The Company hereby waives, to the
fullest extent permitted by applicable law, its right to assert the
violation of any such usury law and the usury law of any other applicable
jurisdiction as a defense to the fulfillment of any of its obligations
under the Senior Notes and covenants and agrees to take all reasonable
actions as may be necessary in the future to make such waiver effective.
(t) CERTAIN ASSETS. The Company has Previously Disclosed a true and
correct listing of the following assets of the Company and its Subsidiaries
as of August 31, 1995: (i) all non-performing loans, securities or other
assets (i.e., all assets on which the Company or the Bank has ceased
recognizing interest under generally accepted accounting principles or as
to which any payments of principal or interest are past due 90 or more days
as of such date), (ii) all loans, securities or other assets as to which
any payments of principal or interest are past due 60 or more days, (iii)
all loans, securities or other assets not included in the foregoing which
have been classified special mention, substandard, doubtful or loss by
management of the Company or the Bank or regulatory examiners, and (iv)
each parcel of Real Estate Owned (excepting such parcels as may have been
disposed of in the ordinary course of business subsequent to such date),
including an identification of the amount of reserves which have been
established with respect to each such parcel and its net carrying value.
(u) NO DEBT. Except for the Senior Notes and Permitted Debt (as
defined in Section 4(c)(i) and (ii) of the Senior Notes), as of the date
hereof the Company, on an unconsolidated basis, does not have any
outstanding Debt (as defined in Section 3 of the Senior Notes), and except
for the Senior Notes and Permitted Debt, the Company will have no
outstanding Debt on the Closing Date.
(v) PRIVATE OFFERING. Neither the Company nor, assuming the accuracy
of such representations of the Placement Agent as may be requested by the
Company in connection with the transactions contemplated hereby, any Person
acting on its behalf, has taken or will take any action which might subject
the offering, issuance or sale of the Units to the registration
requirements of the Securities Act or comparable provisions of any
applicable State securities laws.
(w) DISCLOSURE. None of the representations and warranties of the
Company or any of the information or documents which have been Previously
Disclosed to a Purchaser pursuant hereto are false or misleading in any
material respect or contain any untrue statement of a material fact, or
omit to state any material fact required to be stated or necessary to make
any such information or document, at the time and in light of the
circumstances, not misleading. Copies of all documents referred to in this
Section 3.1 are true, correct and complete copies thereof and include all
amendments, supplements and modifications thereto and all waivers
thereunder.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS.
(a) INVESTMENT INTENT. Each Purchaser, severally and not jointly and
as to itself only, represents and warrants to, and covenants and agrees
with, the Company that the Securities to be acquired by it hereunder are
being acquired for its own account for investment and with no intention of
distributing or reselling such Securities or any part thereof or interest
therein in any transaction which would be in violation of the securities
laws of the United States of America or any State, without prejudice,
however, to a Purchaser's right, subject to the provisions of this
Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Securities under an effective
registration statement under the Securities Act and other applicable State
securities laws or under an exemption from such registration, and subject,
nevertheless, to the disposition of a Purchaser's property being at all
times within its control. Each Purchaser, severally and not jointly and as
to itself only, further represents and warrants to the Company that such
Purchaser has no present agreement, understanding, plan or intent to
transfer the Units (including the Warrants) to be purchased by it to any
transferee.
(b) TRANSFER RESTRICTIONS.
(i) If a Purchaser should decide to dispose of any of the
Securities, such Purchaser understands and agrees that it may do so
only pursuant to an effective registration statement under the
Securities Act or as set forth below: (i) to the Company, (ii) to any
Person reasonably believed by such Purchaser to be a "qualified
institutional buyer" (as defined in Rule 144A under the Securities
Act) in compliance with Rule 144A under the Securities Act, (iii)
pursuant to an exemption from registration set forth in Rule 144 under
the Securities Act, (iv) to any Person who is reasonably believed by
such Purchaser to be an "accredited investor" (as defined in Rule
501(a) under the Securities Act) and that, prior to such transfer,
furnishes to the Purchaser and the Company a signed letter confirming
its status as an accredited investor and agreeing to the restrictions
on transfer of the Securities set forth in this Agreement or (v) to
any Affiliate of such Purchaser pursuant to an applicable exemption
under the Securities Act. In connection with any transfer of any
Securities other than (i) any transfer pursuant to an effective
registration statement or (ii) any transfer by a qualified
institutional buyer (as defined in Rule 144A under the Securities Act)
pursuant to clause (i) or (ii) above, the Company may require that the
transferor of any such Securities provide to the Company an opinion of
counsel experienced in the area of United States securities laws
selected by the transferor (which may include in-house counsel of a
transferor), which counsel shall be and the form and substance of
which opinion shall be, reasonably satisfactory to the Company, to the
effect that such transfer does not require registration of such
Securities under the Securities Act or any State securities laws. In
connection with any transfer pursuant to clause (ii) above, the
Company may request reasonable certification as to the status of the
transferor's transferee as a qualified institutional buyer. Each
Purchaser agrees to the imprinting, so long as appropriate, (i) on the
Senior Notes of the first legend set forth on the form of Senior Note
included as Exhibit B hereto, (ii) on the Warrants of the first legend
set forth on the form of Warrant included as Exhibit D hereto and
(iii) on certificates representing the Series A Preferred Stock and
the Common Stock issuable (x) upon exercise of the Warrants or (y)
pursuant to Section 6(b) of the Senior Notes and/or Section 2(b) of
the Certificate of Designations, a legend substantially similar to the
foregoing legends. The legends set forth above may be removed if and
when the applicable Securities are disposed of pursuant to an
effective registration statement under the Securities Act or in the
opinion of counsel to the Company experienced in the area of United
States securities laws such legend is no longer required under
applicable requirements of the Securities Act. The Senior Notes,
Warrants and certificates evidencing the Series A Preferred Stock and
Common Stock referred to in clauses (i), (ii) and (iii) above also
shall bear any other legends required by applicable federal or state
securities laws, which legends may be removed when, in the opinion of
counsel to the Company experienced in the applicable securities laws,
the same are no longer required under the applicable requirements of
such securities laws. The Company agrees that it will provide each
Purchaser, upon request, with a substitute document evidencing the
Securities not bearing such legend at such time as such legend is no
longer applicable.
(ii) Each Purchaser understands and agrees that it may transfer
the Senior Note, shares of Series A Preferred Stock and Warrant which
comprise a Unit (including any Fractional Unit) only together as such
until the earlier of (x) the date the Company files with the
Commission its annual report on Form 10-K for the year ended December
31, 1996 and (y) March 30, 1997. Each Purchaser agrees to the
imprinting, so long as appropriate, of the second legend set forth on
the form of Senior Notes and the form of Warrant included as Exhibit B
and Exhibit D hereto, respectively, on the Senior Notes, certificates
evidencing Series A Preferred Stock and Warrants which are included in
the Units. Such legends may be removed following the expiration of
the restrictions on transfer contained in paragraph (b)(ii) and (iii)
of this Section 3.2, and the Company agrees that it will provide each
Purchaser, upon request, with a substitute document evidencing the
Senior Notes, Series A Preferred Stock and Warrants comprising the
Units not bearing such legend at such time as such legend is no longer
applicable.
(iii) Each Purchaser understands and agrees that until the
Warrants become exercisable in accordance with their terms, it will
give the Company not less than 10 Business Days' notice of any
proposed transfer of Units and/or Securities, accompanied by
information related to such transfer which is reasonably sufficient to
enable the Company to make the determinations referred to herein, so
that the Company may determine in its reasonable judgment whether (i)
such proposed transfer involves a person who is a "5% shareholder" of
the Company, as that term is defined in Section 382(k)(7) of the Code,
or who would become a 5% shareholder of the Company as a result of
such proposed transfer, and, if so, (ii) whether such proposed
transfer could reasonably be expected to result in an "ownership
change" under Section 382 of the Code and the regulations promulgated
thereunder (taking into account both the proposed transfer and any
other transactions of which the Company is aware) and, if so, (iii)
whether such "ownership change" would result in a material loss of tax
benefits to the Company. In the event the Company makes such
determinations and provides the Purchaser with written notice of the
same within 10 Business Days of its receipt of the above-referenced
notice from the Purchaser, or in the event the Company makes a
reasonable written request to such Purchaser for further information
concerning such proposed transfer within the same 10-Business Day
period and makes the foregoing determinations within 10 Business Days
after receipt of such further information, the Purchaser agrees not to
effect any such transfer as the Company may request in order to avoid
such an "ownership change."
(c) STOP TRANSFER INSTRUCTIONS. Each Purchaser agrees that the
Company shall be entitled to make a notation on its records and give
instructions to any transfer agent of the Securities in order to implement
the restrictions on transfer set forth in Section 3.2(b) of this Agreement.
(d) ACCREDITED INVESTOR. Each Purchaser, severally and not jointly
and as to itself only, represents and warrants to, and covenants and agrees
with, the Company that (i) at the time it was offered the Units, it was,
(ii) at the date hereof, it is, and (iii) at the Closing, it will be, an
"accredited investor" as defined in Rule 501(a) under the Securities Act,
and has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment, is able to bear the economic risk of
such investment and, at the present time, is able to afford a complete loss
of such investment.
(e) DUE EXECUTION. Each Purchaser, severally and not jointly and as
to itself only, represents and warrants to the Company that this Agreement
has been, and each Related Agreement to which it will become a party will
be, duly executed and delivered by it or on its behalf and constitutes, or
will constitute, as applicable, a valid and binding obligation of such
Purchaser, enforceable against the Purchaser in accordance with its terms,
except that (i) rights to indemnity and contribution under the Registration
Rights Agreement may be limited by applicable law, (ii) enforceability may
be limited by bankruptcy, insolvency, moratorium and similar laws affecting
creditors' rights generally and (iii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles
of general applicability.
(f) NO CONFLICT. Each Purchaser, severally and not jointly and as to
itself only, represents and warrants to the Company that (i) the execution,
delivery and performance of this Agreement and each of the Related
Agreements to which it will become a party do not and will not, as
applicable, conflict with or constitute a breach or a default under (i) its
articles of incorporation, charter or other organizational document or
bylaws, as applicable, (ii) any material obligation, agreement, indenture,
bond, debenture, note, instrument or any other evidence of indebtedness to
which it is a party or its assets are subject or (iii) subject to Section
3.2(i) hereof, any law, ordinance, order, license, rule or other regulation
or demand of any court or governmental agency, arbitration panel or
authority applicable to it.
(g) ACCESS TO INFORMATION. Each Purchaser acknowledges receipt of
the Confidential Memorandum and further acknowledges that prior to the date
hereof and, subject to the Company's compliance with its obligations
pursuant to Section 5.3(a) hereof, on and subsequent to the date hereof, it
has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the offering of the Units
and the merits and risks of investing in the Units and (ii) access to
information about the Company and the Company's financial condition,
results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment in the Units.
(h) RELIANCE. Each Purchaser also understands and acknowledges that
(i) the Units are being offered and sold without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) such exemption depends in part
on, and that the Company, its counsel and the Private Placement Agent will
rely upon, the accuracy and truthfulness of the foregoing representations
and warranties of such Purchaser, and such Purchaser hereby consents to
such reliance.
(i) GOVERNMENTAL AUTHORIZATION. Except for (i) compliance with
applicable federal and State securities laws in connection with the
performance by a Purchaser of its obligations under the Registration Rights
Agreement, (ii) any required compliance by a Purchaser with applicable
federal and State securities laws, HSR and/or federal banking laws and
regulations in connection with (x) the issuance of shares of Common Stock
upon exercise of the Warrants in accordance with their terms or (y) any
issuance of Common Stock pursuant to Section 6(b) of the Senior Notes or
Section 2(b) of the Certificate of Designations and (iii) such written
confirmations from the OTS as may be reasonably determined by a Purchaser
to be necessary to ensure that upon consummation of the transactions
contemplated by Section 2.1 hereof it will not be deemed to be in control
of the Company or subject to a rebuttable presumption of control of the
Company under the HOLA and 12 C.F.R. Part 574, each Purchaser, severally
and not jointly and as to itself only, represents and warrants to the
Company that no consent, approval, order or other authorization of any
governmental, administrative or regulatory body or agency is legally
required by or on behalf of the Purchaser in connection with the execution,
delivery and performance of this Agreement and each Related Agreement to
which it will become a party.
(j) OWNERSHIP OF COMPANY STOCK.
(i) Each Purchaser who is an individual, severally and not
jointly and as to itself only, represents and warrants to the Company
that, other than by virtue of this Agreement and in the case of
Management as Previously Disclosed, (A) he does not own any Capital
Stock or Stock Equivalents of the Company, and that to his knowledge
after due inquiry none of his spouse, parents, children or
grandchildren (including for this purpose, persons related by blood or
adoption) (collectively, the "Related Persons") owns any Capital Stock
or Stock Equivalents of the Company, (B) to his knowledge after due
inquiry no partnership, limited liability company or corporation in
which he or any of his Related Persons owns a 5% or greater interest
and no estate or trust of which he or any of his Related Persons is a
beneficiary (collectively, "Related Entities"), owns, directly or
indirectly, any Capital Stock or Stock Equivalents of the Company, and
(C) neither such Purchaser nor to the knowledge of such Purchaser
after due inquiry any of such Purchaser's Related Persons or any
entity that constitutes a Related Entity with respect to such
Purchaser has any present intention or plan to acquire Common Stock or
Stock Equivalents of the Company otherwise than through the exercise
of the Warrants and the terms of the Units.
(ii) Each Purchaser that is not an individual, severally and not
jointly and as to itself only, represents and warrants to the Company
that, other than by virtue of this Agreement, (A) it does not own any
Capital Stock or Stock Equivalents of the Company, (B) to such
Purchaser's knowledge after due inquiry, no partnership, limited
liability company or corporation in which it owns a 5% or greater
interest, or estate or trust of which it is a beneficiary owns,
directly or indirectly, any Capital Stock or Stock Equivalents of the
Company and (C) neither it nor to its knowledge after due inquiry any
Affiliate has any present intention or plan to acquire Common Stock or
Stock Equivalents of the Company otherwise than through the exercise
of the Warrants and the terms of the Units.
(iii) Each Purchaser, whether or not an individual, severally
and not jointly and as to itself only, further represents and warrants
to the Company that (A) such Purchaser owns no shares of stock of any
funds advised by Heine Securities Corporation or Dimensional Fund
Advisors Inc and (B) to such Purchaser's knowledge, no partnership,
limited liability company or corporation in which he or it owns an
interest of less than 5% owns, directly or indirectly, any Common
Stock, or Stock Equivalents of the Company, nor does any such
partnership, limited liability company or corporation have any present
intention or plan to acquire any such Common Stock or Stock
Equivalents.
(iv) Each Purchaser, severally and not jointly and as to itself
only, represents and warrants to the Company that, except as
Previously Disclosed, it does not bear a relationship to any other
Purchaser that is specified in Section 267(b) or Section 707(b) of the
Code.
ARTICLE IV
CONDITIONS PRECEDENT TO THE CLOSING
SECTION 4.1 CONDITIONS TO OBLIGATIONS OF THE PARTIES. The
respective obligations of each of the parties hereto to fulfill their
obligations under Section 2.1 hereof at the Closing shall be subject to the
satisfaction or waiver prior to the Closing of the following conditions:
(a) All requirements prescribed by law which are necessary to
the consummation of the transactions contemplated by this Agreement
shall have been satisfied.
(b) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of any of the transactions
contemplated by this Agreement.
(c) No statute, rule or regulation shall have been enacted,
entered, promulgated, interpreted, applied or enforced by any
governmental authority which prohibits, restricts or makes illegal
consummation of any of the transactions contemplated by this
Agreement.
(d) Each of the parties hereto shall have received (i) a
counterpart to this Agreement, duly executed and delivered by the
parties hereto, and (ii) a counterpart of each Related Agreement
(other than the Senior Notes) to which it is a party, in form and
substance satisfactory to the parties, which shall have been duly
executed and delivered by the Company, the Bank and the Purchaser or
Purchasers, as applicable.
(e) The Certificate of Designations shall have been filed with
the Secretary of State of the State of Delaware in accordance with the
Delaware General Corporation Law.
(f) The OTS shall have indicated in writing to the Bank that
upon the submission by the Company of notice to the OTS of the
consummation of the transactions contemplated by Section 2.1 hereof,
(i) the Prompt Corrective Action Directive issued to the Bank by the
OTS as of June 30, 1995 will be terminated, (ii) the regulatory
capital requirements applicable to the Bank will be the requirements
of general applicability set forth at 12 C.F.R. 567.2 and related
regulations and there will be no individual minimum regulatory capital
requirement required to be maintained by the Bank, (iii) the OTS will
not, solely by virtue of any special assessment to recapitalize the
SAIF, require the Bank to meet an individual minimum regulatory
capital requirement or otherwise increase the amount of regulatory
capital required to be maintained by the Bank, and (iv) the Bank will
not be subject to any capital restoration plan filing requirement and
the Bank's revised capital plan submitted to the OTS on June 22, 1995
will be void.
SECTION 4.2 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS. The
obligations of each of the Purchasers to fulfill its obligations under
Section 2.1 hereof shall be subject to the satisfaction or waiver prior to
the Closing of the following conditions:
(a) Each of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date
as if made on the Closing Date (or on the date when made in the case
of any representation or warranty which specifically relates to an
earlier date); the Company shall have performed, in all material
respects, each of its covenants and agreements contained in this
Agreement to be performed prior to the Closing; and each of the
Purchasers shall have received a certificate signed by the Chief
Executive Officer and the Chief Financial Officer of the Company,
dated the Closing Date, to the foregoing effect.
(b) The Company shall have delivered to each Purchaser a Senior
Note, certificate evidencing Series A Preferred Stock and a Warrant,
in each case registered in the name of the Purchaser, sufficient to
evidence the Securities in the Units to be issued and sold by the
Company and purchased by the Purchaser, as set forth on Exhibit A
hereto, against payment therefor to the Company in the amount of
$500,000 per Unit (subject to pro rata adjustment in the case of any
Fractional Unit).
(c) Each Purchaser shall have received such written
confirmations from the OTS as may be reasonably determined by it to be
necessary to ensure that upon consummation of the transactions
contemplated by Section 2.1 hereof it will not be deemed to be in
control of the Company or subject to a rebuttable presumption of
control of the Company under the HOLA and 12 C.F.R. Part 574, and no
such confirmation shall include any condition or requirement that,
individually or in the aggregate, would reduce the benefits of the
transactions contemplated by this Agreement in so significant a manner
that the party, in its judgment, would not have entered into this
Agreement had such condition or requirement been known at the date
hereof.
(d) The Company shall have delivered to each Purchaser a
certificate signed by the Chief Executive Officer and Chief Financial
Officer of the Company, dated the Closing Date, to the following
effect:
(i) at November 30, 1995, the Company had not less
than $23,500,000 of consolidated shareholders' equity under
generally accepted accounting principles;
(ii) at November 30, 1995, the Company's consolidated
general allowance for loan losses and consolidated general
allowance for losses on Real Estate Owned (x) amounted to not
less than $12,500,000 in the aggregate and (y) complied with any
applicable requirement of the OTS, including without limitation
the requirements set forth in a letter, dated October 5, 1995,
from Timothy J. Layne, Assistant Regional Director of the OTS, to
Scott A. Braly;
(iii) from August 1, 1995 to November 30, 1995, the
Company received not less than $14,000,000 of net proceeds from
the sale of Real Estate Owned (other than apartment buildings),
which sales in each case have been recorded by the Company as
such under generally accepted accounting principles;
(iv) at November 30, 1995, the Company's consolidated
Non-performing Assets amounted to not more than $50,600,000; and
(v) to the best of the knowledge and belief of each
such officer, no event has occurred subsequent to November 30,
1995 which would make the statements in clauses (i)-(iv) above
inaccurate.
(e) Unless waived by the Purchasers in accordance with Section
6.3(a) hereof, either (i) the Company's issuance of the Warrants
included in the Units to be sold pursuant to this Agreement shall have
been approved by the requisite vote of the holders of the Common Stock
pursuant to Section 6(i)(1)(D) of Part III to Schedule D of the Bylaws
of the NASD or (ii) the Company shall have obtained an exemption from
such requirement to obtain shareholder approval upon application to
the NASD and mailed to all shareholders of the Company the notice
referred to in Section 6(i)(1)(e) of Part III to Schedule D of the
Bylaws of the NASD.
(f) Members of Management shall have agreed, by their execution
of this Agreement, to purchase in the aggregate not less than 5% of
the aggregate Units to be sold by the Company pursuant to this
Agreement.
(g) Each Purchaser shall have received, in form and substance
reasonably satisfactory to it, an opinion, addressed to the Purchasers
and dated the Closing Date, of Mayer, Brown & Platt, counsel for the
Company and the Bank, with respect to the matters set forth in Exhibit
H hereto.
(h) No party to this Agreement (other than the relevant
Purchaser) shall be in material breach of this Agreement unless such
breach shall have been waived in writing by each of the other parties
to this Agreement.
(i) Each Purchaser shall have received such other certificates,
opinions, documents and instruments related to the transactions
contemplated hereby as may have been reasonably required by it and are
customary for transactions of this type, and all corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement, shall
be reasonably satisfactory in form and substance to it and its
counsel.
SECTION 4.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to fulfill its obligations under this Agreement,
including without limitation the obligations set forth in Section 2.1
hereof, shall be subject to the satisfaction or waiver prior to the Closing
of the following conditions, provided that the condition set forth at
paragraph (e) below may not be waived without the prior written consent of
the Purchasers:
(a) Each of the representations and warranties of the Purchasers
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date
as if made on the Closing Date, and the Company shall have received a
certificate signed by each Purchaser who is an individual and by a
duly authorized officer of each other Purchaser to the foregoing
effect.
(b) Each Purchaser shall have delivered to the Company $500,000
per Unit (subject to pro rata adjustment in the case of any Fractional
Unit) for each of the Units to be issued and sold by the Company and
purchased by the Purchaser pursuant to this Agreement, as set forth on
Exhibit A hereto, such amount to be payable (i) by wire transfer of
immediately available funds to an account with a bank designated by
the Company, by notice to each of the Purchasers to be provided no
later than two Business Days prior to the Closing Date, or (ii) a
federal (same day) funds check payable to the order of the Company.
(c) No party to this Agreement (other than the Company) shall be
in material breach of this Agreement unless such breach shall have
been waived in writing by each of the other parties to this Agreement.
(d) The Company shall have received such other certificates,
opinions, documents and instruments related to the transactions
contemplated hereby as may have been reasonably required by the
Company and are customary for transactions of this type, and all
corporate and other proceedings, and all documents, instruments and
other legal matters in connection with the transactions contemplated
by this Agreement, shall be reasonably satisfactory in form and
substance to the Company and its counsel.
(e) The Company shall have received, in form and substance
reasonably satisfactory to the Company, an opinion, addressed to it
and dated the Closing Date of Mayer, Brown & Platt, counsel for the
Company and the Bank, to the effect that there is "substantial
authority" within the meaning of Treasury Regulation 1.6662-4(d) to
support the conclusion that consummation of the transactions
contemplated by Section 2.1 hereof will not result in a change of
ownership of the Company for purposes of Section 382 of the Code.
ARTICLE V
COVENANTS
SECTION 5.1 SHAREHOLDER MEETING; EXEMPTION. The Company agrees to
use its best efforts to obtain from the NASD an exemption from the
requirement, pursuant to Section 6(i)(1)(d) of Part III to Schedule D of
the Bylaws of the NASD, to obtain shareholder approval of the issuance of
the Warrants included in the Units to be sold pursuant to this Agreement
and, in the event it obtains such exemption, to mail to all shareholders of
the Company the notice referred to in Section 6(i)(1)(e) of Part III to
Schedule D of the Bylaws of the NASD (collectively, the "NASD Exemption").
In the event that the Company does not obtain the NASD Exemption by October
15, 1995, the Company shall (i) take all action necessary (including
without limitation the preparation, filing and dissemination of requisite
proxy materials) to have its shareholders consider the issuance of the
Warrants included in the Units to be sold pursuant to this Agreement at a
special meeting of shareholders which is called for the purpose as promptly
as practicable after the date hereof, (ii) recommend that its shareholders
approve the issuance of the Warrants included in the Units to be sold
pursuant to this Agreement and use its best efforts to obtain (including
without limitation retaining a proxy solicitor if requested by any
Purchaser), as promptly as practicable, such approval and (iii) cooperate
and consult with the Purchasers with respect to each of the foregoing
matters, provided that the Company may cease taking any of the actions set
forth in the foregoing clauses if it obtains the NASD Exemption.
SECTION 5.2 APPLICATIONS. In the event that any approval, consent
or non-objection need be obtained by the Company, the Bank or any Purchaser
from, or a notice or other filing need be filed by the Company, the Bank or
any Purchaser with, the OTS, the FDIC or any other governmental authority
(including without limitation the Federal Trade Commission and the
Assistant Attorney General in charge of the Antitrust Division of the U.S.
Department of Justice pursuant to the HSR) in connection with (i) the
execution, delivery and performance of this Agreement or any Related
Agreement by the Company, the Bank or any Purchaser or (ii) the Company's
issuance of Common Stock upon exercise of Warrants or pursuant to Section
6(b) of the Senior Notes or Section 2(b) of the Certificate of
Designations, such party shall take all actions necessary to obtain any
such approval, consent or non-objection or file such notice or other filing
as promptly as practicable, and the other parties hereto agree to cooperate
with such party in obtaining or filing the same. Any party that is
required to file any notice, application or other document pursuant to the
preceding sentence shall provide copies thereof (excluding any confidential
information) for review to each Purchaser who is a Material Securityholder
in the case of the Company, and to the Company in the case of a Purchaser,
not less than three Business Days prior to the making of such filing and
shall keep such other party or parties hereto, as applicable, apprised of
the status of such filing and the consideration thereof by the relevant
governmental authority.
SECTION 5.3 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Closing, the Company shall permit each Purchaser and
its representatives reasonable access to its properties and personnel, and
shall disclose and make available to each Purchaser all books, papers and
records relating to the assets, stock ownership, properties, operations,
obligations and liabilities of the Company and its Subsidiaries, including,
but not limited to, all books of account (including the general ledger),
tax records, minute books of meetings of boards of directors (and any
committees thereof) and shareholders, organizational documents, bylaws,
material contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files, loan files, plans affecting
employees, and any other business activities or prospects in which a
Purchaser may have a reasonable interest, provided that such access shall
be reasonably related to the transactions contemplated hereby and not
unduly interfere with normal operations, and provided further that in the
event that any of the foregoing are in the control of any third party, the
Company shall use its best efforts to cause such third party to provide
access to such materials to each Purchaser who shall request the same. In
the event that the Company is prohibited by law from providing any of the
access referred to in the preceding sentence to a Purchaser, it shall use
its best efforts to obtain promptly waivers thereof so as to permit such
access. The Company shall make the directors, officers, employees and
agents and authorized representatives (including counsel and independent
public accountants) of the Company and its Subsidiaries available to confer
with a Purchaser and its representatives, provided that such access shall
be reasonably related to the transactions contemplated hereby and not
unduly interfere with normal operations.
(b) All information furnished to a Purchaser by the Company
previously in connection with the transactions contemplated by this
Agreement or pursuant hereto shall be treated as the sole property of the
Company and each Purchaser covenants, severally and not jointly and as to
itself only, that it shall use its best efforts to keep confidential all
such information and shall not directly or indirectly use such information
for any competitive or other commercial purposes. The obligation to keep
such information confidential shall continue for five years from the date
hereof but shall not apply to (i) any information which (x) a Purchaser can
establish by convincing evidence was already in its possession prior to the
disclosure thereof by the Company; (y) was then generally known to the
public; or (z) became known to the public through no fault of a Purchaser;
or (ii) disclosures pursuant to a legal requirement or in accordance with
an order of a court of competent jurisdiction, provided that a Purchaser
shall use its best efforts to give the Company at least ten Business Days
prior notice thereof and shall limit such disclosure to the minimum amount
required by such legal requirement or court order.
SECTION 5.4 PRESS RELEASES. The Company and each Purchaser who
will be a Material Securityholder upon consummation of the transactions
specified in Section 2.1 hereof shall agree with each other as to the form
and substance of any press release related to this Agreement or the
transactions contemplated hereby, and consult with each other as to the
form and substance of other public disclosures which may relate to the
transactions contemplated by this Agreement, provided, however, that
nothing contained herein shall prohibit any party, following notification
to such other parties, from making any disclosure which it determines in
good faith is required by law or regulation. For purposes of the
foregoing, the Company may treat a law firm designated from time to time by
the Purchasers who are Material Securityholders as the authorized
representative of each of the Purchasers.
SECTION 5.5 NO SOLICITATION. Prior to the Closing, neither the
Company nor the Bank, nor any of the directors, officers, employees,
representatives or agents of the Company or other persons controlled by the
Company, shall solicit or encourage inquiries or proposals with respect to,
furnish any information relating to, or participate in any negotiations or
discussions concerning, any acquisition, lease or purchase of all or a
substantial portion of the assets of, or any equity interest in, the
Company or the Bank, or any business combination with the Company or the
Bank, other than as contemplated by this Agreement. The Company will
immediately notify the Purchasers orally and in writing if any such
inquiries or proposals are received by, or such information is requested
from, or any such negotiations or discussions are sought to be initiated
with, the Company or the Bank.
SECTION 5.6 USE OF PROCEEDS. On the Closing Date the Company shall
apply the net proceeds from the sale of Units pursuant to this Agreement as
follows:
(i) not less than $17,500,000 of such net proceeds shall be
contributed by the Company to the Bank as additional paid-in capital
on the Capital Stock of the Bank held by the Company; and
(ii) an amount of such net proceeds equal to the first six full
semi-annual interest payments which become due on the Senior Notes
shall be used to establish and maintain the Interest Reserve Account
required by Section 1(b) of the Senior Notes and the Security
Agreement.
SECTION 5.7 CURRENT INFORMATION.
(a) Between the date hereof and the Closing, the Company shall
provide to each Purchaser (i) promptly following the filing thereof, copies
of each report filed by the Company under the Exchange Act and each regular
and periodic report filed by the Company and the Bank with the OTS, (ii)
concurrently with the mailing thereof, copies of each communication sent by
the Company to its shareholders generally and (iii) within 15 days after
the end of the month of November 1995 (and in any event prior to the
Closing), a consolidated statement of operations of the Company for each of
October and November 1995 and for the period beginning at the commencement
of the fiscal year and ending at the end of each such monthly period, and a
consolidated balance sheet of the Company as of November 30, 1995, in each
case prepared in accordance with generally accepted accounting principles.
(b) Subsequent to the Closing, the Company shall furnish to each
Purchaser who holds Series A Preferred Stock and/or Warrants, promptly upon
their becoming available, (i) each communication sent by the Company to its
shareholders generally, (ii) each report filed by the Company with the
Commission pursuant to the Exchange Act and (iii) each registration
statement and prospectus filed by the Company with the Commission under the
Securities Act, provided that the Company shall not be required to furnish
any such Purchaser any of the same to the extent that it already has done
so pursuant to Section 4(h)(iv) of the Senior Notes or the Registration
Rights Agreement.
SECTION 5.8 LISTING OF ADDITIONAL SHARES OF COMMON STOCK. The
Company shall take all action which is necessary to ensure that Common
Stock issuable upon exercise of the Warrants and Common Stock which may be
issued pursuant to Section 6(b) of the Senior Notes or Section 2(b) of the
Certificate of Designations will be eligible upon issuance for quotation on
the Nasdaq Stock Market's National Market or any exchange on which the
Common Stock is then traded.
SECTION 5.9 RIGHTS OF FIRST REFUSAL. (a) Subject to subsection
(g), for so long as a Purchaser is a holder of a Unit (an "Eligible
Purchaser"), the Company agrees not to issue any of its Capital Securities
or to permit the Bank to issue any of its Capital Securities (such Capital
Securities of the Company and the Bank hereinafter deemed to be jointly
covered by the term "Capital Securities") to any Person or Persons, other
than in the case of Capital Securities of the Bank to the Company (a "Third
Party Purchaser"), without first offering or causing the Bank to offer, as
applicable, to such Eligible Purchaser the opportunity to purchase all or
part of such Capital Securities being issued at the same purchase price and
on the same terms as are proposed to be offered to a Third Party Purchaser.
For this purpose, the Company shall deliver a written notice, or cause the
Bank to deliver a written notice, as applicable (in each case a "Notice"),
to each Eligible Purchaser of any proposed issuance of Capital Securities
which shall contain all of the material terms of the proposed issuance,
including, without limitation, the purchase price and total amount of
Capital Securities proposed to be issued, which terms, including without
limitation the purchase price and any conversion price or rate of such
Capital Securities, may to the extent necessary be expressed in the form of
good faith estimates by the Board of Directors of the Company.
(b) Upon receipt of the Notice, each Eligible Purchaser will have the
right to subscribe for all or part of the Capital Securities on the same
terms set forth in the Notice, by delivery of written notice to the Company
or the Bank, as applicable ("Acceptance Notice"), in accordance with the
instructions set forth in the Notice, within 20 days from the date of its
receipt of the Notice (the "Offer Period"). The Acceptance Notice shall
specify the amount (not exceeding all) of the Capital Securities being
offered with respect to which the Eligible Purchaser wishes to exercise its
subscription rights.
(c) An Acceptance Notice, once given by an Eligible Purchaser in
accordance with subsection (b), shall become irrevocable at the end of the
Offer Period unless it is withdrawn prior to the expiration of the Offer
Period (any such Acceptance Notice which so becomes irrevocable being
called an "Irrevocable Acceptance" and the Eligible Purchaser giving such
notice being an "Accepting Eligible Purchaser").
(d) (i) In the event that any Eligible Purchaser fails to have
delivered an Irrevocable Acceptance with respect to any Notice on or prior
to the last day of the Offer Period with respect to such Notice, such
Eligible Purchaser will have no further right to subscribe for the Capital
Securities proposed to be issued in such Notice during a Free Sale Period
commencing on the date immediately following the end of the Offer Period
with respect to such Notice.
(ii) In the event that no Eligible Purchasers shall have
delivered an Irrevocable Acceptance with respect to a Notice on or
prior to the last day of the Offer Period with respect to such Notice,
the Company or the Bank, as applicable, will be entitled to a Free
Sale Period with respect to the Capital Securities proposed to be
issued in such Notice commencing on the date immediately following the
end of the Offer Period with respect to such notice.
(iii) In the event that Accepting Eligible Purchasers deliver
Irrevocable Acceptances relating to an amount of Capital Securities in
the aggregate in excess of the amount of Capital Securities proposed
to be issued pursuant to the Notice, the amount of Capital Securities
which each Accepting Eligible Purchaser shall be obligated to purchase
will be such Eligible Purchaser's Purchaser Percentage of the Capital
Securities proposed to be issued pursuant to such Notice (provided
that, if one or more Accepting Eligible Purchasers deliver Irrevocable
Acceptances to subscribe for less than such Eligible Purchaser's
Purchaser Percentage, then the Capital Securities that would have been
allocated to such Eligible Purchaser or Purchasers pursuant to this
subsection (d)(iii) shall be allocated to the other Accepting Eligible
Purchasers in accordance with their respective Purchaser's
Percentages, except that no Accepting Eligible Purchaser shall be
required to purchase any Capital Securities in an amount greater than
the amount elected to be subscribed for by such Accepting Eligible
Purchaser pursuant to its Irrevocable Acceptance).
(iv) In the event that Accepting Eligible Purchasers exercise
their option to purchase, pursuant to the foregoing provisions of this
Section 5.9, in the aggregate, all (or, if the Company or the Bank, as
applicable, shall so elect, more than 90%) of the Capital Securities
proposed to be issued in the Notice, all such Eligible Purchasers and
the Company or the Bank, as applicable, shall complete the purchase of
the Capital Securities on the terms set forth in the Notice within 30
days of the expiration of the Offer Period, or within such longer
period (not to exceed six months from the date of the Accepting
Eligible Purchaser's Irrevocable Acceptance) as may be required for
such Accepting Eligible Purchaser to obtain any applicable regulatory
approvals that such Accepting Eligible Purchaser is making a good
faith effort to obtain. If an Accepting Eligible Purchaser does not
complete the purchase of Capital Securities as set forth above, other
than as a result of the negligence, bad faith or wilful misconduct of
the Company or the Bank or any action or omission made by the Company
or the Bank that would prevent such an Accepting Eligible Purchaser
from completing its purchase, the Company or the Bank, as applicable,
will be entitled to a Free Sale Period commencing on the 31st day
following the expiration of the Offer Period, subject to extension as
set forth in the immediately preceding sentence.
(v) Other than as set forth in subsection (vi) below (and
subject to subsection (iv) above), in the event that Accepting
Eligible Purchasers shall have delivered Irrevocable Acceptances for
all or less than all of the Capital Securities set forth in the
Notice, each Accepting Eligible Purchaser shall purchase, within the
applicable period set forth in subsection (iv) above or subsection
(vi) below, as the case may be, the amount of Capital Securities set
forth in its Irrevocable Acceptance.
(vi) In the event that Accepting Eligible Purchasers elect to
subscribe for, in the aggregate, less than all (or if the Company or
the Bank, as applicable, shall so elect 90%) of the Capital Securities
proposed to be offered pursuant to the Notice, the Company or the
Bank, as applicable, shall have a Free Sale Period commencing on the
date immediately following the end of the Offer Period with respect to
the Capital Securities offered pursuant to such Notice as to which
Accepting Eligible Purchasers do not elect to subscribe and the
Company agrees to sell, and to cause the Bank to sell, as applicable,
and the Accepting Eligible Purchasers shall be obligated to purchase,
the Capital Securities for which they subscribed substantially
simultaneously (or, with respect to any Accepting Eligible Purchaser,
within such longer period (not to exceed four months from the relevant
purchase by the Third Party Purchaser) as may be required for such
Accepting Eligible Purchaser to obtain any applicable regulatory
approvals that such Accepting Eligible Purchaser is making a good
faith effort to obtain) with the purchase by the Third Party Purchaser
of the balance of the Capital Securities proposed to be offered
pursuant to such Notice, it being understood that if such balance of
Capital Securities is not so purchased on the terms set forth in the
Notice, no Eligible Purchaser will be required or entitled to purchase
such Capital Securities as to which its Irrevocable Acceptance
applied.
(e) If at any time during a Free Sale Period the terms of a proposed
issuance shall have changed in any material respect from the terms set
forth in the Notice, the Company or the Bank, as applicable, shall give
notice (the "Alteration Notice") to the Eligible Purchasers describing the
changes in terms. Upon receipt of any Alteration Notice, each Eligible
Purchaser will have the right to subscribe for all or part of the Capital
Securities on the terms set forth in the Alteration Notice, by delivery of
an Acceptance Notice to the Company or the Bank, as applicable, in
accordance with the instructions set forth in the Alteration Notice, within
20 days from the date of receipt of the Alteration Notice (the "Altered
Offer Period"), stating the amount (not exceeding all) of Capital
Securities proposed to be offered as to which such Eligible Purchaser
wishes to exercise its right to subscribe. In any such case, the
procedures set forth in subsection (d), to the extent applicable, shall be
followed.
(f) The failure of an Eligible Purchaser to respond to any particular
Notice or Alteration Notice will not constitute a waiver of such Eligible
Purchaser's rights with respect to any proposed issuance of Capital
Securities pursuant to a subsequent Notice or Alteration Notice.
(g) Subsections (a)-(f) shall not apply to the issuance of Capital
Securities pursuant to or in connection with (i) the purchase and sale of
the Securities contemplated by this Agreement, (ii) a reorganization,
merger or consolidation of the Company or the Bank or a sale, disposition
or other transfer of all or substantially all of the assets of the Company
or the Bank to any Person or any Person to the Company or the Bank pursuant
to one transaction or series of related transactions, (iii) any conversion
or exchange of any Capital Securities (including without limitation the
Warrants) in accordance with the terms of such securities or of the
instruments relating to or governing the issuance of such Capital
Securities, (iv) any employee benefit plans, other than the Employee Stock
Ownership Plan or any similar plan of the Company, (v) any stock dividends,
or pro rata (as to any class) split-ups, combinations or exchanges of or
similar transactions involving Capital Securities, (vi) the issuance of
Common Stock pursuant to Section 6(b) of the Senior Notes or Section 2(b)
of the Certificate of Designations, (vii) any bona fide public offering of
Capital Securities which is registered under the Securities Act and
underwritten by an underwriting firm or firms of national reputation or
(viii) any issuance of Common Stock, Options (as defined in the Warrants)
or Convertible Securities (as defined in the Warrants) which would result
in an adjustment in accordance with the terms of the Warrants to the number
of shares of Common Stock issuable upon exercise of the Warrants or the
exercise price of a share of Common Stock which may be acquired upon
exercise thereof and (ix) any issuance of Common Stock, Options (as so
defined) or Convertible Securities (as so defined) to the holders of Common
Stock in their capacities as such which would not result in an adjustment
in accordance with the terms of the Warrants to the number of shares of
Common Stock issuable upon exercise of the Warrants or the exercise price
of a share of Common Stock which may be acquired upon exercise thereof,
provided that the Company concurrently therewith grants to each Eligible
Purchaser as of the record date for such transaction the rights, warrants
or options to which each Eligible Purchaser would have been entitled if, on
the record date used to determine the stockholders entitled to the rights,
warrants or options being granted by the Company, the Eligible Purchaser
was the holder of record of the number of whole shares of Common Stock then
issuable upon exercise of the Warrants held by such Eligible Purchaser.
(h) Notwithstanding anything to the contrary contained in this
Section 5.9, except as permitted under subsection (g) above, neither
Eligible Purchasers nor any Third Party Purchaser will be permitted to
purchase an amount of Capital Securities of the Bank which, when combined
with any other Capital Securities of the Bank owned by such Purchasers,
would result in the Company and the Bank not being permitted to file a
consolidated federal income tax return in the opinion of independent public
accountants or counsel for the Company, in form and substance reasonably
satisfactory to each Accepting Eligible Purchaser.
(i) For the purposes of this Section 5.9,
"Purchaser Percentage" means, at any time of determination
with respect to an Eligible Purchaser, the aggregate number of
shares of Common Stock (including shares of Common Stock which
may be acquired upon exercise of outstanding Warrants, whether or
not then exercisable) then held by such Eligible Purchaser
divided by the aggregate number of shares of Common Stock
(including shares of Common Stock which may be acquired upon
exercise of outstanding Warrants, whether or not then
exercisable) outstanding at such time, expressed as a percentage,
with fractional percentages of .5 or more and less than .5
rounded up and down, respectively.
"Free Sale Period" means a period of three months (or such
longer period of time, not in excess of one year, required to
obtain any regulatory approvals, consents or other actions
necessary to consummate a sale to a Third Party Purchaser which
has agreed in writing (subject to such regulatory approvals,
consents or actions and other reasonable closing conditions) to
purchase Capital Securities on or prior to the end of such three-
month period), during which the Company or the Bank, as
applicable, shall be permitted to issue the Capital Securities
which were proposed to be issued pursuant to a Notice or
Alteration Notice to a Third Party Purchaser on terms no more
favorable to the Third Party Purchaser than those set forth in
such Notice or Alteration Notice, as the case may be.
SECTION 5.10 RULE 144 AND RULE 144A REPORTING.
With a view to making available to holders of Securities the benefits
of certain rules and regulations of the Commission which may permit the
sale of the Securities to the public without registration, the Company
agrees at all times to:
(a) make and keep public information available, as those terms
are understood and defined in Rules 144 and 144A under the Securities
Act (or any successors thereto); and
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act.
SECTION 5.11 PURCHASES OF SECURITIES.
The Company will not, and will not permit any of its Subsidiaries to,
purchase any:
(i) Senior Notes except in accordance with Section 4(m) of the
Senior Notes;
(ii) Series A Preferred Stock except pursuant to a repurchase
offer made to each holder of shares of Series A Preferred Stock pro
rata in accordance with the aggregate number of shares of Series A
Preferred Stock held by such holder; and
(iii) Warrants except pursuant to a repurchase offer made to
each holder of a Warrant pro rata in accordance with the aggregate
number of shares of Common Stock which may be acquired upon exercise
of the Warrants held by such holder.
SECTION 5.12 STOCK OPTIONS. Between the date hereof and the
Closing, the Company shall use its best efforts to cancel all unexercised
stock options issued to Management pursuant to the Stock Option Plan prior
to the Closing and to grant to members of Management substitute options
under the Stock Option Plan to purchase an aggregate of 360,000 shares of
Common Stock, which options shall (i) have a per share exercise price equal
to the greater of the fair market value of a share of Common Stock on the
date of grant, as determined pursuant to the Stock Option Plan, and $3.875,
(ii) become vested and exercisable in three equal annual installments
commencing on the first anniversary of the date of grant and (iii)
terminate seriatim in three equal annual installments commencing on the
fifth anniversary of the date of grant. The Purchasers acknowledge that an
aggregate of an additional 240,000 shares of Common Stock may be made
subject to options to be granted to other employees of the Company or the
Bank in connection with a program to reduce the amounts of annual cash
compensation payable by the Company and the Bank.
SECTION 5.13 EXCHANGE OF SECURITIES. The Company will, at its
expense, promptly upon surrender of (i) any Senior Note, (ii) any
certificate evidencing Series A Preferred Stock and (iii) any Warrant, at
the office of the Company referred to in, or designated pursuant to,
Section 6.4, respectively execute and deliver to the Purchaser (i) a new
Senior Note or Senior Notes in aggregate principal amounts specified by the
Purchaser (subject to the minimum denomination of the Senior Notes) for an
aggregate principal amount equal to the Senior Note or Senior Notes
surrendered, (ii) a new certificate or certificates in denominations
specified by the Purchaser for an aggregate number of shares of Series A
Preferred Stock equal to the number of shares of such stock represented by
the certificate or certificates surrendered and (iii) a new Warrant or
Warrants covering a number of shares of Common Stock specified by the
Purchaser for an aggregate number of shares of Common Stock equal to the
shares of Common Stock covered by the Warrant or Warrants surrendered.
SECTION 5.14 ACQUISITION OF COMMON STOCK. Until the Warrants become
exercisable in accordance with their terms, each Purchaser who is a
Material Securityholder agrees to give the Company not less than 10
Business Days' notice of any proposed purchase or other acquisition of
"stock" of the Company (as defined under Section 382 of the Code and the
regulations thereunder), including any acquisition of "stock" pursuant to
Section 5.9 hereof but excluding shares of Common Stock which may be
acquired pursuant to Section 6(b) of the Senior Notes and/or Section 2(b)
of the Certificate of Designations, accompanied by information related to
such proposed transaction which is reasonably sufficient to enable the
Company to make the determinations referred to herein, so that the Company
may determine in its reasonable judgment whether such purchase or other
acquisition (i) would result in such Material Securityholder becoming a "5%
shareholder" of the Company, as that term is defined in Section 382(k)(7)
of the Code and, if so, (ii) whether such purchase or other acquisition
could reasonably be expected to result in an "ownership change" under
Section 382 of the Code and the regulations promulgated thereunder (taking
into account both the proposed transfer and any other transactions of which
the Company is aware) and, if so, (iii) whether such "ownership change"
would result in a material loss of tax benefits to the Company. In the
event the Company makes such determinations and provides the Purchaser with
written notice of the same within 10 Business Days of its receipt of the
above-referenced notice from the Purchaser, or in the event the Company
makes a reasonable written request to such Purchaser for further
information concerning such proposed transaction within the same 10-
Business Day period and makes the foregoing determinations within 10
Business Days after receipt of such further information, the Purchaser
agrees not to effect any such purchase or other acquisition as the Company
may request in order to avoid such an "ownership change."
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 SURVIVAL OF PROVISIONS. The representations,
warranties and covenants of the Company and the Purchasers made herein and
each of the provisions of Articles V and VI shall remain operative and in
full force and effect regardless of (i) any investigation made by or on
behalf of any Purchaser or the Company, as the case may be, (ii) acceptance
of any of the Securities and payment by the Purchasers therefor and
retirement thereof, (iii) the transfer of any Securities or interest
therein by any Purchaser, provided that no transferee may claim the benefit
of any such representation or warranty, or (iv) any termination of this
Agreement.
SECTION 6.2 TERMINATION. This Agreement may be terminated (as
between the party electing so to terminate it and the counterparty to which
termination is directed) by giving written notice of termination to the
applicable counterparty at any time prior to the Closing:
(a) By the Company if any of the conditions specified in
Sections 4.1 and 4.3 of this Agreement has not been met or waived by
it pursuant to the terms of this Agreement by 3:00 p.m., Pacific Time
on December 15, 1995; or
(b) By any Purchaser if any of the conditions specified in
Sections 4.1 and 4.2 of this Agreement has not been met or waived by
such Purchaser pursuant to the terms of this Agreement by 3:00 p.m.,
Pacific Time, on December 15, 1995.
SECTION 6.3 WAIVER; AMENDMENTS.
(a) No failure or delay on the part of the Company or any Purchaser
in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company or any Purchaser at law or in equity. No waiver
of or consent to any departure by the Company or any Purchaser from any
provision of this Agreement shall be effective unless signed in writing by
the party entitled to the benefit thereof. Except as otherwise provided
herein, no amendment, modification or termination of any provision of this
Agreement shall be effective unless signed in writing by or on behalf of
the Company and each Purchaser. Any amendment, supplement or modification
of or to any of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure from the terms of any provision
of this Agreement, shall be effective only in the specific instance and for
the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on any
party hereto in any case shall entitle another party hereto to any other or
further notice or demand in similar or other circumstances.
(b) The Company shall not, directly or indirectly, pay or cause to be
paid any remuneration, whether by way of dividends, redemption premiums,
fees or otherwise, to any holder of any Securities as consideration for or
as an inducement to any consent, waiver or amendment of any of the terms
and provisions of this Agreement unless such remuneration is paid to all
Purchasers; provided, however, that this Section 6.3(b) does not restrict
the Company's ability to deal individually with any Purchaser or any
subsequent holder with respect to any settlement of a dispute or in the
ordinary course of business.
SECTION 6.4 COMMUNICATIONS. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing
by hand-delivery, registered first-class mail, telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to any Purchaser, initially at the address set forth
below its name on Exhibit A hereto, and thereafter at such other
address, notice of which is given in accordance with this Section 6.4;
and
(ii) if to the Company, initially at 2381 Rosecrans Avenue, El
Segundo, California 90245, Attention: President; and thereafter at
such other address notice of which is given in accordance with this
Section 6.4.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five
Business Days after being sent by certified mail, return receipt requested,
if mailed; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and on the next Business Day if timely delivered to an air
courier guaranteeing overnight delivery.
SECTION 6.5 COSTS, EXPENSES AND TAXES. The Company agrees to pay
all reasonable costs and expenses incurred by it in connection with the
negotiation, preparation, typing, reproduction, execution, delivery and
performance of this Agreement and the Related Agreements and any amendment
or supplement or modification hereof or thereof (except to the extent
otherwise provided in the Registration Rights Agreement), including without
limitation, attorneys fees and expenses and all reasonable costs and
expenses incurred by it in connection with the Company's administration of
this Agreement and any Related Agreement. The Company also agrees to pay
up to $150,000 of the expenses of the Purchasers incurred in connection
with the transactions provided for herein, including reasonable fees and
expenses payable to Elias, Matz, Tiernan & Herrick L.L.P. in connection
with the negotiation, preparation, typing, reproduction, execution and
delivery of this Agreement and the Related Agreements. The Company shall
pay all reasonable costs and expenses (including, without limitation,
attorneys' fees and expenses), if any, incurred by the Purchasers in
connection with any waiver, amendment or modification of any provision of
this Agreement or any Related Agreement with respect to an obligation of,
or requested by, the Company. In addition, the Company shall pay any and
all stamp, transfer and other similar taxes payable in connection with the
execution and delivery of this Agreement or the original issuance of any
Securities, and shall save and hold each Purchaser harmless from and
against any and all liabilities with respect to or resulting from any delay
in paying, or omission to pay, such taxes.
SECTION 6.6 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
SECTION 6.7 BINDING EFFECT; ASSIGNMENT. Prior to the Closing, the
rights and obligations of any Purchaser under this Agreement may not be
assigned to any other Person except with the prior written consent of the
Company, and after the Closing the rights and obligations of any Purchaser
may be assigned by such Purchaser to any Person purchasing Securities from
the Purchaser contemporaneously with such assignment (provided the rights
so assigned shall apply to the Securities so purchased), subject to the
provisions of Section 3.2(b), provided that the rights of a Purchaser
pursuant to Section 5.9 hereof may not be assigned to any Person other than
an Affiliate of such Purchaser. The rights and obligations of the Company
under this Agreement may not be assigned by the Company without the consent
of each Purchaser. Except as expressly provided in this Agreement, this
Agreement shall not be construed so as to confer any right or benefit upon
any Person other than the parties to this Agreement, and their respective
successors and permitted assigns. This Agreement shall be binding upon the
Company and each Purchaser, and their respective successors and permitted
assigns.
SECTION 6.8 GOVERNING LAW. This Agreement shall be deemed to be a
contract made under the laws of the State of California, and for all
purposes shall be construed in accordance with the laws of said state,
without regard to principles of conflict of laws.
SECTION 6.9 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability only without invalidating the remaining provisions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 6.10 HEADINGS AND GENDER. The Article and Section headings
and Table of Contents used or contained in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement. Use of a particular gender herein shall be considered to
represent the masculine, feminine or neuter gender whenever appropriate.
SECTION 6.11 INTEGRATION. This Agreement (including documents
delivered pursuant hereto) and the Related Agreements constitute the entire
agreement among the parties with respect to the subject matter thereof and
there are no promises or undertakings with respect thereto not expressly
set forth or referred to herein or therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
HAWTHORNE FINANCIAL CORPORATION
By: /S/ SCOTT A. BRALY
-------------------------------------
Name: Scott A. Braly
Title: President and Chief
Executive Officer
VALUE PARTNERS, LTD
By: /S/ TIMOTHY G. EWING
-------------------------------------
Name: Timothy G. Ewing
Title: Partner-in-Charge
SID R. BASS MANAGEMENT TRUST
By: /S/ SID R. BASS*
-------------------------------------
Name: Sid R. Bass
Title: Trustee
THE BASS MANAGEMENT TRUST
By: /S/ PERRY R. BASS
-------------------------------------
Name: Perry R. Bass
Title: Trustee
/S/ MR. LEE M. BASS*
-------------------------------------
Mr. Lee M. Bass
_____
*By William P. Hallman, Jr., Attorney-in-fact.
FORT PITT FUND, L.P.
By: FORT PITT CAPITAL MANAGEMENT
CORPORATION
By: /S/ HARRY F. RADCLIFFE
-------------------------------------
Name: Harry F. Radcliffe
Title: President and Chief Executive
Officer
PROSPER VALUE FUND, L.P.
By: PROSPER CAPITAL MANAGEMENT,
L.P., its General Partner
By: CHAPARRAL CAPITAL
CORPORATION, its General Partner
By: /S/ DAVID S. HUNT
----------------------------------
Name: David S. Hunt
Title: President
TYNDALL PARTNERS
By: HALO CAPITAL PARTNERS, L.P., its
General Partner
By: /S/ JEFFREY HALIS
-------------------------------------
Name: Jeffrey Halis
Title: General Partner
/S/ SCOTT A. BRALY
-------------------------------------
Mr. Scott A. Braly
/S/ MR. DAVID HARDIN
-------------------------------------
Mr. David Hardin
/S/ MR. NORMAN MORALES
-------------------------------------
Mr. Norman Morales
/S/ DR. JEFF SCHULTZ
-------------------------------------
Dr. Jeff Schultz
/S/ MR. TIMOTHY B. MATZ
-------------------------------------
Mr. Timothy B. Matz
/S/ W. MICHAEL HERRICK
-------------------------------------
W. Michael Herrick
/S/ RAYMOND A. TIERNAN
-------------------------------------
Raymond A. Tiernan
/S/ JOHN P. SOUKENIK
-------------------------------------
John P. Soukenik
/S/ WILLIAM H. SAVAGE
-------------------------------------
William H. Savage
EXHIBIT A
Name and Address of
Purchaser No. of Units Dollar Amount
------------------- ------------ --------------
Value Partners, LTD 17 Units $8,500,000
2200 Ross Avenue
4660 West
Dallas, TX 75201
Attn: Mr. Timothy Ewing
W (214) 999-1900
FAX (214) 999-1901
Lee M. Bass 6 Units $3,000,000
201 Main Street (32nd
Floor)
Fort Worth, TX 76102
Attn: Mr. Brian McManus
W (817) 338-2681
FAX (817) 338-8366
Sid R. Bass Management 6 Units $3,000,000
Trust
201 Main Street (32nd
Floor)
Fort Worth, TX 76102
Attn: Mr. Brian McManus
W (817) 338-2681
FAX (817) 338-8366
The Bass Management Trust 5 Units $2,500,000
201 Main Street (32nd
Floor)
Fort Worth, TX 76102
Attn: Mr. Brian McManus
W (817) 338-2681
FAX (817) 338-8366
Fort Pitt Fund, L.P. 7 Units $3,500,000
Birmingham Tower
Suite 710
2100 Wharton Street
Pittsburgh, PA 15203
Attn: Mr. Harry F.
Radcliffe
W (412) 488-1550
FAX (412) 488-1930
Name and Address of
Purchaser No. of Units Dollar Amount
------------------- ------------ --------------
Mr. Scott A. Braly 2.4 Units $1,200,000
Hawthorne Financial
Corporation
2381 Rosecrans Avenue
2nd Floor
El Segundo, CA 90245
W (310) 725-5600
FAX (310) 725-5038
Mr. David Hardin .2 Units $ 100,000
Hawthorne Financial
Corporation
2381 Rosecrans Avenue
2nd Floor
El Segundo, CA 90245
W (310) 725-5600
FAX (310) 725-5038
Mr. Norman Morales .4 Units $ 200,000
Hawthorne Financial
Corporation
2381 Rosecrans Avenue
2nd Floor
El Segundo, CA 90245
W (310) 725-5600
FAX (310) 725-5038
Prosper Value Fund, L.P. 2 Units $1,000,000
3900 Thanksgiving Tower
Dallas, TX 75201
Attn: Mr. David Hunt
W (214) 880-8484
FAX (214) 880-7101
Tyndall Partners 1 Unit $ 500,000
500 Park Avenue
New York, NY 10022
Attn: Mr. Jeff Halis
W (212) 486-4794
FAX (212) 644-4482
Dr. Jeff Schultz 3 Units $ 1,500,000
Christian Brothers
University
650 East Parkway South
Memphis, TN 38104
W (901) 722-0300
FAX (901) 722-0580
Name and Address of
Purchaser No. of Units Dollar Amount
------------------- ------------ --------------
Mr. Timothy B. Matz 1 Unit $ 500,000
Elias, Matz, Tiernan &
Herrick L.L.P.
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
W (202) 347-0300
FAX (202) 347-2172
W. Michael Herrick .1 Units $100,000
Elias, Matz, Tiernan &
Herrick L.L.P.
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
W (202) 347-0300
FAX (202) 347-2172
Raymond A. Tiernan .2 Units $200,000
Elias, Matz, Tiernan &
Herrick L.L.P.
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
W (202) 347-0300
FAX (202) 347-2172
John P. Soukenik .1 Units $100,000
Elias, Matz, Tiernan &
Herrick L.L.P.
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
W (202) 347-0300
FAX (202) 347-2172
William H. Savage .1 Units $100,000
3110 Mount Vernon Avenue
Suite 100
Alexandria, Virginia 22305
W (703) 683-5625
FAX (703) 683-4732
EXHIBIT 3
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY ITS ACCEPTANCE
HEREOF, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS WARRANT MAY BE
OFFERED, SOLD OR OTHERWISE DISPOSED OF ONLY (1) TO THE COMPANY, (2) SO LONG
AS THIS WARRANT IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A,
THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE SALE OR OTHER
DISPOSITION IS BEING MADE IN RELIANCE ON RULE 144A, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (4) TO AN "ACCREDITED INVESTOR" AS DEFINED
IN RULE 501 UNDER THE SECURITIES ACT ("ACCREDITED INVESTOR"), THAT IS
ACQUIRING THIS WARRANT FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER
ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, IF A SIGNED CERTIFICATION LETTER (A FORM
OF WHICH MAY BE OBTAINED FROM THE COMPANY) IS DELIVERED BY THE TRANSFEREE
TO THE COMPANY, (5) AS OTHERWISE PROVIDED IN THE UNIT PURCHASE AGREEMENT
(AS DEFINED BELOW) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. BY
PURCHASING THIS WARRANT, THE HOLDER HEREOF AGREES AND REPRESENTS FOR THE
BENEFIT OF THE COMPANY THAT (A) IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A OR (2) AN ACCREDITED INVESTOR ACQUIRING
THIS WARRANT FOR INVESTMENT PURPOSES FOR ITS OWN ACCOUNT OR THE ACCOUNT OF
ANOTHER ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT AND (B) IT WILL NOTIFY ANY
PURCHASER OF THIS WARRANT FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
ABOVE.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN ADDITIONAL
RESTRICTIONS ON TRANSFER CONTAINED IN SECTION 3.2 OF THE UNIT PURCHASE
AGREEMENT DATED AS OF OCTOBER 10, 1995 AMONG THE COMPANY AND THE OTHER
PARTIES NAMED ON THE SIGNATURE PAGES THEREOF, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY. ANY SALE OR TRANSFER NOT IN COMPLIANCE WITH
SUCH UNIT PURCHASE AGREEMENT SHALL BE NULL AND VOID.
VOID AFTER 5:00 P.M., PACIFIC TIME,
ON DECEMBER __, 2005
No. ___
HAWTHORNE FINANCIAL CORPORATION
WARRANT TO PURCHASE _______ SHARES OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
THIS CERTIFIES THAT, FOR VALUE RECEIVED, _______ or its registered
assigns (the "Holder"), is entitled to purchase from Hawthorne Financial
Corporation (the "Company"), subject to the terms and conditions set forth
hereinafter, _______ fully paid and nonassessable shares of the Common
Stock, $.01 par value, of the Company (the "Common Stock") at an exercise
price of $2.25 per share upon surrender of this Warrant to the Company at
the Company's principal office in El Segundo, California with the form of
election to purchase attached to this Warrant duly completed and signed,
together with payment of the exercise price by wire transfer or other
payment of immediately available funds. The exercise price and the number
of shares of Common Stock for which this Warrant is exercisable are subject
to change or adjustment upon the occurrence of certain events as set forth
below.
SECTION 1. DURATION AND EXERCISE OF WARRANTS.
1.1 (a) This Warrant may be exercised on or after December __, 1998
and will expire at 5:00 p.m., Pacific Time, on December __, 2005 (the
"Expiration Date"), provided that, notwithstanding anything to the contrary
contained herein, this Warrant may be exercised in whole or in part prior
to December __, 1998 in connection with or following a Change in Control.
On the Expiration Date, all rights evidenced by this Warrant shall cease
and this Warrant shall become void. For purposes of this Warrant, a
"Change in Control" means the occurrence of any of the following events
after the date of issuance of this Warrant: (i) any "person" or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of the aggregate voting
power of all classes of capital stock of the Company entitled to vote
generally in an election of directors; (ii) the Company is merged with or
into another corporation or another corporation is merged with or into the
Company with the effect that immediately after such transaction the
stockholders of the Company immediately prior to such transaction hold less
than a majority in interest of the total voting power entitled to vote in
the election of directors, managers or trustees of the entity surviving the
transaction; (iii) all or substantially all of the assets of the Company or
Hawthorne Savings, F.S.B., or any successor thereto, are sold to any person
or persons (as an entirety in one transaction or a series of related
transactions); or (iv) the voluntary or involuntary dissolution,
liquidation or winding up of the Company.
(b) Subject to the provisions of this Warrant, the registered holder
of this Warrant shall have the right to purchase from the Company (and the
Company shall issue and sell to such registered holder) the number of fully
paid and nonassessable shares of Common Stock set forth on the face of this
Warrant (or such number of shares of Common Stock as may result from
adjustments made from time to time as provided herein), at the price of
$2.25 per share in lawful money of the United States of America (such
exercise price per share, as adjusted from time to time as provided herein,
being referred to herein as the "Exercise Price"), upon (i) surrender of
this Warrant to the Company at the Company's principal office in El
Segundo, California with the exercise form attached hereto duly completed
and signed by the registered holder or holders thereof, and (ii) payment by
wire transfer or other payment of immediately available funds, in lawful
money of the United States of America, of the Exercise Price for the shares
of Common Stock in respect of which this Warrant is then exercised (and any
applicable transfer taxes pursuant to Section 2 hereof). Upon surrender of
this Warrant, and payment of the Exercise Price as provided above, the
Company shall promptly issue and cause to be delivered to or upon the
written order of the registered holder of this Warrant and in such name or
names as such registered holder may designate, a certificate or
certificates for the number of shares of Common Stock so purchased upon the
exercise of this Warrant, together with payment in respect of any fraction
of a share of Common Stock issuable upon such surrender pursuant to Section
11 hereof.
(c) The exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the Business Day (as
defined in Section 17 hereof) on which the holder surrenders this Warrant
to the Company and payment of the Exercise Price (and any applicable
transfer taxes pursuant to Section 2 hereof) is made, and at such time the
person in whose name any certificate for shares of Common Stock shall be
issuable upon such exercise shall be deemed to be the record holder of such
shares of Common Stock for all purposes.
1.2 In the event that less than all of the shares of Common Stock
represented by this Warrant are exercised on or prior to the Expiration
Date, a new Warrant, duly executed by the Company, will be issued for the
remaining number of shares of Common Stock exercisable pursuant to the
Warrant so surrendered, and the Company shall deliver the required new
Warrant pursuant to the provisions of this Section 1.
1.3 The number of shares of Common Stock to be received upon the
exercise of this Warrant and the Exercise Price are subject to adjustment
from time to time as hereinafter set forth.
SECTION 2. PAYMENT OF TAXES.
The Company will pay all stamp transfer and other similar taxes
payable in connection with the original issuance of this Warrant and the
shares of Common Stock issuable upon exercise thereof, provided, however,
that the Company shall not be required to (i) pay any such tax which may be
payable in respect of any transfer involving the transfer and delivery of
this Warrant or the issuance or delivery of certificates for shares of
Common Stock issuable upon exercise thereof in a name other than that of
the registered holder of this Warrant or (ii) issue or deliver any
certificate for shares of Common Stock upon the exercise of this Warrant
until any such tax required to be paid under clause (i) shall have been
paid, all such tax being payable by the holder of this Warrant at the time
of surrender.
SECTION 3. MUTILATED OR MISSING WARRANTS.
In case this Warrant shall be mutilated, lost, stolen or destroyed,
the Company will issue and deliver in exchange and substitution for and
upon cancellation of, the mutilated Warrant, or in substitution for the
lost, stolen or destroyed Warrant, a new Warrant of like tenor evidencing
the number of shares of Common Stock purchasable upon exercise of the
Warrant so mutilated, lost, stolen or destroyed, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of
such Warrant and an indemnity, if requested, reasonably satisfactory to it.
Any such new Warrant shall constitute an original contractual obligation of
the Company, whether or not the allegedly lost, stolen, mutilated or
destroyed Warrant shall be at any time enforceable by anyone.
SECTION 4. RESERVATION OF WARRANT SHARES.
The Company shall at all times reserve for issuance and delivery upon
exercise of this Warrant such number of shares of Common Stock or other
shares of capital stock of the Company as from time to time shall be
issuable upon exercise of this Warrant. All such shares shall be duly
authorized and, when issued upon such exercise, shall be validly issued,
fully paid and nonassessable, free and clear of all liens, security
interests, charges and other encumbrances and free and clear of all
preemptive rights. After 5:00 p.m., Pacific Time, on the Expiration Date,
no shares of Common Stock shall be subject to reservation in respect of
this Warrant.
SECTION 5. RESTRICTIONS ON TRANSFER.
Neither this Warrant nor the shares of Common Stock issuable upon
exercise thereof may be sold, transferred or otherwise disposed of, except
in accordance with and subject to (i) the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder and (ii) the applicable requirements of Section 3.2
of the Unit Purchase Agreement dated as of October 10, 1995 among the
Company and the Purchasers named on the signature pages thereto (as
amended, supplemented or otherwise modified from time to time, the "Unit
Purchase Agreement").
SECTION 6. RIGHTS AND LIABILITY OF WARRANT HOLDER.
The holder of this Warrant shall not, by virtue thereof, be (i)
entitled to any rights of a stockholder of the Company, either at law or in
equity, and the rights of such holder are limited to those expressed
herein, or (ii) subject to any liability as a stockholder of the Company.
SECTION 7. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON
STOCK.
The Exercise Price and the number and kind of shares of Common Stock
issuable upon the exercise of this Warrant will be subject to change or
adjustment from time to time as follows:
(a) Change in Common Stock. In the event the Company shall, at any
time or from time to time after the date hereof, (i) issue any shares of
Common Stock as a stock dividend to the holders of Common Stock (other than
pursuant to Section 2(b) of the Certificate of Designations and Preferences
relating to the Company's Cumulative Preferred Stock, Series A), (ii)
subdivide or combine the outstanding shares of Common Stock into a greater
or lesser number of shares or (iii) issue any shares of its capital stock
in a reclassification or reorganization of the Common Stock (any such
issuance, subdivision, combination, reclassification or reorganization
being herein called a "Change of Shares"), then (A) in the case of (i) or
(ii) above, the number of shares of Common Stock that may be purchased upon
the exercise of this Warrant shall be adjusted to the number of shares of
Common Stock that the Holder of such Warrant would have owned or have been
entitled to receive after the happening of such event had such Warrant been
exercised immediately prior to the record date (or, if there is no record
date, the effective date) for such event, and the Exercise Price shall be
adjusted to the price (calculated to the nearest 1,000th of one cent)
determined by multiplying the Exercise Price immediately prior to such
event by a fraction, the numerator of which shall be the number of shares
of Common Stock purchasable with this Warrant immediately prior to such
event and the denominator of which shall be the number of shares of Common
Stock purchasable with this Warrant after the adjustment referred to above
and (B) in the case of clause (iii) above, paragraph (l) below shall apply.
An adjustment made pursuant to clause (A) of this paragraph (a) shall
become effective retroactively immediately after the record date in the
case of such dividend and shall become effective immediately after the
effective date in other cases, but any shares of Common Stock issuable
solely as a result of such adjustment shall not be issued prior to the
effective date of such event.
(b) Common Stock Distribution. In the event the Company shall, at
any time or from time to time after the date hereof, issue, sell or
otherwise distribute (including by way of deemed distributions pursuant to
paragraphs (c) and (d) below) any shares of Common Stock (other than
pursuant to (A) a Change of Shares, (B) the exercise or conversion, as the
case may be, of any Option, Convertible Security (each as defined in
paragraph (c) below) or Warrant) or (C) Section 6(b) of the Company's
Senior Notes due 2002 (any such event, including any deemed distributions
described in paragraphs (c) and (d), being herein called a "Common Stock
Distribution"), for a consideration per share less than the current market
price per share of Common Stock (as defined in paragraph (f) below), on the
date of such Common Stock Distribution, then, effective upon such Common
Stock Distribution, the Exercise Price shall be reduced to the price
(calculated to the nearest 1,000th of one cent) determined by multiplying
the Exercise Price in effect immediately prior to such Common Stock
Distribution by a fraction, the numerator of which shall be the sum of (i)
the number of shares of Common Stock outstanding (exclusive of any treasury
shares) immediately prior to such Common Stock Distribution multiplied by
the current market price per share of Common Stock on the date of such
Common Stock Distribution, plus (ii) the consideration, if any, received by
the Company upon such Common Stock Distribution, and the denominator of
which shall be the product of (A) the total number of shares of Common
Stock issued and outstanding immediately after such Common Stock
Distribution multiplied by (B) the current market price per share of Common
Stock on the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment to the
Exercise Price pursuant to the foregoing provisions of this paragraph (b),
including by operation of paragraph (c) or (d) below, then, effective at
the time such adjustment is made, the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall be increased to a
number determined by multiplying the number of shares so purchasable
immediately prior to such Common Stock Distribution by a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior
to such adjustment and the denominator of which shall be the Exercise Price
in effect immediately after such adjustment. In computing adjustments
under this paragraph, fractional interests in Common Stock shall be taken
into account to the nearest 1,000th of a share.
The provisions of this paragraph (b), including by operation of
paragraph (c) or (d) below, shall not operate to increase the Exercise
Price or reduce the number of shares of Common Stock purchasable upon the
exercise of this Warrant, except by operation of paragraph (j) or (k)
below.
(c) Issuance of Options. In the event the Company shall, at any
time or from time to time after the date hereof, issue, sell, distribute or
otherwise grant in any manner (including by assumption) any rights to
subscribe for or to purchase, or any warrants or options for the purchase
of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (any such rights, warrants or options being
herein called "Options" and any such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether or not
such Options or the rights to convert or exchange such Convertible
Securities are immediately exercisable, and the price per share at which
Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the
Company as consideration for the issuance, sale, distribution or granting
of such Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all such
Options, plus, in the case of Options to acquire Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable
upon the conversion or exchange of all such Convertible Securities, by (ii)
the total maximum number of shares of Common Stock issuable upon the
exercise of all such Options) shall be less than the current market price
per share of Common Stock on the date of the issuance, sale, distribution
or granting of such Options, then, for the purposes of paragraph (b) above,
the total maximum number of shares of Common Stock issuable upon the
exercise of all such Options or upon the conversion or exchange of the
total maximum amount of the Convertible Securities issuable upon the
exercise of all such Options shall be deemed to have been issued as of the
date of the issuance, sale, distribution or granting of such Options and
thereafter shall be deemed to be outstanding and the Company shall be
deemed to have received as consideration such price per share, determined
as provided above, therefor. Except as otherwise provided in paragraphs
(j) and (k) below, no additional adjustment of the Exercise Price shall be
made upon the actual exercise of such Options or upon conversion or
exchange of the Convertible Securities issuable upon the exercise of such
Options. If the minimum and maximum numbers or amounts referred to in this
paragraph (c) or in paragraph (d) below cannot be calculated with certainty
as of the date of the required adjustment, such numbers and amounts shall
be determined in good faith by the Board of Directors of the Company.
(d) Issuance of Convertible Securities. In the event the Company
shall, at any time or from time to time after the date hereof, issue, sell
or otherwise distribute (including by assumption) any Convertible
Securities (other than upon the exercise of any Option), whether or not the
rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the
Company as consideration for the issuance, sale or distribution of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or
exchange of all such Convertible Securities, 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 current market
price per share of Common Stock on the date of such issuance, sale or
distribution, then, for the purposes of paragraph (b) above, the total
number of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued as
of the date of the issuance, sale or distribution of such Convertible
Securities and thereafter shall be deemed to be outstanding and the Company
shall be deemed to have received as consideration such price per share,
determined as provided above, therefor. Except as otherwise provided in
paragraphs (j) and (k) below, no additional adjustment of the Exercise
Price shall be made upon the actual conversion or exchange of such
Convertible Securities.
(e) Dividends and Distributions. In the event the Company shall, at
any time or from time to time after the date hereof, distribute to the
holders of Common Stock any dividend or other distribution of cash,
evidences of its indebtedness, other securities or other properties or
assets (in each case other than (i) dividends payable in Common Stock,
Options or Convertible Securities and (ii) any cash dividend declared and
paid pursuant to a regular quarterly dividend policy of the Company), or
any options, warrants or other rights to subscribe for or purchase any of
the foregoing, then (A) the Exercise Price shall be decreased to a price
determined by multiplying the Exercise Price then in effect by a fraction,
the numerator of which shall be the current market price per share of
Common Stock on the record date for such distribution less the sum of (X)
the cash portion, if any, of such distribution per share of Common Stock
outstanding (exclusive of any treasury shares) plus (Y) the then fair
market value (as determined in good faith by the Board of Directors of the
Company) per share of Common Stock issued and outstanding on the record
date for such distribution of that portion, if any, of such distribution
consisting of evidences of indebtedness, other securities, properties,
assets, options, warrants or subscription or purchase rights, and the
denominator of which shall be such current market price per share of Common
Stock and (B) the number of shares of Common Stock purchasable upon the
exercise of this Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock so purchasable immediately
prior to the record date for such distribution by a fraction, the numerator
of which shall be the Exercise Price in effect immediately prior to the
adjustment required by clause (A) of this sentence and the denominator of
which shall be the Exercise Price in effect immediately after such
adjustment. The adjustments required by this paragraph (e) shall be made
whenever any such distribution is made and shall be retroactive to the
record date for the determination of stockholders entitled to receive such
distribution.
(f) Current Market Price. For the purpose of any computation under
paragraphs (b), (c), (d) and (e) of this Section 7, the current market
price per share of Common Stock at any date shall be the average of the
daily closing prices for the shorter of (i) the 20 consecutive trading days
ending on the last full trading day on the exchange or market specified in
the second succeeding sentence, prior to the Time of Determination and (ii)
the period commencing on the date next succeeding the first public
announcement of the issuance, sale, distribution or granting in question
through such last full trading day prior to the Time of Determination. The
term "Time of Determination" as used herein shall be the time and date of
the earlier to occur of (A) the date as of which the current market price
is to be computed and (B) the last full trading day on such exchange or
market before the commencement of "ex-dividend" trading in the Common Stock
relating to the event giving rise to the adjustment required by paragraph
(b), (c), (d) or (e). The closing price for any day shall be the last
reported sale price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked prices regular
way for such day, in each case (1) on the principal national securities
exchange on which the shares of Common Stock are listed or to which such
shares are admitted to trading or (2) if the Common Stock is not listed or
admitted to trading on a national securities exchange, in the over-the-
counter market as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or any comparable
system or (3) if the Common Stock is not listed on NASDAQ or a comparable
system, as furnished by two members of the National Association of
Securities Dealers, Inc. ("NASD") selected from time to time in good faith
by the Board of Directors of the Company for that purpose. In the absence
of all of the foregoing, or if for any other reason the current market
price per share cannot be determined pursuant to the foregoing provisions
of this paragraph (f), the current market price per share shall be the fair
market value thereof as determined in good faith by the Board of Directors
of the Company.
(g) Certain Distributions. If the Company shall pay a dividend or
make any other distribution payable in Options or Convertible Securities,
then, for purposes of paragraph (b) above (including dividends or
distributions by operation of paragraph (c) or (d) above, as the case may
be), such Options or Convertible Securities shall be deemed to have been
issued or sold without consideration except for such amounts of
consideration as shall have been deemed to have been received by the
Company pursuant to paragraphs (c) or (d) above, as, appropriate.
(h) Consideration Received. If any shares of Common Stock shall be
issued and sold in an underwritten public offering, the consideration
received by the Company for such shares of Common Stock shall be deemed to
include the underwriting discounts and commissions realized by the
underwriters of such public offering. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold or distributed for
a consideration other than cash, the amount of the consideration other than
cash received by the Company in respect thereof shall be deemed to be the
then fair market value of such consideration (as determined in good faith
by the Board of Directors of the Company). If any Options shall be issued
in connection with the issuance and sale of other securities of the
Company, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued, sold or distributed for such
amount of consideration as shall be allocated to such Options in good faith
by the Board of Directors of the Company.
(i) Deferral of Certain Adjustments. No adjustments to the Exercise
Price (including the related adjustment to the number of shares of Common
Stock purchasable upon the exercise of this Warrant) shall be required
hereunder unless such adjustment, together with other adjustments carried
forward as provided below, would result in an increase or decrease of at
least one percent of the Exercise Price; provided, however, that any
adjustment which by reason of this paragraph (i) is not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
(j) Changes in Options and Convertible Securities. If the exercise
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (c) or (d) above, or
the rate at which any Convertible Securities referred to in paragraph (c)
or (d) above 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 upon an event which results in a related
adjustment pursuant to this Section 7), the Exercise Price then in effect
and the number of shares of Common Stock purchasable upon the exercise of
this Warrant shall forthwith be readjusted (effective only with respect to
any exercise of this Warrant after such readjustment) to the Exercise Price
and number of shares of Common Stock so purchasable that would then be in
effect had the adjustment made upon the issuance, sale, distribution or
granting of such Options or Convertible Securities been made based upon
such changed purchase price, additional consideration or conversion rate,
as the case may be, but only with respect to such Options and Convertible
Securities as then remain outstanding.
(k) Expiration of Options and Convertible Securities. If, at any
time after any adjustment to the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall have been made pursuant
to paragraph (c), (d) or (j) above or this paragraph (k), any Options or
Convertible Securities shall have expired unexercised or, solely with
respect to Options that are rights ("Rights"), are redeemed, the number of
such shares so purchasable shall, upon such expiration or such redemption,
be readjusted and shall thereafter be such as they would have been had they
been originally adjusted (or had the original adjustment not been required,
as the case may be) as if (i) the only shares of Common Stock deemed to
have been issued in connection with such Options or Convertible Securities
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Options or Convertible Securities and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for the issuance,
sale, distribution or granting of all such Options or Convertible
Securities, whether or not exercised; provided, however, that (x) no such
readjustment shall have the effect of decreasing the number of shares so
purchasable by an amount (calculated by adjusting such decrease to account
for all other adjustments made pursuant to this Section 7 following the
date of the original adjustment referred to above) in excess of the amount
of the adjustment initially made in respect of the issuance, sale,
distribution or granting of such Options or Convertible Securities and (y)
in the case of the redemption of any Rights, there shall be deemed (for the
purposes of paragraph (c) above) to have been issued as of the date of such
redemption for no consideration a number of shares of Common Stock equal to
the aggregate consideration paid to effect such redemption divided by the
current market price of the Common Stock on the date of such redemption.
(l) Other Adjustments. In the event that at any time the Holder
shall become entitled to receive any securities of the Company other than
shares of Common Stock as constituted on the date of issuance of his
Warrant the number of such other securities so receivable upon exercise of
this Warrant and the Exercise Price applicable to such exercise shall be
adjusted at such time, and shall be subject to further adjustment from time
to time thereafter, in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Common Stock
contained in this Section 7.
(m) Excluded Transactions. Notwithstanding any provision in this
Section 7 to the contrary, no adjustment shall be made pursuant to this
Section 7 in respect of (i) any change in the par value of the Common
Stock, (ii) the granting of any Options or the issuance of any shares of
Common Stock, in either case, which would otherwise trigger an adjustment
under paragraph (b) above, that may be registered on Form S-8 or any
successor form under the Securities Act, to any directors, officers or
employees of the Company, provided that the granting of Options or the
issuance of shares of Common Stock pursuant to this clause (ii) are in the
ordinary course of business and are usual and customary, or (iii) the
issuance of Common Stock pursuant to any dividend reinvestment plan which
provides that the price of the Common Stock purchased for plan participants
from the Company will be no less than 95% of the average of the high and
low sales prices of the Common Stock on the investment date or, if no
trading in the Common Stock occurs on such date, the next preceding date on
which trading occurred (1) on the principal national securities exchange on
which the shares of Common Stock are listed or to which such shares are
admitted to trading or (2) if the Common Stock is not listed or admitted to
trading on a national securities exchange, in the over-the-counter market
as reported by NASDAQ or any comparable system or (3) if the Common Stock
is not listed on NASDAQ or a comparable system, as furnished by two members
of the NASD selected from time to time in good faith by the Board of
Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any other reason the current market price per share
cannot be determined pursuant to the foregoing provisions of this
paragraph, the current market price per share shall be the fair market
value thereof as determined in good faith by the Board of Directors of the
Company.
SECTION 8. REORGANIZATIONS AND ASSET SALES.
If any capital reorganization or reclassification of the capital stock
of the Company, or 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, merger or sale, lawful and
adequate provision shall be made whereby the Holder of this Warrant shall
thereafter have the right to purchase and receive, upon the basis and upon
the terms and conditions specified in this Warrant and in lieu of the
shares of Common Stock immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for a number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented
hereby 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 the Holder of this Warrant
to the end that the provisions hereof (including without limitation
provisions for adjustments of the Exercise Price and of the number of
shares purchasable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. The
Company shall 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 by first class mail, postage prepaid, to the Holder hereof at the
last address of such Holder appearing on the register maintained by 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 purchase.
SECTION 9. NOTICE OF ADJUSTMENT.
9.1 Whenever the number of shares of Common Stock or other stock or
property issuable upon the exercise of this Warrant is adjusted, as herein
provided, the Company shall promptly mail by first class mail, postage
prepaid, to the Holder at the last address of such Holder appearing on the
register maintained by the Company, notice of such adjustment or
adjustments. In addition, the Company at its sole expense shall within 90
calendar days following the end of each fiscal year of the Company during
which this Warrant remains outstanding and an adjustment has occurred, and
promptly upon the request of the Holder of this Warrant in connection with
the exercise thereof, cause to be delivered to the Holder a certificate of
a firm of independent public accountants selected by the Board of Directors
of the Company (which may be the regular accountants employed by the
Company) setting forth the number of shares of Common Stock or other stock
or property issuable upon the exercise of this Warrant after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was
made.
9.2 If at any time after the date of issuance of this Warrant and
ending on December __, 1998, the Company enters into an agreement providing
for a Change in Control or otherwise becomes aware of the occurrence of a
Change in Control not directly or indirectly resulting from actions taken
by it, then the Company will cause to be mailed by first class mail,
postage prepaid, to the Holder at the last address of such Holder appearing
on the register maintained by the Company, as soon as practicable and in
any event within 20 days thereafter, a notice describing any such agreement
or the occurrence of such a Change in Control, and stating the anticipated
effective date of the Change in Control if it has not yet occurred or, if
it has occurred, the effective date thereof.
SECTION 10. STATEMENT OF WARRANTS.
This Warrant may continue to express the same number and kind of
shares which may be purchased upon exercise hereof as are stated in the
Warrant initially issued pursuant to the Unit Purchase Agreement or any
substitute Warrant issued therefor, notwithstanding any adjustment in the
Exercise Price and/or in the number or kind of shares issuable upon
exercise of this Warrant. In the event of any such adjustment, the Company
will, at its expense, promptly upon the Holder's surrender of this Warrant
to the Company, execute a new Warrant or Warrants stating the Exercise
Price and the number and kind of shares issuable upon exercise of this
Warrant.
SECTION 11. FRACTIONAL INTEREST.
The Company shall not be required to issue fractional shares of Common
Stock on the exercise of this Warrant. If more than one Warrant shall be
presented for exercise at the same time by the Holder, the number of full
shares of Common Stock which shall be issuable upon such exercise shall be
computed on the basis of the aggregate number of shares of Common Stock
acquirable on exercise of the Warrants so presented. If any fraction of a
share of Common Stock would, except for the provisions of this Section 11,
be issuable on the exercise of any Warrant (or specified portion thereof),
the Company shall pay an amount in cash calculated by it to be equal to the
then current market price per share multiplied by such fraction computed to
the nearest whole cent. The Holder by his acceptance of this Warrant
expressly waives any and all rights to receive any fraction of a share of
Common Stock or a stock certificate representing a fraction of a share of
Common Stock.
SECTION 12. ENTIRE AGREEMENT.
This Warrant, the Unit Purchase Agreement and the Related Agreements
(as defined in the Unit Purchase Agreement) constitute the full and entire
understanding and agreement among the parties with regard to the subject
matter hereof and no party shall be liable or bound to any other party in
any manner by any representations, warranties, covenants or agreements
except as specifically set forth herein or therein.
SECTION 13. SUCCESSORS AND ASSIGNS.
13.1 All covenants and provisions of this Warrant by or for the
benefit of the Company or the holder of this Warrant shall bind and inure
to the benefit of their respective successors, assigns, heirs and personal
representatives.
13.2 Subject to the requirements of Section 6 of this Warrant, this
Warrant is assignable, in whole or in part, without charge to the holder
hereof upon surrender of this Warrant with a properly executed assignment
at the principal office of the Company. Upon any partial assignment, the
Company will at its expense issue and deliver to the holder hereof a new
Warrant of like tenor, in the name of the holder hereof, which shall be
exercisable for such number of shares of Common Stock (or any shares of
stock or other securities at the time issuable upon exercise of this
Warrant) which were not so assigned. Except as provided in this Section
13.2, this Warrant may not be assigned or transferred.
SECTION 14. TERMINATION.
This Warrant shall terminate at 5:00 p.m., Pacific Time, on the
Expiration Date or upon such earlier date on which all of this Warrant has
been exercised.
SECTION 15. HEADINGS.
The headings of sections of this Warrant have been inserted for
convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
SECTION 16. AMENDMENTS.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the Company and the
holder of this Warrant.
SECTION 17. NOTICES.
All notices, demands and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
(a) if to the holder of this Warrant, at the address set forth
on the register of the Warrants maintained by the Company, or at such
other address as the holder of this Warrant shall have furnished to
the Company in writing;
(b) if to the Company, initially at 2381 Rosecrans Avenue, El
Segundo, California 90245, and thereafter at such other address,
notice of which is given in accordance with the provisions of this
Section 17.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five
Business Days after being sent by certified mail, return receipt requested,
if mailed; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and on the next Business Day if timely delivered to an air
courier guaranteeing overnight delivery. For purposes of this Warrant, a
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the State of California are authorized by law to
close.
SECTION 18. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to give to any person or
corporation, other than the Company and the registered holder of this
Warrant, any legal or equitable right, remedy or claim under this Warrant,
it being intended that this Warrant shall be for the sole and exclusive
benefit of the Company and the registered holder thereof.
SECTION 19. GOVERNING LAW.
This Warrant shall be governed by and construed in accordance with the
laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers.
Dated: December __, 1995 HAWTHORNE FINANCIAL CORPORATION
By:
----------------------------------------
Name: Scott A. Braly
Title: President and Chief
Executive Officer
Attest:
By:
---------------------------------
Name: James D. Sage
Title: Senior Vice President and
Corporate Secretary
ELECTION TO PURCHASE
DATED: ________
The undersigned hereby irrevocably exercises this Warrant to purchase
_______ shares of Common Stock and herewith makes payment of $_______ in
payment of the Exercise Price thereof on the terms and conditions specified
in this Warrant, surrenders this Warrant and all right, title and interest
herein to the Company and directs that the shares of Common Stock
deliverable upon the exercise of this Warrant be registered in the name and
at the address specified below and delivered thereto.
Name:
---------------------------------------------------
(Please Print)
Address:
---------------------------------------------------
City, State and Zip Code:
------------------------------------------
If such number of shares of Common Stock is less than the aggregate number
of shares of Common Stock purchasable hereunder, the undersigned requests
that a new Warrant representing the balance of such shares of Common Stock
be registered in the name and at the address specified below and delivered
thereto.
Name:
---------------------------------------------------
(Please Print)
Address:
---------------------------------------------------
City, State and Zip Code:
------------------------------------------
Taxpayer Identification or Social Security Number:
-----------------
Signature:
---------------------------------------------------
Note: The above signature must correspond with the name as written upon
the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.
